FSCO.PPA

Question 1

Identify the 6 prohibited risk classification elements in ON regulations.

Answer 1

Claims where fault ≤ 25%
    –
Credit history
Occupation (some exceptions)
Net worth
Employment history
Salary

Question 2

Assess whether the following discount complies with ON regulations:

1. Retiree discount
2. Multi-line discount
3. Good credit score discount

Answer 2

1. Yes, required by ON regulations
2. Yes, but only if they do not vary by property product.
3. No, prohibited

Question 3

Identify the 2 types of regulatory approval in ON.

Answer 3

• prior approval (major requirements, simplified guidelines)
• file & use (major requirements, minor requirements)

Question 4

Describe FSCO prior approval

Answer 4

For prior approval, FSCO must approve the following before rates can be used:
• rates
• rate changes
• risk classification

Examples where prior approval can be used:
• PPA on OAP1 (Private Passenger Auto written using the standard Ontario Auto Policy 1)
• FA (Facility Association)

Expedited approval is a type of prior approval with approval in 30 days

Question 5

Describe file & use.

Answer 5

For file & use, the insurer must file:
* rates
* rate changes
* risk classification
THEN regulators have 30 days to approve otherwise rates can be used without approval
Examples:
* other than PPA
* commercial auto
* endorsements
* FA is excluded (not eligible for expedited approval)

Question 6

Describe the UDAP (Unfair or Deceptive Acts or Practices) requirement regarding rate levels among affiliates

Answer 6

It is unfair or deceptive if the insurer fails to provide the lowest rate among all affiliates

Question 7

What is OCPF-44R coverage

Answer 7

• coverage for ‘underinsured MOTORIST’ (as opposed to ‘uninsured AUTO’)
• it is the difference between (your TPL limit) & (at-fault driver’s TPL limit)

Question 8

Identify the required designation, timing and 4 filing items for officer certification on major filing.

Answer 8

• Designation: CEO, CFO or Chief Agent in Canada
• Timing: Always required
• Includes:
  1. Effective dates (new and renewal business)
  2. Guidelines (must certify compliance)
  3. Info/data (certify accuracy & completeness)
  4. Rates are reasonable, nor unfairly discriminatory and do not impair solvency

Question 9

Identify the required designation, timing and 6 filing items required for actuarial certification in major filings.

Answer 9

• Designation: FCIA
• Timing: when there are rate changes or new LOB
• Includes:
  1. Effective dates (new & renewal business)
  2. Vehicle classification system
  3. That Actuary has been authorized by insurer
  4. That data is reliable & sufficient
  5. That AAP was used
  6. That risk classification system is reasonable

Question 10

Briefly explain what info is generally required in a rate filing.

Answer 10

• All steps for rate changes
• Trace steps from raw data to final rates
• No specific methodology mandated by FSCO
• Include RSP as if never ceded, exclude reinsurance and FA