A.M. Best Ratings on COIs: How to Verify Carrier Financial Strength Before a Claim Exposes a Weak Insurer
A.M. Best Ratings on COIs: How to Verify Carrier Financial Strength Before a Claim Exposes a Weak Insurer
A certificate of insurance shows you policy limits. It does not show you whether the company behind those limits can actually pay them.
This is the quiet second layer of COI compliance, and it is the layer where the largest losses happen. You can require $5 million in general liability, verify the additional insured endorsement, confirm the primary and non-contributory wording, and still end up writing the check yourself when a claim lands — because the carrier issuing that $5 million policy is a surplus-lines insurer in voluntary run-off, a thinly-capitalized fronting company, or an offshore captive that fails the moment a real loss is presented.
A.M. Best ratings are how the insurance industry quantifies that risk. This guide explains what the ratings actually mean, which ones property managers should require, how to verify them without calling every broker individually, and why "unrated" should almost always trigger a hold on a vendor.
What A.M. Best Actually Rates
A.M. Best is the oldest and most widely used insurance rating agency in the United States. It publishes a Financial Strength Rating (FSR) on virtually every admitted U.S. property and casualty carrier of consequence, plus most major surplus-lines insurers and reinsurers.
The rating is an opinion of the carrier's ability to meet its ongoing insurance obligations — pay claims, honor reinsurance contracts, maintain adequate reserves. It's not a prediction of any specific claim outcome; it's a probabilistic assessment of solvency based on capital adequacy, underwriting results, operating performance, business profile, and enterprise risk management.
The scale runs in tiers:
| Rating | Category | |---|---| | A++ | Superior | | A+ | Superior | | A | Excellent | | A- | Excellent | | B++ | Good | | B+ | Good | | B | Fair | | B- | Fair | | C++ | Marginal | | C+ | Marginal | | C | Weak | | C- | Weak | | D | Poor | | E | Under regulatory supervision | | F | In liquidation | | S | Rating suspended | | NR | Not rated |
Most major U.S. commercial carriers — Travelers, Chubb, Liberty Mutual, Zurich, CNA, Hartford, AIG, Nationwide, State Farm, Berkshire Hathaway — sit in the A to A++ range. Dropping below A- typically means either a specialty carrier, a surplus-lines insurer, or a carrier with deteriorating financial metrics. Below B+ is unusual for any mainstream commercial placement.
Why Ratings Matter More Than Limits
A vendor's broker will gladly issue a COI showing whatever limits you ask for. Issuing the COI costs them nothing. The constraint is the underlying policy the carrier actually wrote, and the capital behind that policy.
Three realistic scenarios make the risk concrete:
Scenario 1 — Surplus lines in run-off. A specialty carrier that wrote cheap contractor GL policies for years decides to exit the market. It stops writing new business, continues to service existing policies, but announces voluntary run-off. Claims are still paid, but with increasing delay and reduced aggressive defense as the carrier winds down. A$2M slip-and-fall claim that would settle in six months with a top-rated carrier drags for three years. Meanwhile the manager is named in the suit and the carrier's defense is lackluster.
Scenario 2 — The fronting company failure. A rated carrier acts as a "front" for an offshore captive or a thinly-capitalized reinsurer. The captive collapses. The fronting carrier technically remains on the policy but disputes its obligation, or negotiates a heavily discounted commutation with the policyholder that leaves the additional insured (you) collecting pennies on the dollar of the nominal limit.
Scenario 3 — Regulatory intervention. A B-rated or unrated carrier is placed under state regulatory supervision. Claims go into a queue overseen by the state insurance department. Payments are subject to available assets, and the guaranty association — which backstops admitted carriers up to a statutory cap — may or may not cover the loss, depending on the state and the claim type. Surplus-lines carriers are not covered by guaranty associations at all.
Every one of these scenarios looks fine on the COI at binding. The rating is what distinguishes "this carrier will pay the claim" from "this carrier will fight the claim, pay a fraction, or disappear entirely."
The Minimum Rating Property Managers Should Require
Industry practice for property managers, general contractors, and most commercial risk management programs is A- or better (A-, A, A+, A++) from A.M. Best.
This is not arbitrary. A- is the threshold at which most reinsurance panels, lender requirements, and first-tier brokers consider a carrier acceptable. Dropping below A- usually means the insured is placing coverage through a surplus-lines market, a specialty program, or a captive — all of which may be appropriate in some circumstances but require active underwriting scrutiny rather than a passive "COI on file" check.
Tighter programs (large institutional investors, some REITs, high-risk construction projects) require A or better. Looser programs (small contractors, low-hazard vendors) sometimes accept B++ with the understanding that the limit may effectively be discounted.
For most property management portfolios, A- is the right baseline.
How to Verify the Rating on a COI
The certificate itself has a column on the ACORD 25 form labeled "NAIC #" next to each carrier. That number is the carrier's NAIC (National Association of Insurance Commissioners) identifier, and together with the carrier name it uniquely identifies the insurer.
Manual verification looks like this:
- Read the insurer name from the COI.
- Visit the A.M. Best website.
- Search for the carrier by name or NAIC #.
- Record the current rating.
- Compare against your minimum.
- Repeat for every other carrier on every other line (GL, auto, workers' comp, umbrella) on every new COI.
For a property manager with 200 vendors, each renewing annually, that's 200+ lookups per year just for baseline — before re-verification when a vendor changes carriers mid-year.
In practice, nobody does this. The verification step gets skipped, and the rating field on the COI tracking system stays blank.
Automated Carrier Validation in COIPulse
COIPulse ships with a curated registry of major U.S. commercial carriers and their A.M. Best financial strength ratings — Travelers (A++), Chubb (A++), Liberty Mutual (A), Zurich (A+), CNA (A), Hartford (A+), AIG (A), Nationwide (A+), State Farm (A++), Berkshire Hathaway (A++), and 20+ more. Every COI that gets extracted automatically runs through carrier lookup. The vendor detail page shows the carrier, the rating, and whether it satisfies your minimum.
Your compliance rule lets you configure two carrier-related controls:
- Minimum carrier rating — vendors with a carrier below this rating are scored red. Default is A-.
- Flag unrated carriers — vendors whose insurer is not in the registry are scored yellow, with a reason line citing "carrier not in registry." You can then investigate manually and either add the carrier, accept the exception, or reject the vendor.
The registry is maintained in code and updated when rating actions occur — carriers that get downgraded propagate to every scored vendor on the next evaluation. A carrier that moves from A to A- will quietly show the new rating on every vendor detail page; a carrier that gets placed on "under review" will surface as a yellow flag before a claim forces you to discover it.
Why "Not in Registry" Should Never Mean "Ignore"
Unrated carriers are not automatically bad. Some legitimate surplus-lines insurers, captive programs, and specialty carriers are simply not in the default registry, or carry an A.M. Best rating on the carrier group but not the specific legal entity on the COI.
But "not in registry" is also how a subcontractor with a shell fronting arrangement or an offshore captive slips through. Treating unrated as a yellow flag — not a pass — is the only way to distinguish the two.
The workflow is:
- Vendor COI arrives.
- Carrier is not in the registry. Vendor is yellow with reason "carrier not in registry — pending manual verification."
- Compliance team looks up the carrier, decides if it's legitimate.
- Legitimate specialty carrier → add to registry with confirmed rating. Vendor re-scores green.
- Questionable fronting / captive arrangement → reject or require additional documentation.
Within a few months most of your real vendor carriers are in the registry, and the yellow-flag volume drops to near zero. What remains is signal — genuinely new or unusual carriers that warrant a second look.
The Cost of Skipping This Check
A single uncollected claim from a carrier failure can exceed the cost of every piece of COI software you'll ever buy. For a portfolio with meaningful claim exposure — construction trades, property damage, slip-and-fall — ignoring carrier financial strength is statistically the largest single compliance risk a manager carries.
Adding A.M. Best rating verification as an automatic, every-COI step turns that risk from invisible to visible. The moment a carrier downgrades, your vendors re-score. The moment a new vendor submits a COI from an unknown insurer, you get a flag before you're counting on that policy in a claim.
Start Verifying Carrier Ratings Automatically
COIPulse is the only property manager–focused COI platform with built-in A.M. Best rating verification. Configure your minimum rating per trade, flag unrated carriers, and see the rating on every vendor detail page. Start free with 15 vendors and check your existing COIs — you may discover that one of your highest-volume contractors is placing coverage through a carrier you'd never heard of.