Founded in the United States in 1899, AM Best is a global credit-rating agency dedicated to the insurance industry. Alongside Fitch, Moody's and S&P it is one of the four major insurer rating agencies, independently assessing the financial strength and claims-paying ability of insurers worldwide. All six of cargoinsu's partner insurers are rated AM Best A or higher — the standard for global B/L & AWB trade.
The cheapest premium versus the strongest ability to pay — when a cargo loss happens, which one actually matters? That question is the essence of an AM Best Rating.
You pay the premium now; the cover pays out when a loss occurs. That gap in time is the essence of insurance, and AM Best objectively assesses whether the insurer has the financial capacity to keep that promise.
US and European shippers, global airlines and carriers require the insurer's rating to be stated on the B/L (bill of lading) and AWB (air waybill). Below A can mean refused trade or demands for extra security — a global counterparty may decline to trade with a Korean shipper altogether.
Marine and air cargo losses can be enormous, and liability lines such as freight forwarder's liability (FFL) allow long-tail claims. The insurer must stay solvent until then for cover to mean anything, and claims-handling speed at that moment is also reflected in the rating.
From 1 September 2025 the protection cap rose from ₩50M to ₩100M — the first change in 24 years — and it applies to insurers as well as banks and securities firms. On an insurer's failure, claim proceeds are protected up to ₩100M. But that is not enough for cargo insurance: a single container loss can run to hundreds of millions of won; a single shipment of high-value goods (art, jewellery, electronics) into the billions; carrier and FFL liability losses into the billions. A ₩100M cap cannot deliver meaningful indemnity against losses of that scale — which is why the insurer's own financial strength (AM Best A or higher) is decisive.
Source: Financial Services Commission press release; amendments to the Enforcement Decree of the Depositor Protection Act and 5 other decrees (2025-07-22).
The answer to “can an insurer fail?” is “it has happened, and it can happen.” In high-severity areas such as marine and air cargo, an insurer's financial stability is absolute.
California's largest life insurer failed in April 1991 after over-investing in junk bonds. After the state regulator took it over, policyholders recovered only about 60–70% of principal; the rest was written off.
→ Loss on an insurer failure is direct and immediate.
Australia's largest insurer failed in March 2001. With losses of around A$5.3 billion, it is one of the largest corporate collapses in Australian history. Shippers holding marine and cargo cover lost their protection, and even government relief fell short.
→ Cargo losses are huge — even government protection falls short.
Founded in 1762, the UK's largest annuity insurer — 250 years of history — closed to new business in December 2000. Long-tail burdens effectively halted operations, and over a million policyholders lost part of the cover they had been promised.
→ Even 250 years is no guarantee; the longer the policy, the more the rating matters.
All three cases share one thing: a rating agency had issued a downgrade warning before the failure. Rating monitoring is the most objective tool for avoiding risk in advance.
A rating is not just a letter. It is an objective assessment of whether claims will be paid as promised.
| Rating category | Classification | What it means for shippers |
|---|---|---|
| A++ / A+ | Superior | Outstanding ability to meet claim obligations; resilient even in major marine losses and catastrophes. |
| A / A- | Excellent | Strong financial base; the standard benchmark for global B/L · AWB trade. |
| B++ / B+ | Good | Generally stable, but more vulnerable in major marine losses and catastrophes. |
| B and below | Fair – Poor | High risk; global shippers may refuse trade; payment difficult on a loss. |
In practice: for global B/L · AWB trade, A or higher (Excellent · Superior) is already a standard requirement. All six of cargoinsu's partners meet or exceed this bar.
AM Best's Financial Strength Rating splits into two categories — Secure and Vulnerable. A++ to A- is the standard for global B/L · AWB cargo trade, and cargoinsu's six insurers all sit in this band.
SPECIAL: E (under supervision) · F (in liquidation) · S (rating suspended).
Source: AM Best's Credit Rating Methodology (BCRM).
Alphabetical order. All ratings per AM Best's official publications (2025–2026) and reassessed annually.
All grades are AM Best Financial Strength Ratings (FSR). Source: AM Best official Credit Rating Action (news.ambest.com). Ratings are reassessed annually and reflected here on any change. Each insurer's underwriting criteria may differ.
A broker's fundamental duty is to keep the client's assets safe. Placing cover with an insurer of doubtful claims-paying ability — however cheap the premium — risks the cover itself collapsing in a major marine loss or container casualty. N2N Insurance Brokerage, which operates cargoinsu.com, is an independent broker acting for the client under Article 89 of the Insurance Business Act, and runs its partner panel on these principles:
AM Best A or higher applied as the minimum bar.
No ranking between insurers (insurance advertising guidelines).
6 insurers' wordings, endorsements and exclusions analysed in advance for the best fit by cargo type and route.
AM Best annual reassessments tracked and reflected here immediately.
A broker independently compares the wordings of 6 AM Best A++–A insurers for you.
