What are companies like Standard and Poor's known for in the insurance industry?

Companies like Standard and Poor's are primarily known for assessing the financial strength of various institutions, including those in the insurance industry. Their role involves evaluating the creditworthiness of insurers by analyzing financial data, operating performance, and other key financial metrics. This assessment facilitates the understanding of an insurance company's ability to meet its future policyholder obligations and helps consumers and businesses assess the reliability of the insurer.

Rating agencies like Standard and Poor’s issue ratings that reflect the insurer’s ability to pay claims as they come due, which is crucial for consumers when selecting an insurance provider. A strong financial rating can instill confidence in policyholders regarding the insurer's stability and claims-paying capacity.

Underwriting services, claims handling, and policy underwriting are functions carried out by insurers themselves, whereas companies like Standard and Poor's focus specifically on evaluating and reporting on the financial health and credit ratings of these insurers. This distinction is essential for understanding the role of rating agencies in the industry.