State insurance regulators' unfinished plan to get more market data

The National Association of Insurance Commissioners (NAIC), the organization of state insurance regulation bodies, announced plans to issue a data call to insurance carriers, on behalf of its members, as a response to new concerns about availability and affordability of insurance being caused by severe weather and climate events, higher reinsurance costs and inflation.

But at least one consumer advocate sees this effort as too little, too late.

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This action falls short of what other financial services regulators require and highlights a weakness in insurance regulation, according to Birny Birnbaum, director of the Center for Economic Justice.

Data calls collect data from insurers about property markets, coverages and protection gaps. NAIC assigned its Property and Casualty Insurance Committee to help state regulators develop property market data intelligence to better understand their markets and coverage gaps caused by changes in deductibles and coverage gaps.

Insurance regulators should be pushing for ongoing data collection at a granular level, according to Birnbaum.

"NAIC has rejected proposals for granular market monitoring data collection for decades," he wrote in response to questions about the NAIC action, noting that NAIC had criticized a data call proposal by the Federal Insurance Office, a unit of the U.S. Treasury that monitors the availability of insurance for underserved communities and consumers. 

"NAIC said they would be surveying member states on changes in catastrophe peril deductibles," Birnbaum added. "Astonishing that regulators were not already routinely collecting such information."

Asked about carriers' response to the proposed data call, and the possible impact of this action, a NAIC spokesperson wrote that because it has not yet issued a framework for the data call, "it's too early to gauge industry reaction."

That framework for NAIC's request will show if "it's meaningful or not," Birnbaum wrote. "Past special data calls to evaluate auto insurance availability were dictated by industry and consisted of stale and overly aggregated data."

NAIC's Property and Casualty Insurance Committee has started working on identifying what regulatory issues require more data, according to NAIC's August 15 statement. "The group intends to develop a data template to meet the specific needs of state regulators," the statement said. "The goal will be to develop a long-term, robust data collection strategy to help regulators more nimbly respond to inquiries related to their property markets versus a one-time data call."