PACICC.Comp

Question 1

what is the purpose of PACICC (Property and Casualty Insurance Compensation Corporation)?

Answer 1

provide for reasonable level of policyholder recovery for claims and unearned premium after an insurer becomes insolvent

Question 2

who administers this policyholder recovery plan?

Answer 2

administered by non profit PACICC

Question 3

who are the members of PACICC?

Answer 3

• all licensed, participating insurers in a jurisdiction with some exemptions (reinsurers)
• exclude: auto in MB&SK, Auto BI in QC

Question 4

what triggers PACICC involvement?

Answer 4

• a formal winding up order must have been issued to insurer
• insurer must be a member of PACICC

Question 5

compare OSFI vs PACICC on their roles regarding insolvencies

Answer 5

• OSFI: seeks to minimize probability of insolvency
• PACICC: provides reasonable recovery to policyholders after insolvency

Question 6

S2019Q12
S2015Q13
F2014Q11
F2013Q11
F2012Q20
F2019Q10

Question 7

PACICC funding methods

Answer 7

• Assessment of participating (solvent) insurers
• Compensation fund: borrow money from this fund (pre-solvency funding)
• 3rd party recovery

Question 8

which funding mechanisms increase capacity?

Answer 8

Assessment, Compensation fund

Question 9

which funding mechanisms reduce insurer levies?

Answer 9

liquidation and 3rd party recovery reduce insurer levies and assessments

Question 10

who does PACICC assess?

Answer 10

participating insurers in jurisdiction where the insolvent insurer was writing business

Question 11

limit on what PACICC may assess in aggregate

Answer 11

shortfall between
- amounts advanced by PACICC to policy holders
and
- amounts PACICC received from insolvent insurer and third parties

Question 12

formula for individual insurer

Answer 12

A = B* (C/D)
A = insurer assessment
B = total amount assessed by PACICC
C = DWP of insurer
D = total DWP of all assessed insurers

Question 13

limit on individual insurer

Answer 13

1.5% of DWP

Question 14

evaluate the performance of PACICC according to criteria for evaluating government programs

Answer 14

1) insurance or welfare?
- insurance sort of because members pay assessment fees
2) necessary?
- yes, otherwise policyholders may be unprotected if their insurer goes insolvent
3) efficient?
yes, costs are lower because there are no commissions or advertising costs

Question 15

F2018 Q13
F2012 Q17