FSCO.PAA Flashcards
ON PPA prohibited risk classification elements (6)
C-CONES
- Claims where fault is ≤ 25%
- Credit History
- Occupation (exceptions like Uber)
- Net Worth
- Employment History
- Salary
Does a retiree discount on all coverages comply with ontario regulations?
Yes (this discount is actually REQUIRED by Ontario regulations)
Is a multi-line discount varying by property product compliant with ON regulations?
No (this is a trick question). We can have multi-line discounts for property products but the discounts cannot vary by product
Is a good credit discount compliant with ON regulations?
No for PPA in Ontario
Can an insurer cancel your policy if you become unemployed?
No: employment is a prohibited risk classification element
Can an insurer non-renew because of a drunk-driving conviction?
Yes, you would be more than 25% at fault in this case and therefore this element is not prohibited. It’s ok to use convictions for underwriting
Can an insurer lower your rates because your salary has increased?
No: salary is a prohibited risk classification element
Can an insurer change your rates because you moved?
Yes, territory is a very commonly used variable in risk classification systems and is therefore not prohibited
Can your insurer raise your rates if you become an Uber driver?
Yes: use of your car is a valid rating variable (in this case, more miles are being driven which therefore increases the risk which is why its okay to increase rates)
Can an insurer lower your rates because you own a certain credit card?
No: credit usage/history as well as # of credit cards is a prohibited risk classification variable
List the types/subtypes of approval processes - types (2) + subtypes (2)
Prior approval: major requirements, simplified guidelines (used for PPA)
File & use: major requirements, minor requirements (used for non-PPA)
Describe the UDAP (Unfair or Deceptive Acts or Practices) requirement regarding rate levels among affiliates
Essentially, it is unfair or deceptive if the insurer fails to provide the lowest rate among all affiliates
Describe FSCO prior approval & give examples of vehicle classes to which it applies
For prior approval, FSCO must approve the following before rates can be used:
- Rates
- Rate changes
- Risk classification
Examples where prior approval can be used:
- PPA on OAP1 (Private Passenger Auto written using the standard Ontario Auto Policy 1)
- FA (Facility Association)
Describe FSCO expedited approval & give examples of vehicle classes to which it applies
Expedieted approval is a type of prior approval with approval in 30 days
Examples where expedieted approval can be used:
- PPA on OAP1
- FA is excluded (not eligible for expedited approval)
Describe FSCO file & use & give examples of vehicle classes to which it applies
For file & use, the insurer must file:
- Rates
- Rate changes
- Risk classification
THEN regulators have 30 days to approve otherwise rates can be used without approval
Examples are:
- Other than PPA
- Commercial Auto
- Endorsements
- FA is excluded (don’t apply for expedited approval)
What is OPCF-44R
- Coverage for “underinsured MOTORIST” (as opposed to “uninsured auto”)
- It is the difference between (your TPL limit) & (at fault driver’s TPL Limit)
Identify regulatory requirements when changing territory factors in a major filing (DIFFERENT THAN a simplified filing)
REBASE (current, indicated, proposed) territorial relativities
CALCULATE (indicated change, proposed change)
CHECK:
- Indicated & proposed changes have the same sign
- Magnitude of proposed changes < magnitude of indicated change
- Magnitude of proposed change is between -10% to 10%
Officer certifications in major filings (timing & officer qualifications)
Qualifications: CEO, COO, CFO, Chief Agent in Canada
When required: always
What filing items must an OFFICER certify (4)
[EGIR]
- Effective dates: for new & renewal business
- Guidelines: must certify compliance
- Info/data: certify accuracy & completeness
- Rates: reasonable, not unfairly discriminatory, don’t impair solvency
Actuarial certifications in major filings (timing & required actuarial designation)
Qualifications: actuary must be FCIA
When required: when rates change (usually increase) or there is a new LOB (line of business)
What filing items must an ACTUARY certify (6)
- Effective dates: for new & renewal business
- Vehicle classification system
- Actuary has been authorized by Insurer
- Data is reliable and sufficient
- AAPs were used
- Risk classification system is reasonable
Is actuary’s certification needed for fleets?
no, but it IS needed for (endorsements, commercial vehicles insured by FA or 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 mandated by FSCO
Describe the treatment of loss data in filings regarding REINSURANCE
EXCLUDE: reinsurance should not impact price charged to insured, indications use direct premiums
Describe the treatment of loss data in filings regarding CESSION to RSP
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
Identify factors affecting the LENGTH of the loss trend period
- Term (policy term)
- Effective date (proposed effective date of rate change)
- Calculation date (valuation date of loss data)
- Other answers possible are just general knowledge
Describe the general properties of coverages where premium trends are required
- Coverages with inflation-sensitive exposure bases
- Where mix is changing (ex: physical damage make/model)
- For CLEAR filings: but note that premium trend is already accounted for in development of rate groups
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)
