Dutil Flashcards
What is the main objective of Facility Association?
- Goal: Ensure avaibility of auto insurance for every driver by administering the involuntary residual market
- Role: Administer the involuntary residual market of auto insurance on behalf of the private auto insurers in Canada
Provide the provinces in which FA is not operating. Briefly explain why
- BC, MB & SK (Gov insurer)
* QC (PRR)
Provide the risk mechanisms of FA
1 - Risk Sharing Pools (prov: AB, ON, NS, NB, QC)
2 - FA Residual Markets (FARM)
3 - Uninsured Automobile Funds (in Atlantics)
Briefly describe Risk sharing pool
- Invisible by consumer
- Insurers transfer higher-risk exposures to an industry-wide pool
- Cies uw policies under own rates and rules
- Results pooled among all insurers (as all are required by law to belong to FA)
Briefly describe FARM
- Known by consumer
- Provides a residual market to customers who may otherwise have difficulty obtaining auto insurance
- Servicing carrier issue and administer policies and adjust claims on behalf of FA
- Subject to rates, rules and classification of FA
- Results pooled among all insurers (as all required by law to belong to FA)
Briefly describe Uninsured Automobile Funds
(NB, NF, NS, PEI)
Provide compensation for damages to persons who:
• Cannot obtain it from an insurance contract
• Where no other insurance or non-sufficient insurance
Provide responsibilities of the BoD of FA
1 - Approving suggested rate changes and rate filings
2 - Maintaining standards to be followed by servicing carriers
3 - Authorizing expenses
4 - Appointing committees and sub-committees
Provide requirements for a risk to be eligible for transfer to a RSP
1 - Be PPA
2 - Risk not eligible to FARM
3 - Risk is insured to third-party liab limit (TPL)
4 - Insurer has follow classification and rating procedures
5 - Premium charged must be the approved for the risk
Briefly discuss the Ontario RSP
- May not transfer more than 5% of voluntary PPA non-fleet TPL direct written car-years
- Pool only covers 85% of every risk transferred
Briefly discuss the Alberta RSP
Grid pool:
• No limit on amount of risks that are transferable, since law requires insurance cies to accept risks for which they do not control price
Non-Grid pool:
• Max amount transferable is 4% of the voluntary PPV non-fleet written exposures not transferred to grid pool
• Purpose is to help cope with the take-all-comers environment in Alberta
Briefly discuss the New Brunswick RSP
- For exposure where there is a driver receiving the “First Chance” discount
- 8% of voluntary PPV non-fleet
Briefly discuss the Nova Scotia RSP
- Inexperienced Driver” Risk Sharing Pool
- Can only transfer risks for which one household member is a driver with less than 6 years of driving experience without any accidents or convictions
- No limit on amount of risks transferable
List requirements to underwrite FARM policy
1 - It meets the min coverage of the jurisdiction
2 - It is a Residual Market Risk:
• Motor vehicle that is not a PPV
• PPV for which the insurer is authorized by law to decline or refuse te renew contract
Contrast RSP and FARM
- Rates charged : Insurer’s rate vs FA rate
- Admission : carrier UW rules vs if agent/broker can’t find cov
- Customer knowledge: Unaware vs Aware
- # clients: Depends on the province vs Unlimited
- Coveraget: Any coverage vs min coverage at least
- Participation ratio: Based on participation to the pool vs varies by LOB and AY
- UW + claim admin: Ceding cies vs servicing carrier