Attachment C

Request for Comments – Deadline of Jan. 12, 2018

Draft: 7/14/17

Preliminary Discussion Draft

Big Data (EX) Working Group

Background Information for Assessment of Regulatory Data Needs

Charge C

The third charge of the Big Data (EX) Working Group is to “assess data needs and required tools for regulators to appropriately monitor the marketplace and evaluate underwriting, rating, claims, and marketing practices. This assessment shall include gaining a better understanding of currently available data and tools and recommendations for additional data and tools as appropriate. Based upon this assessment, propose a means to collect, house, and analyze needed data.

To begin this discussion, the Working Group requested NAIC staff to identify current data collected and how regulators use the data (for evaluation of underwriting, rating, claims, and marketing practices). This includes the collection of information for the following areas: (1) the Blanks (E) Working Group (financial regulatory reporting); (2) the Market Analysis Procedures (D) Working Group, Market Conduct Annual Statement Blanks (D) Working Group, and Market Information Systems (D) Task Force (market regulation reporting); (3) Auto Insurance (C/D) Working Group (auto insurance availability and affordability data); (4) other NAIC groups, as needed; (5) individual states who have established data calls; and (6) outside sources.

The scope of this request is very broad and this document sets forth various data sources in varying levels of specificity as a starting point of discussion. As the information is reviewed, it is important to recognize certain data or similar data may be reported in multiple places and formats. This occurs because state insurance regulators use data for different purposes (financial regulation, market regulation, company-specific evaluations, broader market evaluations) which may necessitate the collection of the data in different formats.

Part I: Financial Data

High Level Summary of Financial Data Repository

The NAIC’s Financial Data Repository includes annual statement data for the following statement types:

  1. Property & Casualty (including Property Combined filings)
  2. Life, Accident & Health (including Life Separate Accounts filings)
  3. Fraternal (including Fraternal Separate Accounts filings)
  4. Title
  5. Health

The Database includes Risk-Based Capital Reports for the following statement types:

  1. Property & Casualty
  2. Life, Accident & Health
  3. Health
  4. Fraternal

The Database includes quarterly statement data for the following statement types:

  1. Property & Casualty
  2. Life, Accident & Health
  3. Fraternal
  4. Title
  5. Health

Key Schedules and Exhibits of Financial Statements

  1. Balance Sheet/Income Statement
  2. Cash Flow
  3. Underwriting and Investment Exhibits
  4. Exhibit of Premiums and Losses
  5. Direct Business in the State
  6. Schedule BA – Long-Term Invested Assets
  7. Schedule D, Part 1A – Distribution of Bonds
  8. Schedule DA – Short-Term Investments
  9. Exhibit of Number of Policies
  10. Exhibit of Life insurance
  11. Schedule F – Property Reinsurance
  12. Schedule H – A&H Exhibit
  13. Schedule O – Life Losses
  14. Schedule P – 10-Year Losses by Line
  15. Schedule S – Life Reinsurance
  16. Schedule Y – Insurer Organization Chart/Affiliate Transactions
  17. Schedule T – Premiums Written by State
  18. IEE – Insurance Expense Exhibits
  19. General Interrogatories
  20. Five-Year Historical

Use of Financial Data

The Financial Data Repository provides essential data for the Insurance Regulatory Information System (IRIS) Financial Ratio Reports, risk-based capital analysis, and other solvency-related reviews of individual companies, including reporting compliance and financial analysis. There are thirteen Insurance Regulatory Information System (IRIS) ratios calculated for Property/Casualty, twelve for Life/Health, and eleven for Fraternal companies that are calculated annually. A “usual range” of results for each ratio has been established from studies of the ratios for companies that have become insolvent or have experienced financial difficulties in recent years.

Property/Casualty Ratios

Overall Ratios

Ratio 1 - Gross Premiums Written to Policyholders’ Surplus

Ratio 2 - Net Premiums Written to Policyholders’ Surplus

Ratio 3 - Change in Net Premiums Written

Ratio 4 - Surplus Aid to Policyholders’ Surplus

Profitability Ratios

Ratio 5 - Two-Year Overall Operating Ratio

Ratio 6 - Investment Yield

Ratio 7 - Gross Change in Policyholders’ Surplus

Ratio 8 - Change in Adjusted Policyholders’ Surplus

Liquidity Ratios

Ratio 9 - Adjusted Liabilities to Liquid Assets

Ratio 10 - Gross Agents’ Balances (in collection) to Policyholders’ Surplus .

Reserve Ratios

Ratio 11 - One-Year Reserve Development to Policyholders’ Surplus

Ratio 12 - Two-Year Reserve Development to Policyholders’ Surplus

Ratio 13 - Estimated Current Reserve Deficiency to Policyholders’ Surplus

Life/Accident & Health Ratios

Overall Ratios

Ratio 1 - Net Change in Capital and Surplus

Ratio 2 - Gross Change in Capital and Surplus

Ratio 3 - Net Income to Total Income (Including Realized Cap. Gains & Losses)

Investments

Ratio 4 - Adequacy of Investment Income

Ratio 5 - Nonadmitted to Admitted Assets

Ratio 6 - Tot. Real Estate and Total Mortgage Loans to Cash & Invested Assets

Ratio 7 - Total Affiliated Investments to Capital and Surplus

Ratio 8 - Surplus Relief

Change in Operations

Ratio 9 - Change in Premium

Ratio 10 - Change in Product Mix

Ratio 11 - Change in Asset Mix

Ratio 12 - Change in Reserving Ratio

Fraternal Ratios

Overall Ratios

Ratio 1 - Change in Surplus and Other Funds

Ratio 2 - Net Income to Total Income (Including Realized Cap. Gains & Losses)

Ratio 3 - Adequacy of Investment Income

Ratio 4 - Non-Admitted to Admitted Assets.

Ratio 5 - Total Real Estate & Total Mortgage Loans to Cash & Invested Assets

Ratio 6 - Total Affiliated Investments to Surplus and Other Funds

Surplus Relief

Ratio 7 - Surplus Relief

Change in Operations

Ratio 8 - Change in Premium

Ratio 9 - Change in Product Mix

Ratio 10 - Change in Asset Mix

Ratio 11 - Change in Reserving Ratio

Other Financial Data Reports

Medicare Supplement Experience Exhibit by State/Medicare Part D Coverage Supplement

Provides comprehensive information about Medicare supplement insurance sold by insurance companies. The data can be sorted by state, policy form numbers, Medicare Select, plan characteristics, number of covered lives and much more.

Long Term Care Experience Reporting Forms A, B & C

Covers calendar duration up to 10+ years, including earned premiums by duration, total incurred claims, experience by line of business, number of covered lives.

The Demographic File

This file includes contact names for executives, Web site and mailing addresses, group names and other important information for all active companies' annual statements for the current year.

Electronic Company Listing

Provides company name, address, NAIC company code and FEIN on more than 6,000 Property/Casualty, Life/Accident/Health, Health and Fraternal insurers, as well as Alien insurers and reinsurers, included in the NAIC database.

NAIC Statistical Reports – Annual Reports
Accident and Health Policy Experience Report
Offers valuable and in-demand information on health insurance. Derived from the NAIC Accident and Health Policy Experience Exhibit, the report includes aggregated data from the exhibit in the P&C, health, life and fraternal blanks; extensive breakouts of market share data; company index; and important statistics - such as loss ratios, number of policies and certificates, and number of covered lives.
Auto Insurance Database
Provides average costs associated with personal automobile insurance nationwide. This report, which shows state-by-state data, is designed to provide insurance regulators, consumers and legislators with information and analysis of auto insurance information. It makes information that impacts the price of auto insurance in each state readily available to insurance regulators monitoring the market and to the public. Included in the report are averages based on written premiums and exposures for the combined voluntary and residual market business. It also contains earned premiums, incurred losses, earned exposures and number of claims for both voluntary and residual market business.
Competition Database Report
The Competition Database Report is a reference for examining the competitiveness of state insurance markets. This report is meant to be a starting point for studies of competition and can provide insight when used to make multi-state and multi-year comparisons.
Credit Life and Credit Accident and Health Insurance Experience Report
This report provides industrywide data for more than 500 individual insurers. Earned premiums, incurred losses, loss ratios and market share information for each type of insurance are displayed in separate sections for convenient analysis by line of business. Data is also shown for the two years immediately preceding the reported year to help regulators and other interested parties monitor trends in credit insurers' annual financial results.
Dwelling, Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner's Insurance
Reports on homeowners dwelling, fire and tenant insurance. Contains a summary of market distribution and average cost by policy form and amounts of insurance-specific information for each state regarding the number of homeowners policies written, amount of insurance and average premiums.
Long-Term Care Experience Reports
Based on the Long-Term Care Insurance Experience Reporting Forms for the annual statement filed with the NAIC, this report helps regulators monitor and provide data specific to this coverage. Form 1 focuses on the critical assumptions of morbidity and persistency while still presenting high-level loss ratio data. Form 2 focuses on the developing level of funds from the issue age premium basis and compares this to the active life reserve. Form 4 tracks life insurance and annuity products that have long-term care benefits provided by acceleration of certain benefits within these products. Form 5 requires information at the state level.
Market Share Reports for Groups and Companies
A reference for identifying top writers by premium volume. Allows monitoring of increases and decreases in market share and overall level of market concentration. The Property/Casualty reports include the top 10 company groups by state and the top 125 groups countrywide for each P/C annual statement line of business. The Life and Fraternal reports contain the top 125 groups by state and countrywide for life insurance, annuity considerations and total premiums written. The Accident & Health reports contain the top 125 groups by state and countrywide for total A&H premiums written. Contains the latest available year of data.
Market Share by Line Reports
These reports provide detailed information on market share and loss ratios for property/casualty companies by specific line of business. Each report includes data on the top 125 groups/companies countrywide, as well as 99% of the marketplace in each jurisdiction.
Medicare Supplement Loss Ratios Report
This report contains the latest available data drawn from Medicare Supplement Insurance Expense Exhibits filed with the NAIC. It identifies direct premiums earned, market share, direct claims incurred and loss ratios on a countrywide basis. A listing of the top 10 companies by state by direct premiums earned is also included in this report.
Profitability by Line by State
For each line and each state, this report presents aggregate statistics on premiums, losses, expenses, investment income and estimated profits for the preceding calendar year. Also shows estimated underwriting profits and operating profits, as well as estimated federal taxes.
Statistical Compilation of Annual Statement Information
The Statistical Compilation provides aggregate annual statement data for property/casualty, life/health insurance companies, all HMOs and companies that write accident and health insurance and file annual statements with the NAIC.
Supplemental Health Care Exhibit Report
The Supplemental Health Care Exhibit Report is based off the new Supplemental Health Care Exhibit, which was created as a tool to comply with new federal legislation. Aggregated annual statement data, market share data sorted by covered lives and by earned premium, as well the top 10 groups/companies by health premiums earned are included within the report to provide state and federal regulators with aggregated, more granular financial information reported by health plans. This information assists in identifying and defining elements that make up the medical loss ratio (MLR), evaluating health plan profitability, and tracking and comparing financial results of health care business as reported in the annual financial statements.

Part II: Market Regulation Data

Market Conduct Annual Statement (MCAS) Data

The MCAS is a uniform method for states to collect key data elements. Currently, MCAS data is collected on individual life cash and non-cash value products, individual fixed and variable annuities, individual stand-alone and hybrid long-term care policies, private passenger automobile policies and homeowners policies.The collection of MCAS data allows state regulators to compare and contrast entity-specific results with the results for the remainder of the industry regarding such issues as claims, premiums, policies in force, new policies written, nonrenewals, cancellations, replacement-related activity, suits and consumer complaints.

Complaint Data

The Complaints Database System (CDS)contains information about closed consumer complaints filed against insurance entities and producers. The information contained in this database may be submitted by states. There are four closed consumer complaint reports: Closed Complaint Counts by Code; Closed Complaint Counts by State; Closed Complaint Trend Report; and Closed Complaint Index.

Regulatory Interventions

The Market Action Tracking System (MATS) allows market conduct examiners and analysts to communicate schedules and results of examinations and other market actions. MATS allows for the calling of market conduct examinations and non-examination inquiries and market actions, in addition to providing easy access to complete information about the entities involved in the action. Market actions captured in MATS are: comprehensive examinations, targeted examinations, focused inquiries (typically inquiries made of multiple market participants) and other non-examination regulatory interventions.

Enforcement Data

The Regulatory Information Retrieval System (RIRS)contains records of regulatory actions taken by state insurance departments against insurance producers, companies and other entities engaged in the business of insurance. All of these actions have a final resolution. The state submitted information includes, but is not limited to, the following: administrative complaints, cease and desist orders, settlement agreements and consent orders, receiverships, license suspensions or revocations, corrective action plans, restitutions, closing letters and letter agreements.

Use of Market Conduct Data

The Market Analysis Review System (MARS) is available to state insurance regulators for the purposes of tracking, recording and analyzing Level 1 Analysis reviews done by their own state or any other states. There are four MARS reports available to assist regulators in viewing and managing the status of analysis reviews: Completed Reviews Report; Market Analyst Reviews Report; Reviews Automatically Deleted Report; and Companies with No Reviews Report.

The Market Analysis Prioritization Tool (MAPT), creates a scoring system so companies can more easily be prioritized. MAPT is designed to provide regulators with a web-based tool that serves as a starting point in the analysis process by prioritizing companies for further analysis. MAPT utilizes key market and financial components, from state and national sources, to generate weighted ratios on which the prioritization is based. Key market regulation components vary by line of business. They include, but are not limited to: losses, expenses and premiums; enrollments, market components, regulatory actions, complaints, examinations and demographics.

Standardized Data Requests

The NAIC Market Regulation Handbook contains eleven standardized data requests, which states use at their discretion:

1. Producer Data Request;

2. Marketing and Sales Data Request;

3. Commission Data Request;

4. Complaint Data Request;

5. Property and Casualty Personal Lines Data Request;

6. Life and Annuity Insurance Data Request;

7. Property and Casualty Commercial Standard Data Request;

8. Health, Long-Term Care and Medicare Supplement Data Request;

9. Credit Life and Accident and Health Data Request;

10. Title Data Request and Sample Letter; and

11. Health Reform-Related Data Request and Definitions.

Part III: Other Data Sources

Financial Reporting (Public and Private Sector)

If an insurer is publicly traded, it will also be filing with the U.S. Securities and Exchange Commission (SEC). There are a variety of private-sector sources that compile and evaluate financial information, such as rating agencies, statistical and ratemaking advisory organizations, trade associations, securities analysts and academic and nonprofit research institutions. Surveys and reports on particular topics by research institutions, consumer groups and trade organizations may also yield valuable data.

Rating Agencies

There are five principal rating firms that measure insurance companies’ financial strength: A.M. Best Company, Moody’s Investor Service, Fitch Ratings, Standard & Poor’s and Weiss Ratings. It is common for a company’s compliance or marketing strategies to change when there is a rating decrease by one or more of these rating agencies.

Informational Filings

All insurers are subject to state licensing and holding company regulations. Under these laws, state insurance departments will receive notice of changes in corporate officers and directors, changes in the domicile of insurers in the holding company group and reports on significant transactions among an insurer and its affiliates.

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