Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Exam 6 > mix > Flashcards

mix Flashcards

1
Q

reasons for caps on non-pecuniary damages (Trilogy Ruling)

A

CAPS
- keep Cost low, avail & afford
- Awards are limitless
- Predictability of awards
- Social burden

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

identify exceptions to Trilogy decision (caps removed)

A
  • sexual abuse
  • defamation
  • negligence causing financial loss
    because no evidence that these exceptional cases would increase cost of insurance or social burden
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

define J&S liability

A

plaintiff may recover any or all damages from any or all defendants regardless of share of liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

proposed reform of J&S

A

FREe
- Fund
- Replace with proportional liability
- Eliminate J&S from non pecuniary damages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

advan & disadv of J&S reform

A

adv: discourages search for deep pockets and decreases costs
disadv: there is a cost to determining proportionate liability, parties would tend to argue for lower percentage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

federal areas of exclusive authority

A

RBC BAT
- Regulation of trade and commerce
- Banking
- Criminal Law
- Bankruptcy and insolvency
- Aliens & Naturalization
- Taxation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

areas and matters under provincial insurance legislation and regulation

A

contract matters: policy contents/ terms/ prem payment
transaction matters: AUC: agent licensing, unfair practices, claims handling

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

define materiality

A

an omission/under/over statement is material
if the actuary expects it to materially affect the user’s decision making or reasonable expectations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

chars of an insurance company that may affect materiality

A

F-STARS
financial strength
size of entity
type of business
access to capital
net retention
stage of organization life cycle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

FARM and RSP operational difference regarding rates

A

FARM- set by FA
RSP - uses rate of ceding company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

objectives of peer review

A

AAR
Assist OSFI in assessing insurer safety and soundness
Assist AA on independent advice and professional development
Raise confidence in AA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

required management action if capital available falls below internal capital target

A

if this happens or is expected within 2 years, notify OSFI and submit a plan to restore capital to internal target level reasonably quickly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

purpose of stress testing

A

CCRL
- complement to other risk management tools
- capital management support
- Risk identify and control
- liquidation improve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

considerations in adjusting an insurer’s rating based on its stressed BCAR score

A

FFHR
financial flexibility
frequency of severe exposure
historical volatility
risk management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

arguments in support of using credit scores

A

statistically significant: high cs individuals have lower claim costs, removing cs will not change aggregate premium collected
has qualities of a good rating variable: easy to calculate, objective, verifiable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

arguments against using credit scores

A

uhap
unfairly discriminatory
high cs insured often pay small claims out of pocket so their true costs may be understated
accuracy
privacy concerns

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

subsequent event definition

A

an event
of which an actuary first becomes aware
after the calculation date
but before report date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

criteria a government insurance should satisfy

A
  • is it welfare or insurance
  • is it efficient
  • is it necessary
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

why do insurers maintain credit ratings with rating agencies?

A
  • agents are wary of unrated insurers
  • 3rd party rely on ratings for solvency assessment
  • efficiency: agents uws and regulators dont have expertise to do their own rating
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

define compensatory basis in the context of income replacement

A
  • refers to basis for compensating loss of income
  • basis can be either prior net or gross income
  • income replacement is a percentage of this basis
  • current uses gross
  • gross ignores taxes and work related expenses that donot occur when not working so potential of over compensating
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

can CFO be AA?

A

yes if
- audit committee writes to OSFI that duties of CFO&AA can be adequately and independently performed
- OSFI authorizes appointment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

examples of federal regulation/legislation regarding insurer solvency
areas under federal insurance regulation

A

CAR PRICE
- Calculation of Assets and Reserves
- Protect phs
- Regular reporting
- Investments
- Conditions for Entering business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

OSFI expectations regarding an AA

A

AA must be a Canadian profession with Canadian experience
Exp:
- 3 years of Canadian experience in the last 6 years, at least 1 year in valuation
- experience with CIA SOPs, insurance legislation and regulation
Professionalism
- must maintain professional designation requirements
- no adverse findings with CIA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

List of peer review work

A

i AM AA DIE MAF
- Assumptions and Methods
- did AA use AAP
- did AA document
- Internal/external changes
- MCT/BAAT
- examine Adequacy
- FCT scenarios

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

identify financial resources for covering PML for earthquake exposure

A

CREC
- Capital and surplus (max 10%)
- Reinsurance
- Earthquake reserves
- Capital market financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

describe board vs management responsibilities regarding stress testing program

A

BoD;
- ultimate responsibility of program
- ensure implementation of program by management
- aware of key findings
Management
- Implement and manage stress testing program
- develop and implement risk mitigation strategies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

credit score use: regulator’s concern in economic crisis

A

on agg prem: an unwarranted increase. A new rating variable alone should not increase aggregate premium
on ind prem: a distributional shift that doesnot reflect true cost differences

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

actuary’s response on regulator’s concern of using cs

A

agg prem: can apply obf to reverse agg premium
ind prem: stop using temporarily, redo classification after economy stabilizes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

key principles of risk transfer assessment

A

QQ- PIA
transfer risk using QQ on PIA tables
- use quantitative and qualitative approaches depending on info available
- use Professional judgement
- check risk transfer at Inception of contract
- consider overall Agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

types of terms set in advance risk limiting features

A
  • adjustability of reinsurance premiums or commissions
  • pre set limits on timing of loss payments from reinsurer to insurer (removes timing risk)
  • counterparties ceding back to original cedant
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

exs of Experience Based Renewals risk limiting features

A
  • future terms based on past experience and reinsurer guaranteed to recover losses
  • forced renewals if the contract is in deficit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

why may efficiency of government insurance be overstated

A

other govt departments may already be performing services normally provided by insurer but the cost of these services may not be included in expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

agriculture- what is the federal requirement for self sus

A

956152580
for all base and adverse scenarios
- calc 95th percentile of the fund balance at the end of 6th year
- rerun the scenario with that starting point
then the program is self sus if deficit recovery occurs
- within 15 years on avg and
- within 25 years with 80% prob

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

objective of FA

A

ensure auto availability for all owners and licensed drivers who are unable to obtain coverage through the voluntary market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

FARM and RSP admission difference

A
  • only if when broker cant place risk with voluntary company
  • use uw rules of ceding company
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

minimum requirements for rsp transfer eligibility

A
  • PAA only
  • cant be eligible for FARM
  • policy must satisfy statutory minimum coverage requirements
  • insurer must follow proper classification and rating and provide documentation
  • insurer must use approved rates
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

prohibited risk classification elements

A

CCONES
- claims where less than 25% at fault
- credit history
- occupation with exception
- net worth
- employment
- salary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

potential reforms to Canada’s plaintiff friendly tort system

A

JCCV
- joint and several replace with proportional
- comprehensive income gross to net
- collateral disclose (sick pay and disability)
- vicarious liability eliminate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

IBC’s guidelines on use of credit info

A

CAARA Choreographs a LAP Dance on Classical music
- Consent
- Adverse Selection
- no Refusal
- Accuracy
- Cannot quote/deny/cancel based solely on credit
- Legislation
- Appeal
- Privacy
- Double count
- Complaint

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

reporting requirements of AA to BoD

A
  • provide report on financial position annually
  • provide report on financial condition when directed by OSFI
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

reporting requirements of AA to CEO

A
  • report on Material Adverse Events that require rectification
42
Q

describe continuum of rate regulation approaches

A
  • active regulation
  • moderate rate regulation
  • Competitive
43
Q

action items in ON’s five part action plan for addressing the unfair delivery of benefits

A

SCIL$S
structural flaws/ cat injuries/ Lawyer/cash not care/ smart regulation

44
Q

difference between external audit and peer review

A

audit checks if fs is free from material misstatement as a whole, uses CICA standard
peer review reviews AA’s FS at a more granular level, uses CIA standard
Peer Reviewer Doesnot Care to
- Perform detailed Recalculation
- Data verification
- Controls verification

45
Q

key principles of managing earthquake exposures

A

MR.PDF
models
risk management
PML
data management
financial resources and contingency plans

46
Q

non modelled exposures when calculating PML

A
  • exposure growth between date of data and relevant exposure period
  • consider adequacy of ITV
  • consider Guaranteed RC
  • increased seismicity after large event 地震活动性
47
Q

disclosures required by new AA in next AAR

A

DQC
Date
Qualification
Communication

48
Q

ORSA key elements

A

RRIMO
Risk identification and assessment
Relate risk to capital
Internal controls and objective review
Monitoring and reporting of risks
Oversight

49
Q

similarities between dcat and orsa

A

both concerned with risk identification and control/ capital requirements
both submitted to BoD and regulators

50
Q

diff between dcat and orsa

A

DCAT uses CIA SOPs
ORSA uses OSFI guidelines
- quantitative only/qualitative and quant
- by AA/ management responsibility

51
Q

adv of orsa over dcat

A
  • includes all material risks
  • uses stress testing to set ICT
  • qual and quant
  • admits assessment of internal controls
52
Q

elements of strong cat risk management

A
  • cat modelling
  • data quality
  • aggregate loss exposure
  • MML (measure monitor limit exposure on a continuous basis)
53
Q

describe “use periods” related to SPF9 (0123)

A

0: personal use, not logged into TNC
1: logged into TNC but has not accepted a ride
2: accepted a ride, en route to passenger
3: passenger in vehicle
PD optional in 23, no in 1
AB TPL 123

54
Q

identify coverage trigger that begin and end accident benefits coverage under SPF9

A

begin: log in to app
end: log out or customer exit

55
Q

drivers for recent increase in frequency and sev of cats

A

freq: climate change
sev: growth in population density and complexity of supply chains

56
Q

purpose of AM Best natural CAT test

A

test financial condition of insurer after 2 major CAT events

57
Q

IBC’s 5 objectives

A

SEP- DC D
Study legislation
Engage in research
Promote public understanding
Discuss general insurance
Collect and analyze Data

58
Q

focus of Canadian Insurance regulation since Confederation

A

MOTHS
marketing: marketing integrity
ownership: encourage Canadian ownership
taxes: collection
honesty: honesty of intermediaries
solvency: keep insurer’s solvent to protect phs

59
Q

how does federal legislation protect Canadian insureds from foreign insurance companies

A

foreign insurers must maintain sufficient assets in Canada and recovery from insolvency

60
Q

why are uniform guidelines easier to establish than uniform legislation?

A

guidelines donot need to go through the legislative process

61
Q

role of CCIR

A
  • legislation axis: draft legislation/promote uniform ensure adequacy of provincial legislation
  • practice axis: education and consumer protection
62
Q

conditions for recovering under an indemnity policy

A

events must be covered
requires proof of amount of loss

63
Q

define enquiring professional

A

a professional who relies on the work of another (responding professional) in the course of their own work

64
Q

define responding professional

A

a professional whose work is being used by another

65
Q

define non deferrable commission

A

commission not exclusively relating to and varying with the acquisition of premium hence not recoverable over the term of expired policy

66
Q

communication requirements for enquiring professional with responding professional

A

notify responder that work is being used
notify responder regarding needs
request confirmation of responder’s appointment, professional standing and observance to standards

67
Q

communication requirements for responding professional with enquiring professional

A

confirm work will be done
confirm appointment and professional standard
notify of any issues in meeting enquiry professional’s needs

68
Q

considerations in estimating LIC/LRC

A

uw practices
claims handling practices
reinsurance
data processing system
accounting systems

69
Q

define model

A

a practical representation of relationships among entities using fems concepts

70
Q

define model risk

A

the risk that the user will draw inappropriate conclusion due to short comings of model or its use

71
Q

circumstances an subsequent event must be accounted for

A
  • material
  • reflects an error
  • makes the entity different relative to timing and purpose of actuary’s report
72
Q

key principle of PML

A

Total expected Ultimate Cost
- includes considerations for data quality, non modelled exposure, model uncertainty, multi region exposure

73
Q

reasons for government insurance

A

FECCS
filling unmet needs
efficiency
compulsory
convenience
social purpose

74
Q

identify conditions for province to receive unreduced funding under Canada Health Act

A

CUPPA
- comprehensive:
- Universal
- Portable
- Public
- Accessible

75
Q

define probable yield

A

expected yield per unit of exposure for a given producer, agriculture product and crop year

76
Q

define self sustainability load

A

a load in rates to recover deficits and maintain surplus

77
Q

base scenario definiton

A

a set of assumption on risk factors that are consistent with the business plan over forecast period

78
Q

adverse scenario

A

developed by stress testing assumptions used in the business plan, looking specifically for risk factors that threaten financial condition

79
Q

ripple effect

A

an event that occurs when an adverse scenario triggers a change in 1 or more inter dependent assumptions

80
Q

discount rate

A

rate used to discount future cash flows which is consistent with timing liquidity and currency of underlying insurance contracts

81
Q

reference portfolio

A

a portfolio of assets used to derive discount rates based on current market rate of return

82
Q

chars of discount rate

A

reflect time value of money/characteristics of cf/liquidity of insurance contracts
consistent with market prices for financial instruments with similar cf
exclude factors affect MV but not CF of ins contracts

83
Q

circumstances leading to the recognition of significant financing component with regards to policy chars and benefits to the parties that are part of the insurance transaction

A

recognized because policy premium is received by the entity more than a year prior to service being provided
the transaction thus benefits the entity as the ph finances the entity’s activity by pre payment of premium

84
Q

how discount rate is selected when cash flows do vary with returns on underlying premiums

A

make value of liability cash flows equal the fair market value of underlying assets

85
Q

regarding non financial risk, how is the measurement objective different under 27 and pre

A

compensation required by an entity to bear uncertainty and amount required to provide for the effect of uncertainty

86
Q

considerations when estimating risk of non performance of a reinsurer

A

-financial strength
- history of claims and coverage disputes
- delays in payments and concentration risk
- collateral available to mitigate risk

87
Q

under 17, how might insurance revenue for reinsurance contracts issued differ from earned premium?

A

seasonality: release of risk differs from passage of time
reinstatement prem: apply against insurance service expenses
ceding commissions on proportional reins treaties

88
Q

questions AA should ask before taking responsibility for another person’s work

A
  • is the work consistent with a reasonable interpretation of ifrs17 standard
  • … with accepted actuarial practice in Canada?
  • qualification confirmation and awareness work is used
  • is the work similar to what AA would have done
  • is AA able to judge the appropriateness of work
89
Q

two component benefits to ON auto insurance

A
  • no fault, accident benefits, provides benefits regardless of fault
  • tort, BI, allows you to sue at fault driver
90
Q

proposed reform to joint and several liability

A

eliminate js for non pecuniary damages
replace js with rule of proportional liability
fund creation for guilty parties who cant pay

91
Q

adv and disadv of js reform

A

discourages search for deep pockets and decreases costs
cost to determine proportionate liability, parties tend to argue for a lower percentage

92
Q

three insurance transaction matters under provincial legislation

A

agent licensing
unfair practices
claims procedures

93
Q

federal government wants to replace all private and provincial automobile insurers by a single crown corporation, evaluate viability

A

ultra vires for the federal government. regulation of trade of commerce doesnt extend to a licensing agreement of a particular trade, as in the insurance reference case

94
Q

provincial areas of exclusive authority

A

provincial taxes
civil property rights
hiring and supervising provincial employees
operating jails and hospitals

95
Q

contrast liquidation and on going concern

A

liquidation: runoff of assets and liabilities, of interest to regulators of satisfying policy holder obligations
on going concern: continued normal operations, of interest to investors

96
Q

principle based on rule based

A

principle based must be interpreted and applied, more flexible
rule based is with strict rules that have to be followed, easier to understand and to audit

97
Q

adv of commutation (primary insurer, reinsurer)

A

p: removes reinsurance credit risk, decrease expense cost, receive cash flow right away
reins: give stability in the report for LT claims, savings in claims adjusting and admin costs, required after wind up

98
Q

what is the ongoing role of actuaries concerning covid

A

follow guidance from regulatory bodies, monitor legal actions related to covid, report stats on AAR

99
Q

2 approaches to account for time value of money when evaluating runoff of claim liab

A
  • discounting: discount paid and unpaid from t to t-1
  • subtraction: subtract ii earned during cy on assets that support liabilities
100
Q
A

Exam 6 (58 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions