1. Prohibited elements for risk classification - Section 16
    • Past claims where insured <25% AF
    • Existence of medical plan
    • Existence of income continuation or sick leave plan
    • A lapse in auto coverage unless,
      • result of failure to pay premiums
      • suspension of driver’s licence as a result of a conviction
      • did not inform insurer of accident or conviction that could lead to higher premium
  2. Prohibited elements for risk classification - Unless permitted under 16(5)
    • Income level
    • Employment history
    • Occupation, profession
    • Possession of a credit card
    • Credit history
    • Credit rating
    • History of bankruptcy
    • Residence history
    • Home ownership
    • Gross or net worth
    • Indebtedness
    • History of late or dishonored payments but no terminations
  3. Types of filing for changes to rates and risk classifications for PPA/Non-PPV
    • PPV: simplified, CLEAR simplified (for VRG), major
    • Non-PPV: major, minor
  4. Requirements for retiree discount
    1. Retired
      • No income, profession, or business
      • Employed for < half of past 52 weeks
    2. >= 65 or receiving a pension
  5. Elements re graduated licensing system
    • Level 1 drivers not to be rated.
    • Level 2 drivers can be rated.
    • Experience credited for levels 1 and 2 for >= 1 year each
    • 10% reduction for > 1 year for those moving from level 1 to 2 if no convictions in coverages using experience as a rating factor
    • Similar reduction for passing level 2 to fully graduating
  6. Certificate of actuary
    • Must be FCIA
    • Required for rate / differential changes and for new categories
    • Items certified
      1. authorization by company
      2. reliability and sufficiency of data
      3. acceptability of procedures used
      4. reasonableness of risk class'tn system
  7. PPV filing - How are FARM and RSP treated
    • use direct premium / losses for filing:
      • incl ceded
      • incl cession to RSP.
      • excl FARM (own data and industry data)
    • use direct expenses for filing:
      • incl cession to RSP.
      • excl FARM
      • Expenses by servicing carriers in servicing FA business already reflected in FA rates
  8. Overall Rate Level Indication - actuarial support
    • Losses: Development, Trend, LL, CAT, Reform
    • ALAE: Development, Trend, CAT
    • ULAE
    • Premium: On-level, Trend
    • Other Expenses: Exposure Variable Expenses, Premium Variable Expenses
    • Underwriting Profit
    • Credibility
  9. Territorial indications and Proposed differentials - info needed and capping for approval
    • Info:
      • Current, indicated and proposed territory differentials by coverage
      • WP by coverage and territory
      • Exposure by coverage and territory
      • Credibility procedure if used
      • external data used
    • Capping:
      • Rebased indicated and proposed changes are expected to be in the direction of indication and within +/-10%.
      • Fairly allocate costs between territories; newly formed adjacent territories should not vary by more than +/-10%
      • Cap terr differential changes (rebased) at +/-10% (from current) in the direction of coverage indication (re-based avg proposed = avg current)
      • Changes must be in the direction of indicaiton and within +/-10% by coverage and overall.
  10. PPV filing - Use of GLM for liability differentials
    Provide complete description of predictive model used (GLM), and method used for selecting classification variables
  11. Certificate of the Actuary
    • reviewed the data underlying this rate filing for reasonableness and consistency
    • indicated rate changes in accordance with AAP
    • risk classification just and reasonable, reasonably predictive of risk and distinguishes fairly between classes.
  12. Requirements when rely on outside data or a different source of internal data,
    • id source of data
    • explain applicability
  13. Requirements when credibility is used
    • selection of credibility criterion
    • application of credibility standard
    • complement of credibility
Card Set
FSCO Private Passenger Automobile Filing Guidelines - Major