By Dan
Gengler, Internal Actuary, Montana
State
Fund
The AASCIF Audit
& Statistics Committee is pleased to present to our members the
new AASCIF StatBook.
The StatBook
concept was approved by the AASCIF Executive Committee in November
2008 and will replace its predecessor, the AASCIF FactBook.
The FactBook provided
a narrative profile on the operations and operating environments of
member state funds. The stated
purpose of the Fact Book was to be an information-sharing library
that helps AASCIF members explore ideas for their own organizations
by helping them understand the various funds’ similarities and
differences and learn about their environments, activities and
approaches to operating in their markets. The FactBook contained
some financial statistics but, being compiled in MS-Word, could not
be queried or readily manipulated.
Two years ago, the
Audit & Statistics Committee was challenged to consider whether
the FactBook was meeting the needs, wants, and expectations of our
members and whether revisions could improve its value.
The Committee conducted formal and informal surveys of AASCIF
members and learned the following:
-
While most of our
members valued the FactBook as a reference tool available for
when it might be needed, few members used it on a regular basis;
-
Most of the narrative information could readily be obtained from
other sources including member websites or simply picking up the
phone and talking to a contact with another state fund;
-
In 2007, the annual request for FactBook updates had a 57%
response rate. FactBook
submissions for some members were several years out of date.
-
Members who did not respond to requests for annual updates said
it was because the updates were burdensome and duplicative with
information found on their websites.
-
Given the time involved in completing updates combined with the
fact that members perceived the FactBook had low value, it was
not surprising to learn that submitting annual updates was
typically given low priority.
-
The lack of updates was a concern for those members who did use
the FactBook. Its value
was directly related to the ability to keep the information
current.
-
Members who did
use the FactBook were generally most interested in benchmarking
their company financial and operational results against peer
AASCIF members.
In response, the Audit
& Statistics Committee developed the StatBook.
In contrast to the FactBook, the StatBook
is purely numbers driven. Approximately
50 numbers per year will be requested in annual updates.
All financial numbers will be straight from your completed
financial statements. We
expect that the operational statistics requested, such as number of
claims incurred or number of policies written, are also statistics
that are readily available. The
numbers will be normalized such that they mean approximately the
same thing from one AASCIF member to another.
Generally, all the
numbers in the StatBook
are in the public domain. The
value-added of the StatBook
for our members is to assemble these numbers in one place that can
be readily manipulated and queried by anyone proficient in the use
of spreadsheets. The StatBook
statistics will be compiled in an Excel spreadsheet as a “data
cube”. The statistics
contained in the StatBook will be relatively definitive such that
the task of responding to annual requests can be easily delegated to
a financial analyst to complete. We
made a conscious decision not to be overly prescriptive in defining
the requested operational statistics in order to make it easy for
members to report numbers that are reasonably comparable but without
undue reporting burden. We
anticipate that the numbers driven nature of the StatBook
will make providing annual updates far less time intensive for
participating AASCIF members.
Most importantly, we
are hopeful that our members will find greater value in the new StatBook.
Despite our inside joke about how, when you’ve seen one
state fund, you’ve seen one
state fund, we and our stakeholders are still interested in how we
compare to other peer state funds. With
the StatBook, a
wide variety of financial and operational benchmark statistics can
be derived. Common financial
measures that can be derived include statistics such as return on
policyholder equity, reserve to surplus ratios, expense ratios,
combined, loss, and operating ratios.
Common operational measures include policies written, average
premium per policy, average cost per claim, average caseload per
claim professional, etc. The
numbers and types of benchmarking statistics that can be derived are
broad and varied, from common industry measures to the exotic.
We plan to solicit the
initial StatBook
submission from each AASCIF member in the 3rd quarter of
2009. This initial submission
will be somewhat more time intensive as members will be providing
the statistics for five years. However,
from there going forward, it will be necessary to update only the
most recent column of data.
We think our members
will find the new StatBook
is easier to update and will better meet our member needs.
Better value at lower cost is our objective.
Click here for
a preview of what the new StatBook
will look like.
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