Australian Prudential Regulation Authority (confidentiality) determination
No.19 of 2012
Information provided by general insurers and Lloyd’s underwriters for the purposes of the National Claims and Policies Database under Reporting Standard GRS 800.1, GRS 800.2, GRS 800.3, LOLRS 800.1, LOLRS 800.2 and LOLRS 800.3.
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Australian Prudential Regulation Authority Act 1998 (APRA Act), s 57
Purpose
The purpose of the Australian Prudential Regulation Authority (confidentiality) determination No.19 of 2012 (the Determination) made on 27 September 2012 is to enable APRA to disclose, including by way of publication in level 1 and level 2 reports, certain information provided to APRA under reporting standards by general insurers and Lloyd’s underwriters for the purposes of the National Claims and Policies Database (NCPD).
The determination of certain NCPD data to be non-confidential will enable APRA to achieve the original aims of the NCPD. These were:
- to provide insurers, the community and State and Federal governments with a better understanding of public & product liability insurance and professional indemnity insurance; and
- to help make these products more affordable and available by providing insurers with detailed information to help them assess risks and determine appropriate premiums for these insurance products.
Legislative background
The legal framework for release of data collected under the NCPD reporting standards is in s 56 and s 57 of the Australian Prudential Regulation Authority Act 1998 (the APRA Act). Information submitted under these reporting standards are considered ‘protected documents’ within the meaning of s 56 of this Act and contain ‘protected information’ within the meaning of that section.
Subsection 56(5C) provides:
If a document … is a reporting document that:
(a) was given by the entity to APRA under section 13 of the Financial Sector (Collection of Data) Act 2001 ( the Collection of Data Act); and
(b) is determined by APRA under section 57 to be a document that does not contain confidential information;
it is not an offence to disclose the document, or any information contained in the document, to any person (including to disclose the document by making it available for inspection by the public or to disclose the information by making a document containing the information so available).
Section 57 of the APRA Act gives APRA power to determine whether a document given under s 13 of the Collection of Data Act contains confidential information. The section provides that before doing so APRA must give relevant entities or bodies, or their representative association, a reasonable opportunity to make representations as to whether information of the kind contained in the document is confidential, and take such representations into account. The consultation undertaken is discussed below.
Information covered by the determination
The Determination provides that certain information given to APRA under the reporting standards listed below (made under s13 of the Collection of Data Act) (the reporting standards) prior to the date of the Determination, is non-confidential. The Determination applies to all general insurers including foreign general insurers operating in Australia through branch operations and Lloyd’s underwriters authorised to carry on insurance business in Australia under section 93 of the Insurance Act 1973.
Reporting Standards for General Insurers
- GRS 800.1 Policy Data: Public and Product Liability and Professional Indemnity Insurance
- GRS 800.2 Claims Data: Public and Product Liability and Professional Indemnity Insurance
- GRS 800.3 Facility Business Data: Public and Product Liability and Professional Indemnity Insurance
Reporting Standards for Lloyds of London:
- LOLRS 800.1 Policy Data: Public and Product Liability and Professional Indemnity Insurance
- LOLRS 800.2 Claims Data: Public and Product Liability and Professional Indemnity Insurance
- LOLRS 800.3 Facility Business Data: Public and Product Liability and Professional Indemnity Insurance
Consultation
This Determination is the fourth determination by which APRA has declared certain information given to APRA under the reporting standards to be not confidential to allow for publication of statistical information relating to general insurers and Lloyd’s underwriters.
Consultation November 2008:
APRA commenced consultation with contributing insurers by issuing a discussion paper in November 2008. Responses were required by 30 January 2009. The first set of level 2 reports was made available at this time for use in the consultation process. The released reports contained the full confidentiality masking. The discussion paper proposed the following three options for the level of confidentiality protection to be applied to the future release of level 2 reports:
Option A: releasing level 2 reports containing aggregate policy and claim information with full confidentiality protection in place; or
Option B: releasing the level 2 claim reports without masking the aggregated data, but not identifying individual insurers. APRA recognises that claim data may be considered less commercially sensitive than premium data and applying the same confidentiality treatment to both impacts the usefulness of the reports. Policy reports would continue to be treated with full confidentiality protection; or
Option C: releasing level 2 reports containing aggregate policy and claim information with no confidentiality masking in place.
APRA’s goal in proposing the three options was to find a balance between industry’s requirements of protecting confidentiality and the wider public interest in the availability of useful output from the NCPD.
APRA requested that contributing insurers provide comment on each of the three options for the release of the reports. Other interested parties were welcome to submit comments on the paper but did not have access to the reports that were made available to contributing insurers. Insurers were also advised that submissions received in response to this consultation would be considered in conjunction with submissions received from other stakeholders as part of a wider consultation that APRA on the future of the NCPD.
There were 25 responses to the initial consultation, 20 from contributing insurers (including one public insurer) and five from other stakeholders. Support was evenly spread with 10 supporting option A (all contributors), 10 supporting Option C (six contributors and four other submissions) and five supporting option B (two contributors and three other submissions).
Consultation June 2009:
APRA commenced a second round of consultation in June 2009. Responses were required by 12 August 2009 however several organisations requested an extension with the final response being received on 9 November 2009. A second discussion paper was issued for this consultation and access to fully masked level 2 reports was offered to all stakeholders.
The purpose of this second consultation was to seek information on the nature and level of public interest in releasing liability insurance data from the NCPD, and in particular how this would be affected by each of the options for confidentiality protection of the reports outlined in the November discussion paper. To enable APRA to make an informed decision on the confidentiality protection to be applied to the level 2 reports, it was important that APRA had a thorough understanding of both of the industry’s and other stakeholders’ perspectives to provide a balanced view. APRA also requested feedback from stakeholders as to the uses and benefits that could result from release of data that is collected by the NCPD but not released in the level 2 reports.
To enable access to the reports, interested stakeholders were required to send a signed terms and conditions to APRA before access to the data was enabled. APRA received 94 requests for access but this was only supported by 31 signed terms and conditions. There were 11 responses to the second consultation, two of which were from contributing insurers. The nine responses received from other stakeholders all supported removal of the confidentiality masking and provided some good arguments in support of this view.
Opposition to the determination
The main opposition to determining the NCPD data to be non-confidential has come from the contributing insurers. The main issues raised in support of option A were:
- Data is commercially sensitive - several of the contributors that supported option A stated that the release of unmasked policy data would make available sensitive data. For some niche insurers, it was claimed that releasing their data into the public domain would seriously prejudice their competitive position and be detrimental to the company's ongoing operations. - There was no supporting argument or evidence provided to indicate how this would happen or if it did, why it would be an issue for insurers.
- Privacy concerns for individual claims - the removal of confidentiality masking would not negate the need for APRA to consider the impact that this may have on privacy issues. - APRA is currently considering options to protect the privacy of individual claimants. Confidentiality masking for claims reports will remain in place until privacy masking is implemented.
- The extremely sensitive nature of some claims and concerns that reports would reveal either directly or indirectly, the nature or quantum of claims.
- Potential for data to be confusing or misleading - The lack of data or the lack of full data is more likely to create confusion for users and thereby enhance the prospect that data will be misleading or lead to poor decision making. By providing full access to all data the risk that data will be misused will also reduce as the option to make ‘educated guesses’ to fill in the blanks will be removed.
Support for the determination
The main support for determining the NCPD data to be non-confidential has come from other stakeholders and potential external users of NCPD data. The main issues raised in support of option C were:
- Use of NCPD data to determine policy. Government bodies would be able to utilise NCPD data to evaluate policy and support reasoned debate on industry performance and viability. Data could also be used to identify areas of high risk or over regulation and to identify gaps in legislation.
- Complete data would enable liability insurance to be more readily priced and for more accurate reserving. Data would provide greater transparency in pricing, a better understanding of risk distribution and the impact of large losses, improved capital modeling and improved reserving capabilities.
- The nature of liability insurance can lead to skewed analysis as data can be impacted by a small number of very large claims. The liability insurance is also considered to be more fragmented than other major classes and that it may be difficult for individual insurers to identify trends in their own data that may be readily apparent in industry data.
The Reports
The number of data fields and the range of data currently provided in the level 2 reports was reduced after discussions with industry and the Insurance Council of Australia. This was done in order to reduce the number of cells in the reports that were likely to fail the confidentiality checks and result in data being masked. There are a large number of data fields that could be provided in revised level 2 reports if the data was to be determined non-confidential. The inclusion of the additional data fields would significantly enhance the usefulness of the level 2 reports and provide more meaningful data to the report users. The provision of data on the cause and nature of claims and the expansion of the occupation and industry codes would enable risk analysis to be performed for specific industry sectors and assist in lowering claims costs. Further consultation will be undertaken before APRA enhances the format and content of the level 2 reports.
General public interest
Publication of the level 1 and level 2 reports will provide information on various aspects of the liability insurance market that is not provided for in the aggregate data currently published by APRA. APRA’s NCPD reports will provide comprehensive data as well as an authoritative view of a segment of the general insurance market that is difficult to price and reserve for.
APRA believes there is a public benefit in increased disclosure of information about the liability insurance market, as APRA can promote well informed decision making by providing detailed information which facilitates further analysis. In addition, as liability insurance data is not available to the public elsewhere, APRA has the ability to offer more complete and authoritative data to the financial sector and the general public.
Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
The legislative instrument the subject of this explanatory statement does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. Accordingly, in APRA’s assessment, this legislative instrument is compatible with human rights.
Conclusion
APRA considers that Determination No. 19 strikes the appropriate balance between protecting general insurers’ and Lloyd’s underwriters’ commercially sensitive information and the public interest in releasing data that will enable the public to gain a greater understanding of the financial strength of individual insurers and offer further insight into the Australian insurance market. APRA will not remove the confidentiality masking from claims data until such time as appropriate privacy protection is implemented.