FSCO - PPA Flashcards
Prohibited risk classification elements. (6)
- claims where fault <25%
- credit history
- occupation (some exceptions)
- net worth
- employment history
- salary
Can an insurer lower your rates because your salary increased?
NO: salary is a prohibited risk classification element
Can an insurer change your rates because you moved?
YES: territory is a valid rating variable
Can an insurer raise your rates if you become an Uber/Lyft driver?
YES: use of the vehicle is a valid rating variable
Can an insurer lower your rates because you own a certain credit card?
NO: credit history as well as the number or type credit cards owned is a prohibited risk classification element
List the types/subtypes of approval processes? (2)
- prior approval (major requirements, simplified guidelines)
- file and use (major requirements, minor requirements)
Describe the UDAP (Unfair or Deceptive Acts or Practices) requirement regarding rate levels among affiliates.
Basically, it is unfair or deceptive if the insurer fails to provide the lowest rate among all affiliates.
Describe FSCO prior approval and give examples of vehicle classes to which it applies.
FSCO approves the rates, rate changes and risk classifications before their use.
Eg: PPA on OAP1, FA (Facility Association)
Describe FSCO expedited approval and give examples of vehicle classes to which it applies.
It is a type of prior approval with approval in 30 days.
Eg: PPA on OAP1, excl. FA (Facility Association)
Describe FSCO file and use and give examples of vehicle classes to which it applies.
Insurer files rates, rate changes and risk classifications THEN the regulators have 30 days to approve, otherwise rates can be used.
Eg: other than PPA, commercial, endorsements, excl. FA (Facility Association)
What is OPCF-44R?
- coverage for ‘underinsured MOTORIST’ (as opposed to uninsured AUTO’)
- it is the difference between your TPL limit and the at-fault driver’s TPL limit
Officer certifications in major filings - WHICH company officers qualify and WHEN are certifications required?
Qualifications: CEO, COO, CFO, Chief Agent in Canada
When required: always
Which filing items must an OFFICER certify? (4)
- Effective dates: for new and renewal business
- Guidelines: must certify compliance
- Info/data: certify accuracy and completeness
- Rates: reasonable, not unfairly discriminatory, don’t impair solvency
Actuarial certifications in major filings - WHICH actuarial designation are required and WHEN are certifications required?
Qualifications: actuary must be FCIA
when required: when rates change or there is a new LOB
What filing items must an ACTUARY certify? (6)
- Effective dates: for new and renewal business
- Vehicle classification system
- that the Actuary has been authorized by insurer
- that the Data is SUFFICIENT and RELIABLE
- that the AAP (Actuarial Accepted Practice) was used
- that the Risk classification system is reasonable
Is an actuary’s certification needed for fleets?
No, but it is needed for endorsements, commercial, vehicles insured by FA (Facility Association)
What information is generally required in a rate filing? (3)
- data, narrative: all steps for rate changes
- assumptions, methods: regulator should be able to trace steps from raw data TO final rates
NOT REQUIRED: a specific methodology
Describe the treatment of loss data in filings regarding REINSURANCE.
EXCLUDE: reinsurance should not impact price charged to insured.
Describe the treatment of loss data in filings regarding CESSION to RSP (Risk Sharing Pool).
INCLUDE: as if never ceded
Describe the treatment of loss data in filings regarding FARM LOSSES.
EXCLUDE: FA (Facility Association) sets their own prices using FARM loss data
Describe the general properties of coverages where premium trends are required. (3)
- coverages with inflation-sensitive exposure bases
- where mix is changing (Eg: physical damage make and model)
- for CLEAR filings: but note that premium trend is already accounted for in development of rate groups
where CLEAR = Canadian Loss Experience Automobile Rating
What are the regulatory requirements when changing territory factors in a major filing? (note: this is DIFFERENT than for a simplified filing) (3)
REBASE current, indicated, proposed territorial relativities
RECALCULATE indicated change, proposed change
CHECK that:
- indicated and proposed changes have the same sign (+ or -)
- magnitude of proposed change < magnitude of the indicated change
- magnitude of proposed changes are < 10%
Why might FSCO not approve an auto filing? (2)
- insurer used a prohibited rating variable
- insurer’s risk classification system is not reasonable (or not sufficiently predictive of loss)
