Ch. 9

Question 1

Type of control exercised over auto insurance rates

Answer 1

Companies are required to file their proposed rates and wait for approval before using them.

Question 2

Three functions of underwriting. (CRP)

Answer 2

Consideration to accept or reject the risk.
If Risk is accepted, the policy terms
Premium for the policy period is determined.

Question 3

Five (5) items that are typically included in an underwriting manual. COALS

Answer 3

Classification Guide (Risk Class)
Other important instructions
Acceptance and rejection list
Limitation tables / Limitations Guide
Senior Underwriter's only List

Question 4

Purpose of an Auto Application

Answer 4

Contains information that helps an underwriter to determine rates and issue the policy

Question 5

Regulator of Automobile Insurance Forms

Answer 5

Superintendent of Alberta

Question 6

Rules relating to auto applications are found where?

Answer 6

Insurance Act of ALberta

Question 7

Is it mandatory to obtain a signed application before an auto policy is issued? Explain

Answer 7

No. The insurer must still send a copy of the completed application.

Question 8

What must insurer to if it issues a policy with a lower limit than was asked for in the written application?

Answer 8

• INSR must point out the mistake in writing, in what ways the policy differs from the app.
• If no objection from INSD, within 7 days, policy is deemed to cover as it is written

Question 9

Information that is required on an Auto Application Form.

APP CDI CAPP

Answer 9

App. name and Postal
Policy period
Particulars of describe autos

Coverage
Drivers
Impairment

Convictions
Accidents and Claims
Past license experience
Past Insurance Experience

Use of vehicle
Commercial Use of Vehicle
Registered and Actual owner
Penalty of false statement

Question 10

Discuss Impairment on the auto application form

Answer 10

• Enquiries are to be made on all drivers
• Subject to fainting spells, dizziness, heart disorders, epilepsy, diabetes, defective hearing, or vision, any other physical and / or mental disability
• Affects the safe operation of a vehicle

Question 11

Discuss the use of statistics and the law of large numbers in the rate making process (5 marks)

Answer 11

• Law of large numbers are applied to individual risks by keeping statistical loss records on a large number of risks
• Resulting statistics are used by actuaries to establish rates
• Statistics are gathered through GISA and executed through IBC

Question 12

Why doesn’t the F.A. Association exists in Saskatchewan?

Answer 12

• The F.A only exists in territories that do not have a crown corporation
• Crown corporation has to provide mandatory coverage
• ## The government insurer cannot decline risks because it is illegal, therefore, the FA is not required

Question 13

Two levels of underwriting

Answer 13

Head office

Individual

Question 14

Retention

Answer 14

The amount of risk that the insurer keeps for its own account.

Question 15

What are the functions of an individual underwriter?

Answer 15

PURC
Placing risks in correct rate groups
Using endorsements correctly
Rating drivers according to driving records
Classifying risks

Question 16

What are the sensitive issues of an underwriter

Answer 16

Policy cancellation for u/w reasons
Insurer’s refusal to renew the policy
Premium charges
Notice to lienholders and to those with whom a cert of insurance has been filed
Premiums appropriate to the risk
Use of improper use of the insured’s personal information

Question 17

6 main duties of GAA

Answer 17

Administrative Body
Auto damage appraisal centre
estrablish and publish standardize accident report form
Establish and administer DC agreement
Statistical Agency
Fishier control (auto claims)