Solvency issues

The Insurance Companies (Ratings and Inspections) Act 1994 requires all insurers selling general or disaster insurance to:

Obtain a rating from an approved rating agency
Register that rating with the Registrar of Companies, and
Disclose the rating before entering into or renewing a contract of insurance.

Insurance companies who are required to obtain a rating must have a current rating at all times, and must renew their ratings annually. New annual ratings must be registered at the Companies Office.

A rating is an assessment of an insurer's ability to pay present and future claims, and is represented by a letter, number and/or symbol and forms part of a scale.

There are two approved rating agencies:

Standard & Poor's
A M Best
Fitch Ratings

Insurance company ratings are updated quarterly. You can view the current ratings schedule online at:
Insurance and Superannuation Unit Website

Written Disclosures

An insurance company's rating is given in its written disclosure. Two examples of written disclosures are:

XYZ Insurance Ltd has an AA Very Strong claims paying rating given by Standard & Poor's (Australia) Pty Ltd on 10 July 2000. The rating scale is:

AAA	(Extremely Strong)	BBB+	(Good)	B+	(Weak)
AA+	(Very Strong)	BBB	(Good)	B	(Weak)
AA	(Very Strong)	BBB-	(Good)	B-	(Weak)
AA-	(Very Strong)	BB+	(Marginal)	CCC	(Very Weak)
A+	(Strong)	BB	(Marginal)	CC	(Extremely Weak)
A	(Strong)	BB-	(Marginal)	R	(Regulatory Action)
A-	(Strong)

ZYX Insurance Ltd has a C Weak claims paying rating given by A.M. Best Company, Inc on 10 July 2000. The rating scale is:

A++	(Superior)	B+	(Very Good)	C	(Weak)
A+	(Superior)	B	(Fair)	C-	(Weak)
A	(Excellent)	B-	(Fair)	D	(Poor)
A-	(Excellent)	C++	(Marginal)	E	(Under Supervision)
B++	(Very Good)	C+	(Marginal)	F	(In Liquidation)

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