26 June 2026

Understanding Insurer Financial Strength Ratings

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By DNA Insurance
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From 1 July 2026, Clegg Gifford will cease binding new business with Watford Insurance Company Europe Ltd, instead will be binding with Tradex Insurance Company plc who do not hold a financial strength rating. As a result, some customers may wish to review their insurance arrangements and understand what this means for their cover.

What is a Financial Strength Rating?

A financial strength rating is an independent assessment provided by rating agencies such as AM Best or Standard & Poor’s. It gives an indication of an insurer’s ability to meet its ongoing financial obligations, including the payment of valid claims.

While ratings can provide useful insight into an insurer’s financial position, they do not guarantee that claims will be paid, as all claims are subject to the terms, conditions and exclusions of the policy.

Rated and Non-Rated Insurers

Insurance may be placed with either rated or non-rated insurers, depending on the nature of the risk and the availability of cover.

  • Rated insurers have been assessed by an external agency and assigned a financial strength rating
  • Non-rated insurers have not been assigned a public rating, but may still operate in specific or specialist markets

Non-rated insurers are commonly used in certain sectors and may be appropriate depending on your individual requirements and risk profile. However, where an insurer is not rated, there may be less publicly available independent information about its financial strength.

Things to Consider When Choosing an Insurer

When reviewing your insurance arrangements, it is important to consider a range of factors, including:

  • The level of cover provided
  • The policy terms, conditions and exclusions
  • The financial strength of the insurer, where this is important to you
  • The overall suitability of the policy for your business needs
  • The price and value of the cover

What is most appropriate will depend on your individual circumstances and priorities.

Financial Services Compensation Scheme (FSCS)

If an authorised insurer is unable to meet its obligations, the Financial Services Compensation Scheme (FSCS) may provide protection.

For general insurance, this typically covers 90% of a valid claim with no upper limit, although this may not cover all losses in every circumstance.

Eligibility and the level of protection can vary depending on the specific situation.

Reviewing Your Cover

If your insurer’s rating status has changed, or you are unsure about your current arrangements, it may be appropriate to review your cover.

Our team can help you understand the available options so that you can make an informed decision based on your individual business requirements.

Important Information

  • This is a marketing communication and is intended for information purposes only
  • It does not constitute a personal recommendation or advice
  • Any insurance arranged will be subject to underwriting criteria, policy terms, conditions and exclusions
  • The availability of cover and insurer options will depend on your individual risk profile

Contact Us

If you would like to discuss your insurance requirements or review your current cover, please contact the DNA team on 01708 988952.

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