COLLECTION & PUBLICATION OF GENERAL INSURANCE STATISTICS AN OVERVIEW OF REGULATORY BEST PRACTICE. Win-Li Toh 20 November 2014

Transcription

1 COLLECTION & PUBLICATION OF GENERAL INSURANCE STATISTICS AN OVERVIEW OF REGULATORY BEST PRACTICE Win-Li Toh 20 November 2014

2 What we ll cover today A potted history of regulation: Australia, NZ, US, Canada Why collect data, why publish and any issues? What s collected? What s published? International best practice Any gems for NZ? Your views Taylor Fry Pty Ltd 2

3 Australian Prudential Regulation Authority (APRA) Reserve Bank of New Zealand (RBNZ) National Association of Insurance Commissioners (NAIC) Office of the Superintendent of Financial Institutions (OSFI) Est 1987 Est 1871 Est 1998 IPSA 2010 Taylor Fry Pty Ltd 3

4 Why collect, why publish? What do the International Association of Insurance Regulators (IAIS) say? (>200 jurisdictions in 140 countries) Insurance Core Principles of the IAIS ICP9 Supervisory Reporting conduct effective supervision of insurers and evaluate the insurance market ICP20 Public Disclosure relevant, comprehensive and adequate information on a timely basis give policyholders and market participants a clear view of the insurers business activities, performance and financial position enhance market discipline and understanding of the risks Will vary according to overall market structure and conditions Takes account of nature, scale and complexity of insurer Considers confidentiality and commercial sensitivity Information that s verifiable and complete Key information, not significant volumes Taylor Fry Pty Ltd 4

5 A matter of balance! Information needs for supervision vs administrative burden on insurers Information needs of market participants vs excessive disclosures Meaningful disclosure vs protection of confidential information Timeliness vs reliability APRA financial promises met within stable, efficient and competitive financial system RBNZ maintain a sound and efficient financial system Taylor Fry Pty Ltd 5

6 Why collect, why publish? Promote transparency and accountability of regulated insurers Allows policyholders to make better choices between price and risk Timely and standardised data enables peer-to-peer analysis and insurance sector comparisons Better monitoring and assessment of financial performance, position and compliance of licensed insurers Ensures market disciplines apply against imprudent behaviour Assist research and public discussion on policy issues Increased veracity and visibility of information Enables informed decision-making by policymakers, other regulators, market analysts, researchers and management Increases confidence in soundness and efficiency of the insurance sector Taylor Fry Pty Ltd 6

7 RBNZ proposed reporting Quarterly Survey Sector aggregate summaries of financial performance and position - Larger insurers only Annual returns Half-yearly returns Taylor Fry Pty Ltd 7

8 RBNZ Insurer Financial & Exposure Return This return collects financial and exposure data from licensed NZ insurers Liabilities Assets Capital Net profit Premium Incurred claims development Taylor Fry Pty Ltd 8

9 RBNZ Insurer Solvency Return This return collects solvency data from licensed NZ insurers Solvency capital Insurance & Cat risk charge Risk capital charge Reinsurance recovery risk charge Taylor Fry Pty Ltd 9

10 RBNZ Quarterly Insurer Survey This survey collects quarterly financial and exposure data from the larger NZ licensed insurers only Liabilities Assets Capital Net profit Exposure Recent process of consultation with insurers feedback expected soon. Taylor Fry Pty Ltd 10

11 RBNZ Publication of data Planned first release Late 2015 / early 2016 Issues unique to NZ constraints on data collection, dominant players in some classes, home jurisdiction exemptions, insurers with life/non-life mix Taylor Fry Pty Ltd 11

12 NAIC products Annual Report Card State level overview of the insurance market Statistical Reports In depth company level data for a fee. Taylor Fry Pty Ltd 12

13 NAIC report card Information available at both national and state level Taylor Fry Pty Ltd 13

14 NAIC report card Additional state level information Taylor Fry Pty Ltd 14

15 NAIC products Taylor Fry Pty Ltd 15

16 NAIC Auto Insurance Database Taylor Fry Pty Ltd 16

17 NAIC Auto Insurance Database AVERAGE PREMIUMS AND EXPENDITURES 5 AUTO INSURANCE EARNED AND INCURRED DATA GENERAL INFORMATION 29 BODILY INJURY LIABILITY 35 PROPERTY DAMAGE LIABILITY 51 COMBINED SINGLE LIMITS LIABILITY 67 PERSONAL INJURY PROTECTION 95 MEDICAL PAYMENTS 111 UNINSURED/UNDERINSURED MOTORIST 127 TOTAL LIABILITY 155 COLLISION 167 COMPREHENSIVE 183 TRAFFIC CONDITIONS 199 CRIME 205 AUTO REPAIR COSTS 209 ECONOMIC / DEMOGRAPHIC DATA 213 STATE LAWS 219 APPENDIX 237 Taylor Fry Pty Ltd 17

18 NAIC Claim development triangles Taylor Fry Pty Ltd 18

19 OSFI reporting Quarterly Reports Individual insurer and insurance group information about financial performance, position and capital base and capital adequacy. Former head of the Canadian regulator sought for expert review of APRA post-hih Taylor Fry Pty Ltd 19

20 OSFI Web Tool Taylor Fry Pty Ltd 20

21 OSFI beyond 2020 Taylor Fry Pty Ltd 21

22 10.15 Directors (All provinces) Corporate Information (All provinces) Assets Liabilities and Equity Statement of Income Statement of Retained Earnings; Reserves Comprehensive Income (Loss) and AOCI (Loss) Statement of Changes in Equity Minimum Capital Test Capital Required for Balance Sheet Assets based on External Credit Ratings Summary of Investments Other Loans and Invested Assets (Quebec/Alberta) Interest in & Amounts receivable from/payable to Subsidiaries, Associates & Joint Ventures Premiums and Claims OSFI Canadian Property & Casualty Insurers Claims Incurred - Undiscounted / Discounted Amounts and Foreign Exchange / Gains & Losses on Investments Claims and Adjustment Expenses - Paid, Current Period and Unpaid, Current and Prior Period Provincial and Territorial Exhibit of Premiums Written Provincial and Territorial Exhibit of Premiums Earned Provincial and Territorial Exhibit of Claims Incurred including Adjustment Expenses Provincial and Territorial Exhibit of Claims Incurred including Adjustment Expenses - Undiscounted Reinsurance Ceded to Unregistered Insurers Commissions Assets (Non Consolidated) Liabilities and Equity (Non Consolidated) Statement of Income (Non Consolidated) Statement of Retained Earnings; Reserves (Non Consolidated) Comprehensive Income (Loss) and AOCI (Loss) (Non Consolidated) Premiums and Claims (Non Consolidated) Claims Incurred - Undiscounted / Discounted Amounts and Foreign Exchange / Gains & Losses on Investments (Non Consolidated) Claims and Adjustment Expenses - Paid, Current Period and Unpaid, Current and Prior Period (Non Consolidated) Provincial and Territorial Exhibit of Premiums Written (Non Consolidated) Provincial and Territorial Exhibit of Premiums Earned (Non Consolidated) Provincial and Territorial Exhibit of Claims Incurred including Adjustment Expenses (Non Consolidated) Taylor Fry Pty Ltd 22

23 APRA GI reporting Quarterly Performance Statistics Industry aggregate summaries of financial performance, financial position and key ratios. (Issued ~ 2 months after as at date) Biannual Institution-level Statistics Individual insurer and insurance group information about financial performance, position and capital base and capital adequacy. (Issued ~ 6 months after as at date) Taylor Fry Pty Ltd 23

24 APRA GRF 300 Statement of Financial Position Assets Liabilities Shareholders' equity Taylor Fry Pty Ltd 24

25 APRA GRF 310 Income Statement Premium revenue Claims expenses Profit (loss) Retained earnings Taylor Fry Pty Ltd 25

26 APRA GRF 110 Prescribed Capital Amount Risk charge Prescribed capital amount Capital adequacy Adjusted net assets Taylor Fry Pty Ltd 26

27 APRA Published company level data Table 1 Company level financial performance Financial years ended in the 12 months to December 2013 ($ thousand) Company short name Balance date Gross earned premium Outwards reinsurance expense Net earned premium Gross incurred claims Nonreinsurance recoveries revenue Reinsurance recoveries revenue Net incurred claims Underwriting expenses Underwriting result Investment income Other items Net profit / loss after tax AAI 30 Jun 1,652, ,683 1,304,742 1,107,247 92, , , ,303 65, , , ,983 Table 2 Company level financial position Financial years ended in the 12 months to December 2013 ($ thousand) Company short name Balance date Investments Total assets Outstanding claims liabilities Unearned premium liabilities Total liabilities Shareholders' equity AAI 30 Jun 5,342,035 6,988,586 1,850, ,639 4,181,864 2,806,722 Table 3 Company level capital adequacy Financial years ended in the 12 months to December 2013 ($ thousand) Company short name Balance date Prescribed capital amount Capital base Capital in excess of prescribed capital amount Prescribed capital amount coverage ratio AAI 30 Jun 635,354 1,287, , Taylor Fry Pty Ltd 27

28 APRA Published quarterly aggregated data Geographic region Australian Capital Territory New South Wales Northern Territory Queensland South Australia Tasmania Victoria Western Australia Class of business category Short-tail property Short-tail property Short-tail property Short-tail property Long-tail Long-tail Long-tail Long-tail Other Other Other Other Other Other Inwards reinsurance Industry sector Direct insurer Reinsurer Class of business Houseowners and householders Commercial motor vehicle Domestic motor vehicle Fire and industrial special risks (ISR) Compulsory third party (CTP) motor vehicle Public and product liability Professional indemnity Employers' liability Other Other accident Marine and aviation Travel Consumer credit Mortgage Inwards reinsurance 177 data items Premium Claims expense Underwriting expenses Investment income Operating income and expenses Profit or loss Assets Investment assets Liabilities Equity Outstanding claims provision Premium liabilities Investment risk charge Concentration risk charge Insurance risk charge Operational risk charge Other risk charge Capital and capital requirement Non-branch capital components Taylor Fry Pty Ltd 28

29 APRA Quarterly data a snapshot Reporting date Industry sector Data item Class of business Geographic region 30/06/2014 Direct insurer Gross written premium 11,592,000,000 30/06/2014 Reinsurer Gross written premium 326,000,000 30/06/2014 Total industry Gross written premium by class of business Houseowners and householders 1,927,000,000 30/06/2014 Total industry Gross written premium by class of business Commercial motor vehicle 685,000,000 30/06/2014 Total industry Gross written premium by class of business Domestic motor vehicle 2,013,000,000 30/06/2014 Total industry Gross written premium by class of business Fire and industrial special risks (ISR) 1,170,000,000 30/06/2014 Total industry Gross written premium by class of business Compulsory third party (CTP) motor vehicle 942,000,000 30/06/2014 Total industry Gross written premium by class of business Public and product liability 658,000,000 30/06/2014 Total industry Gross written premium by class of business Professional indemnity 565,000,000 30/06/2014 Total industry Gross written premium by class of business Employers' liability 930,000,000 30/06/2014 Total industry Gross written premium by class of business Travel 232,000,000 30/06/2014 Total industry Gross written premium by class of business Marine and aviation 196,000,000 30/06/2014 Total industry Gross written premium by class of business Mortgage 320,000,000 30/06/2014 Total industry Gross written premium by class of business Other accident 305,000,000 30/06/2014 Total industry Gross written premium by class of business Consumer credit 97,000,000 30/06/2014 Total industry Gross written premium by class of business Other 254,000,000 30/06/2014 Total industry Gross written premium by class of business Inwards reinsurance 1,625,000,000 30/06/2014 Total industry Number of risks written by class of business Houseowners and householders 3,067,000 30/06/2014 Total industry Number of risks written by class of business Commercial motor vehicle 318,000 30/06/2014 Total industry Number of risks written by class of business Domestic motor vehicle 3,542,000 30/06/2014 Total industry Number of risks written by class of business Fire and industrial special risks (ISR) 414,000 30/06/2014 Total industry Number of risks written by class of business Compulsory third party (CTP) motor vehicle 3,059,000 30/06/2014 Total industry Number of risks written by class of business Public and product liability 2,403,000 30/06/2014 Total industry Number of risks written by class of business Professional indemnity 143,000 30/06/2014 Total industry Number of risks written by class of business Employers' liability 53,000 30/06/2014 Total industry Number of risks written by class of business Travel 2,694,000 30/06/2014 Total industry Number of risks written by class of business Marine and aviation 189,000 30/06/2014 Total industry Number of risks written by class of business Mortgage 56,000 30/06/2014 Total industry Number of risks written by class of business Consumer credit 1,174,000 30/06/2014 Total industry Number of risks written by class of business Other accident 858,000 30/06/2014 Total industry Number of risks written by class of business Other 3,379,000 Taylor Fry Pty Ltd 29 Value

30 APRA Masking and unmasking Consultation with industry during 2013 Previously permission sought for unmasking certain items from affected insurers Forms (Prescribed Capital Amount), (Capital Base), (Investments), (Financial Position), 310 (Income Statement), (Premium Revenue and RI Expense) now declared to be non-confidential Removal of masking over time I will protect you from chaos! My trade secrets! Taylor Fry Pty Ltd 30

31 APRA some basic calculations e.g. risk margins Class of Business Outstanding claims provision - Central estimate ($M) Outstanding claims provision - Risk margin ($M) Risk margin Commercial motor vehicle % Compulsory third party (CTP) motor vehicle 12, % Consumer credit % Domestic motor vehicle 1, % Employers' liability 3, % Fire and industrial special risks (ISR) 2, % Houseowners and householders 1, % Inwards reinsurance 7, % Marine and aviation % Mortgage % Other % Other accident % Professional indemnity 3, % Public and product liability 6, % Travel % Grand Total 41,536 3,550 8% Taylor Fry Pty Ltd 31

32 TaylorVision Industry solvency trends Taylor Fry Pty Ltd 32

33 TaylorVision Breakdown of risk charges Taylor Fry Pty Ltd 33

34 TaylorVision Insurer solvency comparisons Taylor Fry Pty Ltd 34

35 TaylorVision Profitability by class Taylor Fry Pty Ltd 35

36 TaylorVision Insurer performance benchmarks Taylor Fry Pty Ltd 36

37 APRA example NCPD data release National Claims and Policy Database (NCPD) established in 2003, to coincide with tort reform aimed at delivering affordability and availability in liability insurance Classes of business PL, PI and D&O Unmasking of data over time Detailed market analytics 10 years on PL PI Taylor Fry Pty Ltd 37

38 Professional Indemnity Occupation group results Best to worst average performance over last 3 years: General Consultants Engineering Legal & Paralegal Finance Real Estate & Property Services Medical & Paramedical Other Taylor Fry Pty Ltd 38

39 Public and Products Liability Occupation group results Best to worst average performance over last 3 years: Mining Government Agriculture Wholesaling Services Other Transport Retail Construction Manufacturing Taylor Fry Pty Ltd 39

40 Loss ratios NZ Industry Overview Source: ICNZ Taylor Fry Pty Ltd 40

41 What would you like to see published? Information APRA NAIC OSFI RBNZ Insurer level disclosure Financial position, performance, solvency, assets, premium and reinsurance Y Y Y? Claims development triangles N Y N? Industry aggregated disclosures Unmasking of all items. Views of: - Larger / smaller / exempt insurers - Established / new market participants P Y? Y?? Unmasking of selected items P N N? Fee for service N Y N? Taylor Fry Pty Ltd 41