Is Bigger Better?

| Auto insurance, Business Insurance, Homeowners Insurance, Insurance education.

You might be surprised to know that world’s largest insurer is headquartered in… Japan.    In 2009, Japan Post Insurance Co Ltd was easily the world’s largest insurer with total assets of $1,095,621,460,000 – just over $1 trillion!   The list trickles down from there with Axa in the #2 spot and AIG (who had occupied the #1 spot for many years) now seated at #3.    There are only 5 insurers based in the U.S. on the top-25 list:  AIG, MetLife, Prudential, Hartford and Berkshire Hathaway.  Japan has the most big-boys – 6 in all – with total assets of over $2.8 trillion.

But does size really matter in the insurance industry?  The conventional wisdom is that the larger the insurance company, the more money available to pay claims.   In truth, that logic is generally sound.   A large insurance company likely has extensive cash reserves available for a catastrophic event or series of events.  However, that same large insurance company probably issues policies across the country, maybe even around the globe. That large territory of operation means the biggest insurance companies are exposed to all sorts of potential ugly calamities: gulf coast hurricanes, midwest tornados, west coast earthquakes, wildfires, and east coast blizzards.

Smaller insurance companies, often called “regionals”, are usually less exposed to catastrophic losses.  Regional insurers also tend to be very cautious about entering new markets and often do an exceptional job underwriting new policies.   From an agents perspective, regionals tend to be more responsive to market conditions (such as rate increases or decreases) and are very concerned about their reputation, especially their claims satisfaction.   Some of the best insurance companies you’ve probably never heard of meet this definition, such as Acuity and Central Mutual.

Somewhere in between the big boys and the small players are insurers know as “super-regionals”.   These are insurance companies that are generally part of a much larger insurance group but operate independently and in a smaller geographic area.   Super-regionals benefit from the technology and efficiency of their parent, but typically offer the service and responsiveness of smaller regionals.  They are like the Goldilocks of the insurance world:  not too big, not too small, just right.  Some of these super-regionals you may have heard of such as Acuity, Central Mutual, and Safeco.

At Safeguard Insurance we work with insurance companies large, medium and small that have a proven track record of competitive pricing, fast & fair claim handling and excellent customer service.  When we recommend a particular insurer for your needs we will also provide you with the history of that insurance company and their AM Best Rating.   We encourage you to do your own research and ask us questions.   No matter who you buy auto, home, or business insurance from, it is critical you are comfortable with the insurance company, the agent and the price.