Travel Insurance Decoded: What an AM Best Upgrade Means for Policy Reliability

Travel Insurance Decoded: What an AM Best Upgrade Means for Policy Reliability

Hook: You’ve found the perfect trip—but who will pay when the unexpected happens? For many travellers the worry isn’t just cancellations or medical bills; it’s whether the insurer will actually pay. Recent moves in the market, like AM Best’s January 2026 upgrade of Michigan Millers Mutual, show why insurer credit ratings matter now more than ever.

Quick takeaways (read first)

• AM Best ratings are a practical proxy for claims reliability: higher Financial Strength Ratings (FSR) and Issuer Credit Ratings (ICR) mean insurers are better capitalised to pay claims.
• An upgrade—like Michigan Millers to A+/aa- in Jan 2026—often reflects stronger balance sheets, reinsurance support and proven underwriting.
• Practical shopper action: prioritise A or higher-rated insurers, check policy wording, verify who underwrites the product (not just the brand), use state insurance resources and set rating-change alerts.

Why insurer credit ratings matter to travellers in 2026

Travel in 2026 continues to rebound with higher volumes and more complex risks: climate-related disruptions, regional instability and fluctuating medical evacuation costs are increasing insurers’ exposure. That makes an insurer’s financial strength and creditworthiness directly relevant to consumers who need reliable, timely claims payments.

What a rating measures: independent rating agencies such as AM Best evaluate an insurer’s balance sheet strength, operating performance, business profile and enterprise risk management. For AM Best, the two headline measures to watch are the Financial Strength Rating (FSR) — which speaks to an insurer’s ability to meet policyholder obligations — and the Long-Term Issuer Credit Rating (ICR), which assesses long-term creditworthiness.

Case study: Michigan Millers Mutual — what the Jan 2026 upgrade tells travellers

On 16 January 2026 AM Best upgraded Michigan Millers Mutual’s FSR to A+ (Superior) from A and its Long-Term ICR to aa- (Superior) from a. The outlook was set to stable. Why does this matter for travellers?

Key reasons behind the upgrade — explained for non-specialists

• Strong balance sheet: AM Best assessed Michigan Millers’ balance sheet strength as "strongest," which means it now has higher capital adequacy and reserve coverage to meet unexpected claim surges.
• Operating performance and ERM: consistent underwriting results and appropriate enterprise risk management practices reduce the chance of surprise insolvency.
• Reinsurance and pooling support: Michigan Millers joined the Western National Insurance Group’s pooling agreement effective 1 January 2026, and AM Best extended Western National’s ratings due to significant reinsurance support. For consumers, that translates into an added safety layer: pooling and reinsurance spread risk across a larger group, improving claim-paying capacity.

In plain terms: if you buy a travel product underwritten by Michigan Millers or by a carrier with similar backing, you're less likely to face delays or non-payment because the company is better capitalised and has formal reinsurance support.

How insurer ratings translate into real-world claim outcomes

Ratings do not guarantee individual claim outcomes — policy wording and exclusions still control. But they materially affect the ecosystem around claims processing:

• Faster settlements: financially strong insurers are more likely to maintain staffed claims teams and robust systems, which shortens processing times for trip cancellation, medical or evacuation claims.
• Fewer solvency interruptions: higher-rated insurers have lower risk of regulatory takeover or rehabilitation, both of which can delay claims payments.
• More generous reinsurance relationships: carriers with strong ratings often secure better reinsurance terms, keeping liquidity available during catastrophe years (useful for storm-related cancellations or large-scale travel disruptions).

2025–2026 trends that affect insurer reliability

Late 2025 and early 2026 saw a few industry trends travellers should know:

• Consolidation and pooling: regional insurers have sought group affiliations or pooling agreements to stabilise loss volatility — the Michigan Millers/Western National move is a prime example.
• Higher claims volatility from climate and geopolitics: more frequent weather events and localized instability have increased insurers' aggregate exposure.
• Regulatory scrutiny and solvency focus: regulators in several jurisdictions are tightening reserve and reporting rules, which helps consumers but can drive M&A activity.
• Insurtech distribution: many online travel insurers are distribution-first; you must check who underwrites the policy (the insurer) rather than the brand selling it.

Step-by-step checklist: choosing a more reliable travel insurance policy (actionable)

Use this practical checklist before you buy or renew travel insurance.

1. Identify the underwriter: not the broker or app. Look for the insurer name and check their AM Best rating (or S&P/Moody’s if listed).
2. Prefer A/A+ (or equivalent) and above: aim for insurers rated A (Excellent) or higher. Upgrades like Michigan Millers to A+ signal improved claims capacity.
3. Confirm reinsurance support or group backing: policies underwritten by carriers in a pool or with strong reinsurance partners are more resilient during large events.
4. Read the policy wording for core sections:
   • Trip cancellation and interruption: covered reasons and required documentation
   • Emergency medical and evacuation: limits, network hospitals, repatriation rules
   • Baggage and delay definitions and per-item limits
   • Exclusions: pre-existing conditions, pandemics, known-event exclusions
   • CFAR (Cancel For Any Reason): optional add-on and reimbursement percentage
5. Check claims process and timing: how to submit, portal vs phone, average settlement times, whether they pay upfront for emergency medical payments.
6. Search regulator and complaint data: use the NAIC (US) or UK Financial Ombudsman/FSCS or other national regulators to review complaint ratios and enforcement actions.
7. Confirm policy currency and jurisdiction: depends where you live and where the insurer is domiciled — local guaranty funds and protections vary.
8. Phone-test the insurer: call their claims line with a hypothetical query. Speed, clarity and empathy are telling signs of operational strength.
9. Watch for recent rating changes: upgrades are good; downgrades are red flags. Set up alerts from AM Best or financial news feeds for insurers you commonly use.

Special considerations for trip cancellation and emergency medical cover

Trip cancellation is one of the benefits consumers check first, but it’s also often the most disputed. Here’s what to verify:

• Covered reasons: look beyond standard illness or death. Does the policy include work reasons, jury duty, or terrorism closures?
• Proof requirements: insurers will ask for documentation. Confirm what evidence is acceptable (doctor’s note, employer letter, official closure notices).
• Cancellation windows and refund timelines: policies might have different tiers of refunds depending on when you cancel; stronger insurers typically process refunds more quickly.
• Medical limits and evacuation: emergency medical and medical evacuation can be the costliest claims. Check sub-limits and whether the insurer coordinates evacuation directly.

What to do if your insurer is upgraded — or downgraded — mid-policy

Ratings can move during the lifecycle of your policy. Here’s how to respond:

• Upgrade: if your insurer is upgraded (like Michigan Millers), it’s a good sign but generally doesn’t change your existing policy terms. Make a note for renewals and consider keeping the insurer for future trips.
• Downgrade: downgrades are more concerning. For active claims, collect full documentation and file promptly. For future purchases, switch to a better-rated underwriter if possible.
• During large events: if a carrier faces mass claims after a catastrophe, follow public updates from the insurer and regulator. Keep records of all communication and seek payment timelines in writing.

Comparing card benefits vs standalone travel insurance

Many UK and international credit cards or debit cards offer travel protection. But the issuer’s financial strength and the insurer behind the card’s protection matter just as much as standalone policies.

• Find the underwriter for card benefits: card issuers often rely on third-party insurers; check the name and rating.
• Coverage limitations: card benefits often have lower limits and narrower covered reasons compared with dedicated travel policies.
• Claim pathways: don't assume cards have faster claims. Confirm the claims process and expected settlement timings.

Real-world example: how pooling improved claim security

Pooling agreements — when insurers aggregate risk — provide stability across fluctuating claims. The Michigan Millers move into Western National’s pool indicates a strategic choice to stabilise underwriting results and capital. For a traveller, the practical benefits are:

• More predictable claims payment during regional disasters
• Access to a broader capital base for large losses like mass cancellations or evacuation operations
• Potentially improved claims infrastructure and processes from group sharing

Advanced strategies for the informed traveller (2026 and beyond)

For high-frequency travellers and travel planners, use these advanced steps to boost protection:

• Set rating-change alerts: use AM Best feeds, Google Alerts or insurer watchlists to track upgrades/downgrades of favoured underwriters.
• Buy earlier if concerned about insurer health: purchasing sooner locks your coverage under the current insurer terms and may help if downgrades follow.
• Diversify large-group travel: for group trips, consider splitting bookings or using travel agents that vet insurer strength for group policies.
• Include CFAR selectively: Cancel For Any Reason is expensive but can reduce disputes — pair CFAR with higher-rated insurers for maximum reliability.
• Use third-party claim advocates: for complex large claims (medical evacuation), consider using a trusted medical claims advocate; they often know which insurers are quicker and which require more documentation.

Checklist you can copy before buying

• Who is the underwriter? (Not just the brand)
• AM Best rating and outlook: A or higher preferred
• Reinsurance support or group affiliation noted? (e.g., pooling)
• Clear trip cancellation reasons and documentation list
• Emergency medical and evacuation limits adequate for destination
• Claims process: portal, phone, expected timelines
• Complaints and regulator notices checked
• Policy jurisdiction and guaranty protections verified
• Price vs coverage trade-off evaluated

When to escalate a denied claim

If a claim is denied or unpaid for an unreasonable time:

• Ask for a written denial explanation and reference the policy section.
• Request an internal review and note deadlines for escalation.
• File a complaint with the relevant regulator (state insurance department, Financial Ombudsman Service in the UK) and include all documentation.
• Consider legal counsel for large claims; insurer ratings do not obstruct legal recourse, but strong ratings suggest better negotiation leverage.

Final notes: ratings are critical, but not the only factor

Ratings matter. The Michigan Millers upgrade is a useful reminder that the insurer behind your policy matters as much as policy wording. But a high rating won’t fix a poorly written policy or an exclusion you missed. Use ratings as a gatekeeper for financial reliability, then layer in careful policy reading, claims process checks and regulatory research.

Practical rule: choose a highly rated underwriter and a policy that actually covers the risks you expect. One without the other exposes you to gaps.

Call to action

Ready to buy travel insurance with confidence? Start by checking the underwriter’s AM Best rating and compare both price and policy wording. If you want a fast setup: use our travel-insurance checklist, sign up for insurer rating alerts, and compare policies from A-rated underwriters first. For personalised guidance, contact our travel protection team to review one policy in 48 hours—know you’re covered before you fly.

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