A note on risk and value from an underutilized dataset: Consolidated disclosures

• DOI: http://doi.org/10.1111/rmir.12141
• Author: Nicos Scordis
• Published date: 01 March 2020
• Date: 01 March 2020

Risk Manag Insur Rev. 2020;23:105–112. wileyonlinelibrary.com/journal/rmir

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105

Received: 3 November 2019

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Accepted: 2 March 2020

DOI: 10.1111/rmir.12141

DATA INSIGHT

A note on risk and value from an underutilized

dataset: Consolidated disclosures

Nicos Scordis

Tobin College of Business, School of Risk

Management, Insurance and Actuarial

Science, St John's University, New York,

New York

Correspondence

Nicos Scordis, Tobin College of Business,

School of Risk Management, Insurance and

Actuarial Science, St John's University,

101 Astor Place, New York, NY 10003.

Email: ScordisN@stjohns.edu

Abstract

This essay highlights an underutilized source of data

in insurance research: The consolidated data in-

surance holding companies disclose in Form 10‐Kto

their investors. A reinsurance example demonstrates

that using consolidated data, as a complement to

individual company statutory data, has the potential

to extend insights gleaned from statutory data alone.

Consolidated data, however, is limited to publicly

traded insurers.

1|A SHIFT IN VIEWPOINT

This essay highlights an underutilized source of data in insurance research: The consolidated

data insurance holding companies disclose in Form 10‐K to their investors. The essay relies on a

reinsurance example to show that consolidated data, used as a complement to individual

company statutory data, has the potential to extend insights gleaned from statutory data alone.

Consolidated data, however, is limited to publicly traded insurers.

The nature of insurance regulation in the United States has produced statutory data on the

operations of insurers that are uniform across companies, consistent over time, and minutely

detailed. This statutory data represents the combined US operations of an insurer, which the

data blanks of the National Association of Insurance Commissioners (NAIC) stratify into dis-

tinct product segments. Two segments that dominate the formulation and testing of hypotheses

in insurance research are the property–casualty (PC) segment (SIC Code 6331) and the life–

health (LH) segment (SIC Code 6311 and 6321). Cummins and Weiss (2016) explain that

analysis relies on statutory data because by comparison, consolidated data captures only part of

the industry. Indeed, analysis of statutory data has significantly increased our understanding of

how the insurance mechanism generates value from risk. Some selected examples are Cum-

mins, Phillips, and Smith (2001) who use data from Schedule DB to investigate insurers’

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