C. 11-13

Front 1

FSCO, PPA Filing Guidelines

Back 1

FSCO, PPA Filing Guidelines

Front 2

Prohibited elements in a risk classification (4)

Back 2

1) Past claims for accidents for which an insured person was 25 per cent or less at fault.

2) The existence or non-existence of a medical, surgical, dental or hospitalization plan

3) The existence or non-existence of an income continuation plan, a sick leave plan

4) A lapse in automobile insurance coverage unless,

i. termination of a policy of automobile insurance as a result of the insured person's failure to pay the premiums due,

ii. suspension of insured person's driver's licence as a result of a conviction for an offence related to use or operation of an automobile, or

iii. an accident or a conviction for an offence related to the use or operation of an automobile, if the insured did not inform the insurer of the accident or conviction and would likely have led to insured person being charged a higher premium.

Front 3

Prohibited elements in a risk classification (12)

Back 3

1) Income level of potential insured person.

2) Employment history of potential insured person.

3) Occupation, profession or employment circumstances

4) Whether potential insured person has a credit card.

5) The credit history of potential insured person.

6) The credit rating of potential insured person

7) The fact whether potential insured person is bankrupt or has a history of bankruptcy.

8) The residence history of potential insured person.

9) Whether potential insured person owns a home.

10) The gross or net worth of potential insured person.

11) The indebtedness of potential insured person.

12) The fact whether a person who would be an insured person under the contract has made premium payments that were late or dishonored in respect of a contract of automobile insurance that was not terminated by reason of the late or dishonored payments.

Front 4

Expedited approval vs. file-and-use

Back 4

Under a prior approval system, rates and risk classifications must obtain regulatory approval before they can be used.

The expedited approval process is a type of prior approval in which rates and risk classifications may be approved within thirty days. It is applicable to coverages for personal vehicles - private passenger automobiles written on OAP 1, except those written by the Facility.

Under a file-and-use system, rates and risk classifications can be used thirty days after they have been filed. It is applicable to endorsements, categories of automobile insurance other than private passenger automobile insurance, and insurance written on OAP2.

Front 5

Requirements for retiree discount

Back 5

a) Be retired

i) No income, profession, or business

ii) Be employed for less than 26 out of the last 52 weeks

b) Be at least age 65 or receiving a pension under the CPP/QPP or a pension registered under the Income Tax Act

Front 6

Expedited approval

Back 6

regulation process in which approval may come within 30 days after filing; applies to PPA coverages on OAP 1, but not Ontario Policy Forms 4--8, Facility contracts, and fleets

Front 7

File and use

Back 7

regulation process whereby an insurer can use classes and rates 30 days after filing; applies to OAP 2 and auto insurance other than PPA, but not Ontario Policy Forms 4--8 and fleets

Front 8

Investment income

Back 8

investment income from policyholder and shareholder funds including realized gains/losses net of expenses

Front 9

Prior approval

Back 9

regulation process whereby insurers must have rates and classes approved before use; applies to Facility insurance and PPA coverages on OAP 1, but not Ontario Policy Forms 4--8, Facility contracts, and fleets

Front 10

Underwriting profit margin

Back 10

direct premiums earned less discounted claims, investment income on cash flow, acquisition and general expenses, and taxes

Front 11

Nature of change elements (4)

Back 11

1. Change to rating rules

2. Algorithm change

3. Territorial definition change

4. Changes to fees

Front 12

Summary of information in filing (4)

Back 12

1. Nature of change

2. Proposed effective dates for new and renewal policies

3. Distribution of risks by policy term

4. Capping of rates

Front 13

Certificate of the officer/designate (3+7)

Back 13

a. Required for each filing

b. Items certified

1) Effective dates of filing

2) Knowledge of relevant matters

3) Compliance of requested changes with major filing guidelines

4) Completeness and accuracy of the information

5) "Just and reasonably, do not impair the solvency of the insurer, and are not excessive in relation to the financial circumstances of the insurer"

6) Conformity to the filing of all future premiums charged

7) Testing in advance of related system changes and their implementation in a timely manner

c. Authorized officers are president, CEO, COO, CFO, or chief agent for Canada or designate

Front 14

Certificate of the actuary (3+4)

Back 14

a. Must be FCIA

b. Required for rate level changes and for rates for an insurance category not previously written

c. Items certified

1) Authorization by the company,

2) Reliability and sufficiency of data for the determination of the indicated rates

3) The indicated rate changes are calculated in accordance with AAP

4) Reasonableness of the risk classification system, reasonably predictive of risk and fairly distinguishes between classes

Front 15

Actuarial Support (3)

Back 15

a. Need to complete for any rate level change

b. Provide detail for major coverages even if no rate change proposed for that coverage

c. No specific methodology required but need adequate documentation and support

Front 16

Losses used in Actuarial Support (3)

Back 16

1. prior to reinsurance

2. not reduced by insurer's cession to Risk Sharing Pool

3. no losses incurred on FA residual market risk business

Front 17

Items to provide for on-level adjustments to premium (3)

Back 17

a) Unadjusted and adjusted premiums

b) Factor approach calculations and if used, a description of the rerating process

c) History of rating changes in last five years

Front 18

Reasons for premium trend (2)

Back 18

a) Inflation-sensitive bases

b) Changing mix of exposures

Front 19

Other expenses in Actuarial Support (3)

Back 19

1) Separate exposure variable and premium variable expenses to reflect

a) Manner business is conducted

b) Manner expenses incurred

c) Type of risk insured

2) Allocation of expenses by category of insurance

3) No provision for the Facility Association unless a proven subsidy nor for additional expenses of servicing carriers

Front 20

Documentation profit provisions (2)

Back 20

1) Rate indications must be based on clearly derived target underwriting profit provision

2) Estimated expected investment income from policyholder-supplied funds and equity; need to consider new money rates and historic returns

3) Discount rate and payout pattern of losses and expenses

4) Expected profit and the expected underwriting margin if differ from the target

Front 21

Territorial indications and proposed differentials (3)

Back 21

1) Current, indicated, and proposed territorial differentials by coverage

2) Written premium and exposure distributions by territory and coverage

3) Both indicated and proposed changes should be rebased and within +-10%

4) Any external data used, source and applicability

Front 22

Rating based on group membership (3+5)

Back 22

Allowed groups including spouses and children under certain conditions

1) Group of employees

2) Certain organizations

a) Trade unions

b) Members of a qualifying credit union

c) Professional or occupational organizations

d) Alumni associations

e) Not-for-profit organizations at least two years old formed for reasons other than the purchase of insurance

3) But insurers may not use existence of health or income plans in classification

Front 23

Reasons for lower group rates/discounts (2)

Back 23

• Lower acquisition expense

• Lower loss costs

Front 24

Requirements for group rates (2)

Back 24

a) At least 100 members

b) Must have group marketing plan

Front 25

UBIP

Back 25

currently new to Ontario so FSCO willing to accept data from other jurisdictions until companies gain experience

e.g. names of other insurers,

rating rule for discount,

details and level of proposed discount

Front 26

Reasons for capping increases (3)

Back 26

1) Mergers and acquisitions

2) Extensive risk classification changes

3) Previously approved positive cappings are exhausted

Front 27

Requirements for approval of capping (3)

Back 27

1) Uncapped and capped rate changes must be provided

2) All policies with positive caps and all uncapped policies with premium increases greater than the cap must be tracked

3) Annual filings accounting only for the effect of the cap

Front 28

When capping is prohibited (3)

Back 28

1) Base rate changes only

2) Broker portfolio transfers or acquisitions

3) Capping of premium decreases a.k.a. negative capping

Front 29

Rating examples (4)

Back 29

1. Provide annual rates

2. Do not assume progression through the graduated licensing system

3. Use Facility definitions for convictions and at-fault accidents

4. If group discounts, provide nongroup rates as well as rates with the largest discount

Front 30

FSCO, Regulation 664

Back 30

FSCO, Regulation 664

Front 31

commercial vehicle

Back 31

automobile used primarily to transport materials, goods, tools or equipment in connection with the insured's occupation, including

1) Police department vehicle

2) Fire department vehicle

3) Driver training vehicle

4) Construction or maintenance vehicle

5) Vehicle rented for <= 30 days

6) Trailer intended for a commercial vehicle

Front 32

fleet (3)

Back 32

>=5 automobiles meeting the following requirements

1) Under common ownership or management

2) >=5 commercial, public, or business vehicles

3) Any leased > 30 days are leased to the same person

Front 33

Requirements for monthly payments (6)

Back 33

1) Insurer insures at least 10,000 autos in ON

2) Contract is either Automobile Policy 1or 2

3) Does not insure commercial or public vehicle

4) Does not insure > 4 vehicles under common ownership

5) Annual premium exceeds $300

6) In last years, at most one termination for nonpayment

Front 34

For monthly payments insurer may require (2)

Back 34

1) Initial payment of two months' instalments

2) Preauthorized payments from fmancial institution

Front 35

Interest rate for monthly payments (3)

Back 35

1.3% (>= 12 months)

0.65% (6--=12 months)

0.22% (< 6 months)

Front 36

Prohibited items at issue/renewal/termination (5+7)

Back 36

1) Insured was or would be insured by the Facility Association

2) Another insurer declined coverage

3) Cannot consider a minor accident unless insured was at-fault in at least one (other) minor accident in previous 3 years

4) Cannot consider claims for loss or damage other than from collision or upset to refuse to issue or renew or to terminate coverage

5) Cannot terminate contract if group marketing plan terminates or if insured stops being a member of certain groups

1) Physical or mental disability

2) Number of insured persons under contract, their health, or life expectancy

3) Occupation, profession, or employment

4) Existence of medical plan

5) Existence of income continuation or sick leave plan

6) Request to purchase optional benefits

7) Past claims for which not at fault

Front 37

Prohibited items at issue/renewal/termination (10)

Back 37

Level of income or any of the following:

a) Employment history

b) Possession of a credit card

c) Credit history

d) Credit rating

e) History of bankruptcy

f) Residence history

g) Home ownership

h) Gross or net worth

i) Indebtedness

j) History of late or dishonored payments but no terminations

Front 38

Minor accident

Back 38

(a) Cost of damages <= $2000 and paid by/on behalf of driver at fault;

(b) no personal injuries from accident;

(c) no insurance payment

Front 39

First-party insurer

Back 39

insurer responsible for the payment of statutory accident benefits

Front 40

Second-party insurer

Back 40

insurer required to indemnify the first party insurer

Front 41

Items in settlement diclosure offer (6)

Back 41

1) Insurer's offer

2) Description of benefits that may be available

3) That insured person may change his mind by written notice and return of money within two days after the latter of the date of signing the disclosure notice and the date of the release

4) Description of consequences of the settlement on the described benefits

5) Advice to insured to consider independent advice

6) Statement for signature that the insured has considered seeking independent advice

Front 42

Restriction on rights of litigation, appeal is valid if (3)

Back 42

1) Restriction is contained in the settlement

2) Settlement is entered on or after one year after the accident

3) Insurer has complied with various requirements

Front 43

Restriction on rights of litigation, appeal is valid in first year if (3)

Back 43

1) Insured brings proceeding in a competent court and discovery has begun

2) Insured referred issues to arbitrator and a prehearing conference has begun

3) Insurer and insured have entered into an arbitration agreement

Front 44

Arbitrator considerations in awarding expenses incurred (4)

Back 44

1) Any written offers to settle

2) Whether novel issues are raised

3) Conduct to prolong or obstruct the proceedings

4) Whether insured did not undergo a required examination or provide required material

Front 45

Considerations of written offer (4)

Back 45

1) Terms

2) Timing

3) Response to the offer

4) Result of proceeding

Front 46

Group (3)

Back 46

a) Trade union or professional, occupational, or alumni association

b) Nonprofit entity in existence for 2 years but not one established mainly for purchasing or providing goods

c) Employee group of the same employer including retired employees but only as associate members

Front 47

If the following persons are included in group, must be as associate members (3)

Back 47

a) Spouse of a member or associate member

b) Child of member or of associate member or of spouse of such who is< 25 residing in the same household of such and a full-time student

c) Spouse of such a child

Front 48

Requirements for expedited approval (4+4)

Back 48

1) Relate only to personal vehicles-private passenger automobiles

2) Average cumulative rate changes for all changes is <= 0

3) Territorial rate changes for each coverage is <= 5% or >= -5% of the ON average

4) No changes are proposed to the following:

a) Algorithm

b) Differentials

c) Discounts

d) Surcharges

Front 49

FSCO, UBI pricing in Ontario

Back 49

FSCO, UBI pricing in Ontario

Front 50

Advantages of UBIP (2)

Back 50

a) Drivers have more control over their auto insurance costs

b) Could see fewer accidents and less congested roads

Front 51

Information from insurers to consumers in UBIP (4)

Back 51

a) What personal information is being collected

b) Who may use information

c) How information is being used

d) Under what circumstances information could be disclosed to others

Front 52

Non-UBIP goods or services requirements (3)

Back 52

1. Drivers should not be required to share information for non-UBIP purposes (e.g., marketing).

2. Insurers should not require consent to more beyond that required by a UBIP program as a condition of participation.

3. Consumers should be able to actively opt-in, rather than opt-out.

Front 53

Additional rights and obligations in UBIP (3)

Back 53

a) Consumer must install and use the monitoring device

b) Insurer must use the information collected for specific purposes and not for others

c) Benefits, conditions or exclusions must be in terms and conditions and enrollment documentation

Front 54

Limitations on use of UBIP data (3)

Back 54

1. Solely for discount-setting purposes, not for claims-related purposes

2. Not to decline, cancel or refuse to renew risks

3. Not to confirm rating criteria

Front 55

UBIP filings need to contain (4)

Back 55

1. Which consumer behaviours are measured

2. How data measured

3. How data normalized and categorized for rating purposes

4. Relevant claim and loss data supporting rating

Front 56

UBIP must comply with Unfair or Deceptive Acts or Practices (2)

Back 56

A. Insurer's UBIP must be available in all its territories and to all its policyholders

B. If part of a group of affiliated insurers, affiliated insurers not offering UBIP may need to make all policyholders aware that a discount may be available through the affiliated insurer with UBIP program. Otherwise, UBIP should be provided by all of affiliated insurers in a group.

Front 57

Data considerations UBIP (4)

Back 57

1. Data Accuracy

Before using UBIP for rating, reasonable efforts to make sure accurate

2. Data Security

Ensure that data capture, transmission and analysis in secure environment

3. Data Storage

Personal information must not be kept for longer than necessary

4. Termination of Participation or Policy

No further data to be received/accessed after consumer terminates participation

Front 58

Written contract between insurers and third party providers should contain (3)

Back 58

1. Provider's ability/commitment to ensure personal information protection equal to or greater than that expected of insurer, and to comply with all applicable laws/regulations

2. Service provider has required service capability

3. Succession issues addressed to ensure smooth transition when ending or varying an agreement with a provider

Front 59

Requirements for simplified filing (5)

Back 59

1)On an all coverages combined basis, the proposed overall rate level change must be lessthan or equal to 0.0%.

2) Any existing territorial base rate or differential change must be between –15.0% and+5.0%.

3) Any other changes to existing differentials or risk classification elements must bebetween -15.0% and +5.0% with no off-balancing. Each change to a differential is to bemeasured with reference to the current differential after re-basing the average proposeddifferentials to the same average current differentials for each coverage.

4) Changes to existing risk classification elements including discounts, rating variables andrating rules are permitted.

5) No changes to the rating algorithm are permitted, except when new discounts are beingproposed by the insurer.