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Examen 6 Partie A > FSCO PPA Filing Guidelines > Flashcards

FSCO PPA Filing Guidelines Flashcards

1
Q

Definitions Expedited approval

A

Process of regulation in which insurers may have their risk classification systems or rates approved within 30 days after filing with FSCO in accordance with legislation

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2
Q

Definitions Prior approval

A

Process of regulation in which insurers must have their rates and risk classification systems approved before use in accordance with legislation. Proposed changes to rates and risk classifications can be:
• Subject to the simplified filing guidelines
• Subject to the major filing requirement

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3
Q

Definitions File and use

A

Process of regulation in which insurers may use the risk classification systems or rates 30 days after filing them with FSCO in accordance with legislation. Filings can be:
• Subject to the major filing requirements, where the filing is the initial application for the category, or the insurer satisfies the criteria established by the supt
• Subject to the minor filing requirements in all other cases

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4
Q

In order for an application to be approved, insurers must have filed rates and risk classification sytems for the following:
Optional accident benefits

A
  • Optional accident benefits (as set out in the Statutory Accident Benefits Schedule (SABS))
  • Increased income replacement benefit
  • Increased medical and rehabilitation benefit
  • Increased caregiver and dependant care benefit
  • Increased attendant benefits
  • Increased death and funeral benefits
  • Indexation benefit
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5
Q

In order for an application to be approved, insurers must have filed rates and risk classification sytems for the following:
Deductibles

A
  • $300 for Comp, AP and SP and DCPD
  • $500 for collision or upset coverage

These deductible levels must be establish for all categories of automobile insurance though an insured may choose to purchase higher/lower deductibles

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6
Q

In order for an application to be approved, insurers must have filed rates and risk classification sytems for the following:
A retiree’s discount

A

A retiree’s discount is mandatory on only the PPA. Discount must be a % of the standard accident benefits coverage rate if principal operator meets the following requirements:
• Be retired
• No income, profession or business
• Be unemployed less than 26 out of the last 52 weeks
• Be at least age 65 or receiving a pension under the CPP/QPP or a pension registered under the Income Tax Act

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7
Q

Filing Approval Process How submitted?

A
  • Must be submitted using web (ARCTICS)
  • Statutory time periods do not commence until the filing is deemed complete
  • Once approved, need to file the rate manual, containing the revised rates and risk classification(Hard + electronic copy)
  • May list pages that cie considers confidential in case of Freedom of Info requests
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8
Q

Importance of Appendix A

A

All data used in the Actuarial Support should reconcile to the info presented in Appendix A

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9
Q

Nature of the filed rate level or risk classification system changes

A
  • Base rate change not due to off-balancing
  • Change to class, limit, ded or other rate differentials
  • Change to rating rules
  • Changes involving discounts or surcharges
  • Algorithm change
  • Territorial definition change
  • Introducing rate capping procedure
  • Anniversary rate-capping report or removal
  • Changes to fees
  • Changes to opt accident benefit or tort deductible rates
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10
Q

Briefly explain Certificate of the officer/designate

A

• Required for each filing
• President, CEO, COO, CFO, chief agent for Canada or designate
• Items certified
1) Completeness and accuracy of the information
2) Reasonableness, adequacy, non-excessiveness rates
3) Compliance with filing guidelines

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11
Q

Briefly explain Certificate of the actuary

A

• Must be FCIA
• Required for rate level changes and for rates of a category not previously written
• Items certified:
1) Authorization by the company
2) Reliability and sufficiency of data for the determination of indicated rate change
3) Indicated rate changes have been calculated in GAAP
4) Reasonableness of the risk classification system

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12
Q

Actuarial Support. Common themes seen throughout majority of sections

A
  • Description of the data used, approach, details of calculations, and support for judgments used
  • Identification of outside sources used and applicability
  • Exhibition of all data used
  • Selection and application of credibility standards and disclosure of the complement
  • Generally, use own data as much as possible
  • Approaches generally can be expected to remain reasonably constant over the years
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13
Q

Actuarial Support. What general information regarding losses should be included? What kind of losses should be used for ratemaking?

A
  • Whether losses include ALAE
  • Type of loss data (AY, CY), valuation dates and sources
  • Direct losses (excluding FA allocations) should be used for ratemaking
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14
Q

Actuarial Support. Specific elements/topics relating to losses and additional requirements

A
  • Loss development
  • Loss trend: Description of the trend period
  • Treatment of large losses: Number of capped losses and the effects
  • CAT (or excess claim) procedure
  • Other adjustments
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15
Q

Actuarial Support. ALAE What is discussed here and when?

A

If considered separately from losses

• Same items as losses except large losses that are irrelevant

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16
Q

Actuarial Support. ULAE What is discussed here?

A

Approach use and the details of the calculations

17
Q

Actuarial Support. Premium What is discussed here?

A
  • On-level adj (if LR): parallelogram / EOE
  • Premium trend: for coverage with inflation-sensitive exposure bases or for coverage where a changing mix of exposures is expected
  • Other adjustments
18
Q

Actuarial Support. Other Expenses What is discussed here?

A

Non-claims related expenses
• Exposure variable expenses (fixed): subject to a trend
• Premium variable expenses (variable)

FSCO is not likely to approve any filing that will pass through to consumers an expense provision excluding ULAE and ALAE, that is significantly higher than the industry average w/o details indicating the cause

19
Q

Actuarial Support. UW Profit Provisions What is discussed here?

A
  • Target ROE (disclose payout pattern on L&LAE)
  • Resulting target UW profit margin
  • Expected investment income attributed to PH supplied funds: Should consider new money rates and insurer’s historical investment returns
20
Q

Actuarial Support. Territorial Indications What is discussed here?

A
  • Ratemaking process
  • A comparison of current, indicated and proposed territorial differentials must be provided for each coverage for which rates are changing by territory
  • Credibility procedures
  • Calculation of off-balance must be shown
  • Any changes to territorial definitions must be accompanied by a map showing current and proposed territorial boundaries
21
Q

Actuarial Support. Classification/Limit of Liability/Deductible What is discussed here?

A
  • Indicated differentials
  • Current, indicated, proposed differentials by coverage
  • WP and exposure distributions by class, etc.
  • Complete description of any predictive model used (GLM) and an outline of the method used for selecting classification variables
  • Off-balance: If no off-balance correction, must treat as a rate change
22
Q

Actuarial Support. Rating based on group membership What is discussed here?

A

• Could be based on 2 factors:

1) Lower loss cost based on favorable xp or risk management programs
2) Lower expenses due to lower acquisition costs or lower admin costs

• Criteria for groups
1 ) Group of employee of the same employer
2) Trade union
3) Professional organization
4) Occupation organization
5) Alumni association
6) Not-for-profit organization (existence >= 2 yrs)

23
Q

Section 5: Discount/Surcharges What is discussed here?

A
  • Approach used in costing and a general narrative of the process
  • Comparison of current, indicated and proposed D/S must be provided for each coverage for which D/S are changing
  • Current and proposed distribution of the insurer’s book of business that is affected by the D/S change must be provided to determine the average premium change
24
Q

Section 6: Rating rule change What is discussed here?

A
  • Description of the proposed changes
  • Rationale for the proposed changes
  • Rate level effects of the proposed changes
  • Calculations that validate the rate level effect of the proposed changes based on the expected distribution of business
25
Q

Section 7: Final rates/Rate level change What is discussed here?

A
  • Algorithm
  • Base rates
  • Differentials
  • Discounts and surcharges
  • Calculation of final rates
  • Calculation of rate level change
  • Dislocation and capping
26
Q

Section 8: Other than PPA - Dependent Categories What needs to be submitted for categories dependent on PPA filing?

A
  • Rate level effects
  • Calculations that validate rate level effect
  • Copy of rating rules showing linkage
  • Rating examples (profiles) must be completed for the dependent category
27
Q

Section 9 - Manual Pages Containing Revised Rates and Risk Classification System What manual pages must be provided? What pages are optional? When must the final set of pages be submitted?

A
  • Draft of manual pages containing changes must be provided showing changes
  • Draft of manual pages containing territorial and class rates are optional
  • Must submit final set of pages within 30 days after approval
28
Q

Section 11 - Fees Changes When should Appendix D be submitted?

A

If the company is proposing to make changes or add new fees, Appendix D must be submitted.
Certificate of the Actuary not required.

29
Q

Section 12 - Optional AB and Tort Deductible Changes When must this section be submitted?

A

If the company is proposing to make these changes, Appendix E must be submitted.
Certificate of the Actuary not required.

30
Q

What are the circumstances where capping of premium increases is possible

A
  • Mergers and acquisitions
  • Extensive risk classification changes
  • Previously approved positive capping are exhausted
31
Q

What are the requirements for approval of capping?

A
  • Uncapped/capped rate changes must be provided
  • All policies with positive caps and all uncapped policies with premium increases greater than the cap must be tracked
  • Annual filings accounting only for the effect of the cap
32
Q

What are the circumstances where capping is not permitted?

A
  • Base rate change only
  • Broker portfolio transfers or acquisitions
  • Capping of premium decreases

Examen 6 Partie A (22 decks)

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