Establishing an Analytical Framework for Measuring the Role of Reinsurance in the Health Insurance Market. 1. Indemnity Market


The most logical data source through which to gather additional data on reinsurance arrangements by indemnity insurers is the NAIC annual statement, which is discussed above. The annual statement collects detailed information annually from every licensed insurer, so it could be a source of information from ceding insurers and insurers assuming reinsured risk. As discussed above, detailed information about individual insurance transactions of ceding and assuming insurers already is collected on Schedule S of the annual statement, so it would be a logical place to request some of the additional information identified above in the section on key variables. In fact, it is difficult to imagine a more efficient method of collecting this information from ceding and assuming insurers.

In terms of reliability, cost, and even response burden, collecting the information through the NAIC annual statement makes a great deal of sense. The statement is completed by and submitted to individuals with expertise in the area, so reliability is likely to be quite good. And given the amount of information currently collected in the annual statement on reinsurance, the marginal effects on costs and response burden of requesting additional reinsurance information are relatively small. The response rate will not be effected because the filing of the annual statement is mandatory.

A potential objection to the use of the annual statement to collect this information, however, is that it does not serve a regulatory purpose. The NAIC or the insurance industry could object to the use of the annual statement to collect purely descriptive information, in part because this might be seen as the first in a long line of general or specific questions about the insurance industry that could be answered by adding a question to the statement. Unless regulators could be convinced that knowing more about the reinsurance arrangements of indemnity insurers was relevant to the insurers solvency or to their oversight of the health insurance market, they may be reluctant to add additional reinsurance questions to the statement.

There are no other good options for collecting detailed information on the reinsurance arrangements of indemnity insurers. There are a number of private companies that collect and distribute information about insurers to the general public or the investment community, including A.M. Best, Moodys, and Weiss Research. However, the size and purpose of these data collection efforts are not directed at answering questions of public policy, making the data largely inadequate for our purposes.