My friend Ray Lehman points to an intriguing opportunity to expand public access to government data: insurance regulation. The United States has a decentralized, state-based system for regulating the insurance industry. Insurance companies are required to disclose data on their premiums, claims, assets, and many other topics, to state regulators for each state in which they do business. These data are then shared with the National Association of Insurance Commissioners, a private, non-profit organization that combines it and then sells access to the database. Ray tells the story:
The major clients for the NAIC’s insurance data are market analytics firms like Charlottesville, Va.-based SNL Financial and insurance rating agency A.M. Best (Full disclosure: I have been, at different times, an employee at both firms) who repackage the information in a lucrative secondary market populated by banks, broker-dealers, asset managers and private investment funds. While big financial institutions make good use of the data, the rates charged by firms like Best and SNL tend to be well out of the price range of media and academic outlets who might do likewise.
And where a private stockholder interested in reading the financials of a company whose shares he owns can easily look up the company’s SEC filings, a private policyholder interested in, say, the reserves held by the insurer he has entrusted to protect his financial future…has essentially nowhere to turn.
However, Ray points out that the recently-enacted Dodd-Frank legislation may change that, as it creates a new Federal Insurance Office. That office will collect data from state regulators and likely has the option to disclose that data to the general public. Indeed, Ray argues, the Freedom of Information Act may even require that the data be disclosed to anyone who asks. The statute is ambiguous enough that in practice it’s likely to be up to FIO director Michael McRaith to decide what to do with the data.
I agree with Ray that McRaith should make the data public. As several CITP scholars have argued, free bulk access to government data has the potential to create significant value for the public. These data could be of substantial value for journalists covering the insurance industry and academics studying insurance markets. And with some clever hacking, it could likely be made useful for consumers, who would have more information with which to evaluate the insurance companies in their state.
The Dodd-Frank legislation may require the government to collect all this insurance information but making it public is still a different story. The current government is continuing to keep the cost of the Obama health-care law hidden. Even though the law contains provisions to encourage businesses not to discontinue their health insurance the provisions are less of a cost than providing the insurance. The cost of $2000/employee is much less then the $12,000/employee that these companies have to pay for health insurance now. By not providing health insurance these companies that they have now their employees can go the government health insurance to get their insurance and reduce their cost and also reduce the cost of the employer who, if smart, will share that savings with their employees.
The data generally is publicly available, just not easily accessible. The data submitted to NAIC is generally also submitted to an insurance company’s state of domicile as a notarized hard copy signed by the officers of the company. The state keeps these on file for public review, usually at the office of the state insurance commissioner. I am not aware of any states that make the data available in electronic format, but it would be possible.