KPMG Regulatory Oversight

  1. 6 approaches to rate regulations
    1. Open competition
      • No filing required. Nunavut, Yukon
    2. Use and file
      • use rates now and file with regulators who can review and retroactively intervene if needed within a certain period. Quebec
    3. File and use
      • File rates and wait a certain period for regulators to review and intervene, if no issues after the period, good to use. PEI
    4. Flex rating
      • changes within a certain range can be implemented & used.
    5. Prior Approval
      • cannot use rates before approval. ON major filings
    6. Gov mandated rates
      • Gov mandate the rates or rate change. Alberta grid system
  2. Auto insurance regulation in AB
    • Gov-mandated rates: PPV Grid rating (AIRB sets and annual review max premium for basic coverages TPL & AB)
    • File and use:
      • PPV: "off-set" - can adj one or more rating variables for basic coverages by up to 10% as long as overall revenue neutral
      • comm auto / misc
  3. Auto insurance regulation in Alberta - Criteria for review of rates
    • A percent of premium profit provision
    • Fair and predictable
    • Rate stable over 3-5 years
    • Auto insurance market
  4. Auto insurance regulation in BC
    • Gov-mandated rates (ICBC): mandatory coverages
    • Open competition: excess TPL/UM, optional coverages
  5. Auto insurance regulation in MB
    • Gov-mandated rates (MPI): basic
    • Open competition: other
  6. Auto insurance regulation in NB
    Prior approval:
    • File every 12 months
    • Must file >= 30 days in advance
    • NBIB has authority to notify within 30 days that it plans to investigate proposal and insurers must refrain from implementing until approved
  7. Auto insurance regulation in NB - Criteria for review of rates
    • Just and reasonable
    • Based on NB driver experience
    • Based on NB company experience
  8. Auto insurance regulation in NF & criteria for rate review
    • Prior approval: if increase
    • File and use: if decrease
      • appropriateness of rate
      • not too high
  9. Auto insurance regulation in NS & criteria for rate review
    Prior approval
    • Proposed risk clss'tn system / rates are just and reasonable
    • risk class'tn reasonably predictive of risk and distinguish fairly btw risks
    • Doesn't impair solvency
    • Not excessive
  10. Auto insurance Regulatory System in ON, condition for PPV simplied filing
    • Prior approval for PPV
    • Prior approval or File and use for comm auto / misc
    • PPV simplified filing if:
      • overall <=0% rate change
      • terr base rate change [-10%, 0%]
      • other rate or risk class'tn changes [-10%, 0%]
      • No change to algorithm
  11. Criteria for review of rates in ON
    • Proposed risk class'tn / rates just and reasonable
    • Risk class'tn reasonably predictive of risk and distinguish fairly btw risks
    • Doesn't impair solvency
    • Not excessive
  12. Auto insurance regulation in PEI & criteria for rate review
    File and use
    • adequate
    • not excessive
    • not discriminatory
  13. Auto insurance regulation in QC
    • Gov-mandated rates (pure no fault for BI; SAAQ)
    • Use and file (TPL-PD)
  14. Auto insurance regulation in SK
    • Gov-mandated rates (basic; SAF)
    • Open competition (optional and excess)
  15. Benefit of moving from prior approval to use and file
    • regulatory costs -> decreasing insurance premiums
    • faster. Lack of regulatory lag -> can adapt to changes quickly
    • increase competition -> increase availability
    • less disruption to premium rates
Card Set
KPMG Regulatory Oversight
KPMG Regulatory Oversight