FSCO.PPA

Question 1

Identify the 6 prohibited risk classification elements in ON regulations.

Answer 1

- Claims where fault ≤ 25%
    –
- Credit history (credit card, credit history, credit rating, bankruptcy, indebtedness)
- Occupation (some exceptions)
- Net worth
- Employment history
- Salary
- Lapse in automobile insurance coverage 
- Residence history, owns a home or not
- Minor accident that occurred on or after June 1, 2016

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

Answer 4

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

Question 5

Identify 3 regulatory requirements when changing territory factors in a major filing.

Answer 5

REBASE current, indicated, proposed territorial relativities
CALCULATE indicated change, proposed change
CHECK:
- indicated and proposed changes have the same sign
- proposed RC (%) < indicated RC (%)
- magnitude proposed change btwn (-10%, 10%)

Question 6

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

Answer 6

• 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 7

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

Answer 7

• 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 8

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

Answer 8

• 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

Question 9

Describe treatment of loss data when ceding to RSP, FARM, or reinsurer in ON auto filling

Answer 9

• Reinsurance: Not considered. Use direct premiums.
• Cession to RSP: Kept in losses as if they were never ceded
• Losses incurred from FARM: Excluded from loss data

Question 10

2 Certificates to include in ON filling

Answer 10

• Certificate of the Officer (CEO, COO, CFO or VP designate): Certify that proposed rates don’t impair solvency
• Certificate of the Actuary (FCIA): Certify that indications were done using reliable/sufficient data & AAP