Part A2 ACTEX Qs Flashcards
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
The filing guidelines published by FSCO require that a trend be determined for LALAE. Describe two other specific circumstances where guidelines sugges that trends should
- Premium trend for coverages with inflation-sensitive exposure bases or with a changing mix of exposures
- Exposure variable expense trend should be determined for expenses that vary with the number of units insured rather than with the premium volume.
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to FSCO PPA Filing Guidelines - major, in the process of selecting the target ROE, what is the minimum an applicant has to disclose/support?
The payout pattern on losses and expenses
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to FSCO PPA Filing Guidelines - major, what is required from an applicant proposing rates different from those that are actuarially indicated based on the target ROE?
An estimate of the expected ROE and the expected underwriting margin underlying the proposed rates.
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to FSCO PPA Filing Guidelines - major, what two coverage types require a detailed actuarial calculation even if a rate level change is not proposed for these coverages?
Collision and Comprehensive
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to FSCO PPA Filing Guidelines - major, all categories of automobile insurance for the Facility Association are subject to approval under section ____?
410
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the FSCO PPA Filing Guidelines - Major, does section 410 apply to contracts insuring fleets?
No
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the FSCO PPA Filing Guidelines - Major, a discount or a schedule of rates based on group membership could be based on two major factors. Identify and give an example of each of these two factors.
- Lower loss costs based on favourable experience, or risk management programs, or identifiable characteristics of a group that would result in a lower loss exposure.
- Lower expenses due to lower acquisition costs or lower administrative costs
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the FSCO PPA Filing Guidelines - Major, should expected investment income be calculated on the basis of the new money rates only?
No, it should also take into consideration the insurer’s historical investment returns.
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the FSCO PPA Filing Guidelines - Major, should RSP expenses be added to the expense provision used in the calculation of the overall rate level indication?
No
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the FSCO PPA Filing Guidelines - Major, under certain conditions the FSCO allows insurers to rely on outside data in the rate filing process. Describe fully these conditions.
- The source of the data must be identified
2. The applicability of the data must be explained
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the FSCO PPA Filing Guidelines, no element of a risk classification system shall use membership in an organized group unless the group meets certain criteria. Identify 4.
- a group of current employees of the same employer
- Members of a qualifying credit union
- A trade union
- a professional organization
- an occupational organization
- an alumni association
- a not-for-profit organization at least 2 years old
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
Under Ontario regulation 664, what are insurers prohibited from using in their risk classification systems?
existence of medical, surgical, dental, hospitalization, income continuation benefit or sick leave plans
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
With an insurers major rate filing to FSCO, should direct losses be adjusted for all reinsurance transactions?
No
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
With an insurers major rate filing to FSCO, should direct losses exclude amounts incurred on Facility Association residual market business?
Yes
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
With an insurers major rate filing to FSCO, should direct losses be reduced for business transferred to the facility Association’s risk sharing pool?
No
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
In Ontario what type of rate regulation system exists?
Prior approval is required for Facility Association policies and PPA coverages
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the filing requirements of the Ontario Insurance Commission, list the circumstances for which you need to provide a certificate of the actuary
Filings that result in a rate level change, or filings for a category of automobile insurance previously not written by an insurer.
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
According to the filing requirements of the FSCO, define investment income.
is income attributable to the investment of policyholder supplied funds and shareholder supplied funds and surplus, including realized capital gains and losses, net of investment expense.
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
Does FSCO require applicants to use a specific ratemaking methodology?
no
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
Who’s certificate for automobile insurance rates in Ontario certifies that the proposed rates will not impair the solvency of the insurer?
Officer
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
Based on FSCO’s PPA - Major for Proposed revisions to automobile Insurance Rates and Risk Classification Systems, identify the two elements an actuary must certify in the Certificate of the Actuary.
- The data is reliable and sufficient for the determination of the indicated rate changes.
- The indicated rate changes have been calculated in accordance with Accepted Actuarial Practice.
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
An auto insurer may use the file and use rating system in Ontario when:
Other than PPA
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
Is the insurer in compliance with the FSCO Regulation 664?
Insurer ABC applies a 25% surcharge on commercial taxicab policies where the driver is self-employed.
Yes
policies involving commercial or public vehicles or vehicles used in the course of carrying on a business, trade or profession are excluded from the prohibition against using employment status in a risk classification system.
FSCO Private Auto, FSCO Reg 664, KPMG et al (no Q’s on rest)
Is the insurer in compliance with the FSCO Regulation 664?
Insurer DEF offers a 10% stability discount for auto insurance policyholders who have lived at their current address for five years or longer.
No
it cannot use residence history in a risk classification system