FSCO Private Auto

Question 1

Types of filing guidlines

Answer 1

Prior Approval - PPA

1. Simplified filing
2. CLEAR simplified filing
3. Major filing

Prior Approval or File and Use - non-PPA

1. Major filing
2. Minor filing

Question 2

5 Prior Approval Filing Characteristics

Answer 2

1. Needs to be in an approved form and contain all the required information
2. Separate filing for each category of insurance
3. Different guidelines when only change is an update of CLEAR table
4. If rate of a category is dependent on PPA rates, they can be submitted with PPA
5. Separate guidelines for UM coverage and for fee filings

Question 3

2 Qualification for retiree’s discount

Answer 3

1. Be retired; not earn or receive income from any office or employment; not be engaged in any professional occupation; not be operating in a business; not have been employed for 26 weeks or more in the last 52w
2. 65 or order, or in receipt of a pension under the Canada Pension Plan or the Quebec Pension Plan or in receipt of a pension registered under the Income Tax Act, Canada

Question 4

Procedure in graduated licensing system

Answer 4

1. Level 1 cannot be rated; Level 2 can be rated
2. To determine driving experience, credit drivers for time spent at Lv 1 and 2 for max 1 year each
3. Reduce premium by 10% when driver entering Lv 1 to 2 or 2 to full where drivers experience is used for rating if driver had no conviction or at-fault accidents. This reduction is applicable for 1 yr

Question 5

Transaction inclusion/exclusion from direct losses in a PPA major filing for reinsurance transaction/RSP/FARM

Answer 5

1. Include reinsurance transaction but do not adjust for them
2. Include business transferred to RSP (cession to RSP are kept in the loss as they were never ceded)
3. Direct losses and premium should exclude experience of FARM business; no expense provision should be included “unless there is a known subsidy in its operation”

Question 6

6 Requirements territorial indications and proposed differentials

Answer 6

1. Territorial indications must be provided and territorial ratemaking process must be outlined in details in every filing
2. Rebased indicated and proposed changes must be provided and they must all be the direction of the indication as well as within +/- 10% for all coverages and on an overall basis
3. The rates for newly adjoining territories should not vary more than +/-10%
4. Any changes to territorial definitions must be accompanied by colour maps showing current & proposed territorial boundaries as appropriate
5. No more than 55 territories, of which max 10 in the city of Toronto, all territories must be geographically contiguous
6. Common territorial definition must be used for all coverages

Question 7

Cap premium increase is allowed under 2 circumstances

Answer 7

1. Insurance company M&A: require to develop a plan to phase out positive capping within a 2-yr time period
2. Extensive risk classification system changes: introduce new variables or unbundling existing ones
   Insurer may continue to submit rate filing during this period; however, no new positive capping will be considered for approval by FSCO unless the previously approved filing has been exhuasted

Question 8

Capping is NOT allowed under 3 circumstances

Answer 8

1. Base rate changes only
2. Broker portfolio transfers or acquisitions
3. Premium decrease (negative capping)

Question 9

4 Items certified in the certificate of the actuary

Answer 9

1. Authorization by the company
2. Reliability and sufficiency of the data
3. Acceptability of procedures used (assumptions in line with Accepted Actuarial Practices)
4. Reasonableness of the risk classification system