When the U.S. Treasury Department’s Federal Insurance Office (FIO) introduced in December 2022 that it was contemplating a brand new data-reporting mandate for sure property/casualty insurers, it raised purple flags for insurers and policyholders.
In response to a request for feedback on the proposed knowledge name, Triple-I informed FIO the requested knowledge can be duplicative, might result in deceptive conclusions, and – by rising insurers’ operational prices – would finally result in increased premium charges for policyholders.
“Fulfilling this new mandate would require insurers to pull existing staff from the work they already are doing or hire staff to do the new work, increasing their operational costs,” Triple-I wrote. “As FIO well knows, state-by-state regulation prevents insurers from ‘tweaking’ their cash flows in response to change the way more lightly regulated industries can. Higher costs inevitably drive increases in policyholder premium rates.”
In its personal response, the National Association of Insurance Commissioners (NAIC) emphasised the significance of collaboration with the trade to keep away from such unintended penalties.
“While we recognize the Treasury’s desire to better understand the impact of climate risk and weather-related exposures on the availability and affordability of the homeowners’ insurance market,” NAIC wrote, “we are disappointed and concerned that Treasury chose not to engage insurance regulators in a credible exercise to identify data elements gathered by either the industry or the regulatory community.”
FIO has listened and responded appropriately. The company has deserted its plan to assemble knowledge on house insurance coverage charges and availability in high-risk states. Instead, NAIC introduced that it has applied a nationwide Property & Casualty Market Intelligence Data Call (PCMI) in collaboration with FIO.
“The PCMI data call represents the collaborative, nonpartisan work that state insurance regulators have undertaken through the NAIC to address the critical challenge of the affordability and availability of homeowners’ insurance and the financial health of insurance companies,” stated NAIC president Andrew Mais, who additionally serves as Connecticut’s insurance coverage commissioner.
The change in strategy is essential each by itself deserves – in guaranteeing that FIO obtains the data it wants with out excessively and unnecessarily burdening the insurance coverage trade – and within the recognition it displays that federal actions affecting the insurance coverage trade ought to contain the trade. For instance, legislation proposed by U.S. Rep. Adam Schiff earlier this yr to create a federal “catastrophe reinsurance program” raises a number of issues that warrant scrutiny and dialogue – not the least of which is that it could set protection thresholds and dictate ranking elements primarily based on enter from a board through which the insurance coverage trade is just nominally represented.
“Triple-I commends the decision by FIO and NAIC to collaborate on a joint comprehensive property/casualty insurance data call to gather insights into the dramatic changes we’re seeing in the insurance marketplace,” stated Triple-I CEO Sean Kevelighan. “Insurance companies are committed to finding solutions for how we can predict and prevent property damage from natural disasters, as well as keeping costs of coverage at competitive levels. Data calls are time-consuming and expensive. A unified collection of data will help make this a more efficient process.”
Learn More:
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