Financial Data and Data Resources

Question 1

Financial Data

Answer 1

Assets
Liabilities
Income from Premium
Expenses
Policyholder Surplus

Question 2

Why Have Financial Data

Answer 2

• Monitor insurers financial condition

Insurers must file financial reports with
○ Jurisdictional insurance departments
○ Federal Tax and security organizations
○ NAIC
○ Rating agencies
○ Lending institutions
○ Advisory organizations

• RBC requirements
• Determine profitability
• Assess premium taxes
• Certify balance sheet items
• Can indicate market competition

Question 3

Market Research

Answer 3

Research studies examine:
○ General oversight into market activity
○ Market competitiveness and elasticity
○ Response to an event or problem
 Affordability or availability

Question 4

Annual Statement Blanks

Answer 4

NAIC forms

Separate forms for each line of business Delineated by line and column Extensive instructions for completion

Reporting required by jurisdictional and federal laws

Changes are made in public forums with input from various professionals

Question 5

Risks

Answer 5

Using only financial data to examine market activity is limited

Premiums and losses are not from the same policies

Insured risks

Market analysis at a finer level is necessary

Question 6

Financial Data Resources

Answer 6

• Isite+
• Market share reports
• Profitability report
• Competition database report

Question 7

Statistical Data

Answer 7

Develop loss costs
○ In order to make profitable underwriting and marketing decisions, insurance companies and advisory organizations must develop loss costs from data that match information from the policies sold, with information from the claims associated with those policies

More data=more accurate predictions, so more than one insurer’s data is combined together
- Data not complied with financial reports
○ Ratemaking requires determining how much money was paid or will likely be paid on a claim, and how frequently the same kinds of claims will be filed
 Many small claims can affect rates as significantly as a few large claims

Question 8

Basic Statistical Data for Rate Development

Answer 8

○ Average premium
○ Pure premium
○ Claim severity
○ Claim frequency
○ Loss ratio

Question 9

Data Resources

Answer 9

Statistical handbook
 Statistical reporting and plans for P and C lines of business
 Collection of statistical data is delegated to industry statistical agents

Standard summary reports
 Fast track monitoring providers quarterly trend data
 Available 60 days after each quarter
 Collected only for major lines and only from major insurers

Various statistical reports
 Disaster data collection template
 Catastrophic event data by zip code

Auto insurance database
 Published by the NAIC
 Average nationwide numbers for
□ Written and earned premiums
□ Losses incurred
□ Earned exposure
□ Number of claims

Homeowners report
 Made by NAIC
 Summary of market distribution and average cost by policy form

Compendium of state laws
 Published by NAIC
 Resource for state laws on issues related to insurance
 More than 100 issue specific charts on various insurance topics

Model laws, regulations, and guidelines
- Published by the NAIC
- Complete list of every model law, regulation, guideline and state page Updated three times per year, following each national meeting

Question 10

Summary

Answer 10

○ Statistical data is just one type of information needed by regulators
○ To obtain the most appropriate date needed
 Understand when and how insurance data are collected
 Identify reliable data sources

 Become informed about the data types and elements available
 Determine the intended use for data