PACICC Flashcards
identify the types of insurers under OSFI’s solvency regulations
- federally incorporated P&C insurers
- Canadian P&C branch operations of insurers incorporated outside Canada
identify the types of insurers under provincial solvency regulations
P&C insurers incorporated in their own experience
what is CCIR
Canadian council of insurance regulators: an association of insurance regulators from across Canada
what does CCIR do
promote an efficient regulatory system to serve the public interest
identify options for addressing the deficiency in provincial solvency regulation vs. IAIS
- province can restrict regulation to market conduct and rely on OSFI for solvency regulation
- province can upgrade its own solvency regulation
- province can transfer solvency regulation to on another province that has higher standards
describe a disadvantage of having separate federal and provincial solvency regulation
- separate regulation could create 2 classes of insurers
- the PACICC guaranty fund may demand a higher risk premium from insurers with weak provincial regulation
what is the purpose of PACICC (property and casualty insurance compensation corporation)
provide for reasonable level of policyholder recovery for claims & unearned premium after an insurer becomes insolvent
what triggers PACICC involvement
- a formal winding up order must have been issued to insurer
- insurer must be a member of PACICC
compare OSFI vs. PACICC on their roles regarding insolvencies
- OSFI: seeks to minimize the probability of insolvency
- PACICC: provides reasonable recovery to policyholders after insolvency
PACICC funding methods
(AC3):
- assessment of participating solvent insurers
- compensation fund - borrow money from this fund (pre-insolvency funding)
- 3rd party recovery
who does PACICC assess
participating insurers in jurisdiction where the insolvent insurer was writing business
limit on what PACICC may assess in aggregate
shortfall between amounts advanced by PACICC to policyholders and amounts PACICC received from insolvent insurer&3rd parties
formula for individual insurer
A = B * C/D
where
A = insurer assessment
B = total amount assessed by PACICC
C = DWP of insurer
D = total DWP of all assessed insurers
limit on individual insurer
1.5% of DWP
evaluate the performance of PACICC according to criteria for evaluating government programs
- is it insurance or welfare? Insurance, because members pay assessment fees
- is it necessary? Yes, otherwise policyholders may be unprotected if their insurer goes insolvent
- is it efficient? Yes, costs are lower because there are no commissions or advertising costs
