FSCO.TECHNOTES

Question 1

what classes of auto insurance does FSCO’s Tech Notes bulletin apply to?

Answer 1

non-fleet automobile insurance on
* Ontario Automobile Policy (OAP 1)
* Ontario Driver’s Policy (OPF 2)

Question 2

identify the 5 categories of filing guidelines in FSCO’s Tech notes bulletin

Answer 2

• PPA Filing Guidelines – Major:
  → used when an insurer is initially entering the private passenger automobile insurance market
  ..or..
  → when changing existing automobile insurance rates but the changes proposed do not meet the criteria for the Simplified Filing Guidelines.
• PPA Filing Guidelines - Simplified
• PPA Filing Guidelines – CLEAR Simplified
• Other Than PPA Guidelines - Major
• Other than PPA - Minor

Question 3

identify legislative requirements for non-fleet auto rate filings in ON

Answer 3

• just and reasonable
• solvency of insurer cannot be impaired
• not be excessive in relation to the financial circumstances of the insurer

Question 4

identify legislative requirements for non-fleet auto risk classification in ON

Answer 4

• just and reasonable
• predictive of risk
• distinguish fairly between risks

Question 5

identify 5 items of required information in an Ontario major rate filing

Answer 5

1. Loss Data
2. Loss Development
3. Loss Trend
4. On-Level Premium
5. Indicated Rate Changes and Proposed Rate Changes

Question 6

identify 2 requirements for loss data in an Ontario rate filing

Answer 6

• must be specific to Ontario
• must be at the major sub-coverage level
  (Valuation data for loss reserving purposes may not satisfy this requirement.)

Question 7

what conditions must be met if an Ontario insurer is proposing to make territorial definition changes?

Answer 7

• Ontario ≤ 55 territories, City of Toronto ≤ 10 territories
• all territories must be contiguous (you can’t have a territory that isn’t touching the others)
• new territories require 3 years of insurer data and 2,500 annualized average vehicles over the period
• new adjoining territories do not vary by more than +/-10%
• territory definitions are the same for all coverages
• large claims should be capped in establishing territorial rates

Question 8

once a new discount is approved, how long must an ON insurer continue to offer the discount and why?

Answer 8

3 years - to ensure stability in the market before the insurer can withdraw it from its risk classification system

Question 9

when is rate capping in ON not permitted?

Answer 9

• base rate changes only
• broker portfolio transfers or acquisitions
• premium decreases (negative capping)