Dutil

Question 1

What is the main objective of Facility Association?

Answer 1

• 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

Question 2

Provide the provinces in which FA is not operating. Briefly explain why

Answer 2

• BC, MB & SK (Gov insurer)

* QC (PRR)

Question 3

Provide the risk mechanisms of FA

Answer 3

1 - Risk Sharing Pools (prov: AB, ON, NS, NB, QC)
2 - FA Residual Markets (FARM)
3 - Uninsured Automobile Funds (in Atlantics)

Question 4

Briefly describe Risk sharing pool

Answer 4

• 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)

Question 5

Briefly describe FARM

Answer 5

• 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)

Question 6

Briefly describe Uninsured Automobile Funds

Answer 6

(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

Question 7

Provide responsibilities of the BoD of FA

Answer 7

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

Question 8

Provide requirements for a risk to be eligible for transfer to a RSP

Answer 8

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

Question 9

Briefly discuss the Ontario RSP

Answer 9

• May not transfer more than 5% of voluntary PPA non-fleet TPL direct written car-years
• Pool only covers 85% of every risk transferred

Question 10

Briefly discuss the Alberta RSP

Answer 10

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

Question 11

Briefly discuss the New Brunswick RSP

Answer 11

• For exposure where there is a driver receiving the “First Chance” discount
• 8% of voluntary PPV non-fleet

Question 12

Briefly discuss the Nova Scotia RSP

Answer 12

• 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

Question 13

List requirements to underwrite FARM policy

Answer 13

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

Question 14

Contrast RSP and FARM

Answer 14

• 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