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6 approaches to rate regulations
- Open competition
- No filing required. Nunavut, Yukon
- Use and file
- use rates now and file with regulators who can review and retroactively intervene if needed within a certain period. Quebec
- 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
- Flex rating
- changes within a certain range can be implemented & used.
- Prior Approval
- cannot use rates before approval. ON major filings
- Gov mandated rates
- Gov mandate the rates or rate change. Alberta grid system
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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:: "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
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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
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Auto insurance regulation in BC
- Gov-mandated rates (ICBC): mandatory coverages
- Open competition: excess TPL/UM, optional coverages
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Auto insurance regulation in MB
- Gov-mandated rates (MPI): basic
- Open competition: other
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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
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Auto insurance regulation in NB - Criteria for review of rates
- Just and reasonable
- Based on NB driver experience
- Based on NB company experience
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Auto insurance regulation in NF & criteria for rate review
- Prior approval: if increase
- File and use: if decrease
- appropriateness of rate
- not too high
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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
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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
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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
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Auto insurance regulation in PEI & criteria for rate review
File and use - adequate
- not excessive
- not discriminatory
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Auto insurance regulation in QC
- Gov-mandated rates (pure no fault for BI; SAAQ)
- Use and file (TPL-PD)
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Auto insurance regulation in SK
- Gov-mandated rates (basic; SAF)
- Open competition (optional and excess)
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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
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