FSCO.TechNotes

Question 1

Identify the 2 classes of insurance FSCO Tech Notes apply to

FSCO Tech notes ( ON only)

Answer 1

1. Ontario Automobile Policy (OAP1)
2. Ontario Driver’s Policy (OPF2)

Question 2

Identify 5 categories of filing guidelines in FSCO Tech Notes Bulletin

Answer 2

1. Major PPA
2. Simplified PPA
3. CLEAR Simplified PPA
4. Major Other Than PPA
5. Minor Other Than PPA

Question 3

When are Major PPA Filing Guidelines required?

Answer 3

1. When an insurer is initially entering the private passenger automobile insurance market
   OR
2. When changing existing automobile insurance rates but proposed changes do not meet criteria for simplified filing guidelines

Question 4

Identify 3 legislative requirements for non-fleet auto rate filing in ON

J&R / S / E

Answer 4

1. Just & reasonable
2. Solvency of insurer cannot be impaired
3. Not be excessive in relation to the financial circumstances of the insurer

Question 5

Identify 3 legislative requirements for non-fleet auto risk classification in ON

J&R/P/F

Answer 5

1. Just & reasonable
2. Predictive of risk
3. Distinguish fairly between risks

Question 6

Identify 5 required items in an ON major rate filing

Answer 6

1. Loss Data ( loss dev + trend + cat +LL)
2. On-Level Premiums
3. Expenses ( Tax, exp, profit, credibility)
4. Indicated & Proposed Rate Changes (Territory, Class, Driving Record, overall)
5. New Discounts/Surcharges or Differentials

Miscellaneous Information
19. Predictive Models
20. Usage-Based Insurance Pricing (UBIP) Programs
21. Introduction of New Discounts/Surcharges or Differentials
22. Dislocation and Capping Premium Increases (Rate Capping)
23. Auto Insurance Manual Pages

Question 7

Identify 2 requirements for loss data in ON major rate filing

Answer 7

1. Must be specific to Ontario
2. Must be at the major sub-coverage level

Question 8

For large loss provision, how long should be the period used?

Answer 8

No specific number of years but should be long enough to minimize statistical variations

Question 9

what conditions (4) must be met if an Ontario insurer is proposing to make territorial definition changes?

Answer 9

1. No more than 55 territories for ON and 10 for Toronto
2. All territories must be contiguous (touching eachother)
3. If new territories, require 3 years of insurer data and 2500 annualized average vehicles over the period
4. If new adjoining territories, must not vary by more then +/- 10%
5. Territory definition is the same for all coverages
6. Large claims should be capped in establishing territorial rates

Question 10

Identify 4 items that should be included in an initial UBIP filing.

Answer 10

1. What driving behaviours are being are being measured (acceleration, speed, distance)
2. How is data measured
   (frequency, occurence, thresholds)
3. How is data normalized and categorized for rating purposes
   (total occurences, average)
4. Loss data to support UBI discounts
   (claim severity, claim frequency, loss costs)

Question 11

Identify 3 UBIP costs in rate filing

Answer 11

1. Startup cost of the UBI program
   Ongoing expenses for:
2. Data transfer & analysis
3. Marketing
4. Third-party provider contracts

Question 12

Identify 3 scenarios where capping is not permitted in ON

Answer 12

1. When changing base rates only
2. When rating broker portfolio transfers or acquisitions
3. Premium decreases (negative capping)

Question 13

once a new discount is approved, how long must an ON insurer continue to offer the discount and why?

Answer 13

` 3 years - to ensure stability` in the market before the insurer can withdraw it from its risk classification system