Two Broad Groupings of Services Retail Telephone Services Wholesale Carrier Services.
Addressing Selected Issues in Estimates of U.S. International Services: Improved Measures of...
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Transcript of Addressing Selected Issues in Estimates of U.S. International Services: Improved Measures of...
Addressing Selected Issues in Estimates of U.S.
International Services: Improved Measures of
Insurance, Wholesale and Retail Trade, and Financial
ServicesMaria Borga
U.S. Bureau of Economic AnalysisOECD-Eurostat Expert Meeting on
Trade-in-services Statistics
September 13, 2006
2www.bea.gov
Introduction In June 2002, BEA identified issues
affecting the measurement of Insurance services Distributive services of wholesalers and
retailers Financial services
Data gap FATS statistics cover nonbank affiliates only
Measure with limited usefulness Insurance services supplied through
affiliates reflect gross premiums
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Addressing the Measurement Issues
To address the issues identified, BEA Initiated new data collections Developed new methodologies Identified and used data from outside
sources Estimates presented are not yet
official
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Output of Insurers
Components of output Financial protection against specified risks Financial intermediation services Auxiliary insurance services
Assume insurers set premiums to maximize profits given expectations of Future claims Investment income
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Insurance Services Sold through Affiliates
One of the larger services sold through affiliates
Currently, measured as services-related operating revenues Mainly premiums Fees for auxiliary insurance services
Missing important aspects No deduction for losses paid Premium supplements
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Premiums less Normal Losses
“Normal” losses: proxy for insurers’ expectations
Consist of: Regularly occurring losses A share of catastrophic losses
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Premiums less Normal Losses
To construct, BEA collected Premiums earned Losses paid
Collected on 2002 benchmark survey of foreign
direct investment in the United States (FDIUS) and follow-on annual surveys
2004 benchmark survey of U.S. direct investment abroad (USDIA) and follow-on annual surveys
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Regularly Occurring Losses
6 year, arithmetic moving average of ratio of actual losses to premiums
Excludes current year To avoid waiting until 6 years of
data have been collected Used data on the U.S. domestic
insurance industry
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Catastrophic Losses
If a catastrophe affects the insurance sold through affiliates
Then, Develop estimate of catastrophic
losses Remove it from actual losses in
calculating the normal losses in that year
Spread over next 20 years
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Preliminary Estimate for 2002: Premiums less Normal Losses
Estimated premiums earned: $63.3B
Multiplied by 6-year moving average of losses/premiums:
76.1%
Normal losses= $48.2B
Premiums less normal losses= $15.1B
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Premium Supplements
Applies to non-life insurers Collect data on investment
income Combine with data on
domestic insurance industry to estimate investment income on technical reserves
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Preliminary Estimate for 2002: Premium Supplements
Estimated investment income earned by non-life insurers:
$11.8B
Estimate of share of investment income earned on technical reserves
48.3%
Premiums supplements $5.7B
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Changes in the Estimates of Sales of Insurance Services by U.S. Affiliates of
Foreign MNCs2002
Worldwide sales of services
Sales to U.S.
residents
Current estimates 92.7 88.2
LESS Premiums earned 63.3 60.2
EQUAL
Auxiliary insurance services or services from other industries
29.3 27.9
PLUS New measure of insurance services
20.8 19.8
EQUAL
New estimate of sales of services
50.2 47.7
Difference from current measure
-42.5 -40.4
(Billions of dollars)
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Wholesale and Retail Trade
Distributive services SNA measures as trade margins
Sales of goods less cost of goods resold
Important service industries in U.S. economy In 2004, accounted for almost 13% of
GDP
15www.bea.gov
Wholesale and Retail Trade in Estimates of Sales Through Affiliates
Sales of services through wholesale and retail trade affiliates are insignificant
Because BEA treats the total value of sales associated with wholesale and retail trade as sales of goods
Sales of services of these affiliates are Sales from secondary, service activities Not the distributive services provided
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Data Collection for Wholesale and Retail Trade Services
To construct estimates, BEA collected Goods for resale Beginning- and end-of-year inventories
of goods for resale Collected on:
2002 benchmark survey of FDIUS and follow-on annual surveys
2004 benchmark survey of USDIA and follow-on annual surveys
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Preliminary Estimates for 2002: Wholesale and Retail Trade
New data collected indicate $134.9B in distributive services sold to U.S. residents
Offsetting reduction in the sales of goods in broader FATS statistics Sales of goods were $1,561.6B Would fall by 8.6%
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Financial Services
Sales through affiliates exclude bank affiliates
Services supplied by banks can be charged for Explicitly—fees and services
charges Implicitly—financial intermediation
services indirectly measured (FISIM)
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Data Collection for Bank Affiliates
To construct estimates, BEA collected Explicit fees and service charges Total interest received Total interest paid
Collected on: 2002 benchmark survey of FDIUS 2004 benchmark survey of USDIA
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Preliminary Estimates for 2002: Bank Affiliates
Data collected indicate sales to U.S. residents of:
For explicitly charged services: $14.1B
For implicitly charged services: $16.4B
Total sales of services: $30.5B
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Impact on the Estimates of Sales of Services by U.S. Affiliates of Foreign
MNCs, 2002
0
100
200
300
400
500
600
Current measure Incorporating changes
Bill
ion
s o
f d
olla
rs
Sales of services unaffected by changes
Premium supplements
Wholesale & retail trade services
Services through bank affiliates
Sales of services unaffected by changes
Premiums devoted to settlement of normal losses
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Conclusions
More meaningful measure of insurance services
Measure distributive services provided by wholesale and retail trade affiliates
Closed data gap by including bank affiliates