KPMG.RegOv Flashcards
Identify the 3 types of rate regulation approaches.
- Active
- Moderate
- Competitive
Identify the 2 subtypes of active rate regulation approaches.
- Government mandated
- Prior Approval
Briefly explain the Government mandated rate regulation approach and give examples of provinces using it.
Gov sets rates, rate changes and risk classification.
Ex: Alberta GRID
, BC
, QC -BI cov
Briefly explain the prior approval rate regulation approach and give examples of provinces using it.
Gov approves rates, rate changes and risk classification before use.
Ex: ON for major filings, NS
Identify the 3 subtypes of moderate rate regulation approaches.
- File & Use
- Use & File
- Flex Rating
Briefly explain the File&Use rate regulation approach and give an example of province using it.
Insurer files and regulators have a predetermined period to approve before use.
Ex: PEI
Briefly explain the Use&File rate regulation approach and give an example of province using it.
Insurer uses rates, rate changes and risk classification and then files with regulators.
Regulators could decide to change rates retroactively within a set period.
Ex: QC
Briefly explain the flex rating regulation approach.
Insurer uses rates, rate changes and risk classification provided rate changes are within a certain range.
**Not used in Canada
Identify the 2 subtypes of competitive rate regulation approaches.
- File only
- Open competition
Briefly explain the file only rate regulation approach.
Insurer files, but no review is required.
Briefly explain the open competition
rate regulation approach and give examples of provinces using it.
No filing required.
Ex: NU, YU, NWT
Identify the 2 main regulatory concerns for auto insurance
Availability & Affordability
Identify 3 external conditions affecting rate regulation.
- Market cycle
- Economic conditions
- Politics
Identify 4 advantages of switching from Prior Approval
to Use & File
approach.
- Less rate volatility (faster rate updates)
- Lower rates (lower filing costs since simpler)
- More competition & innovation
- Regulators can focus on solvency