CCIR

1. Legislation axis
   • Draft legislation
   • Promote consistency of insurance regulation among provinces
   • improve efficiency of canadian insurance regulation
   • Review legislations or Study proposed legislation
2. Practices axis
   • Encourages uniform practices in industry (testing materials for licensing of agents)
   • Provide education
   • Consumer Protection
   • Promote transparency to the public

commissions, premium taxes, allocated operating expenses

Commission not exclusively attributable to premium volume and thus is not nondeferrable

• commission expense on direct and assumed premiums for coverage period beyond current YE and
• not reduced by unearned (reinsurance) commissions

• commission revenue on ceded premiums for coverage period beyond current YE, and
• not reduced by deferred commissions on direct and assumed business

Situation where unearned premiums are insufficient to cover expected policy liabilities, including servicing expenses

If insurer pays the entire claim, SIR amount under other liabilities as an 'other recoverable'

1. Regulators may request collateral to insure collectibility
2. Need reasonable IBNR

1. Insurer owns annuity with payments irrevocably to claimant
2. No current or future benefits to insurer
3. Insurer is released by claimant, but still liable if required payments not made

1. can't reognize liability or annuity as asset
2. need to disclose credit risk

1. Annuity is commutable, assignable, or transferable
2. Claimant doesn't provide a legal release

Insurer must recognize

• liability like claim liabilities
• annuity as asset

• Equity
• - Non-controlling interests
• - Capiral required for catastrophes
• - Capital required for unregistered reinsurance

• Paid claims for AY
• + Unpaid claims for AY
• - Investment Income on UCAE & IBNR for AY

• MIN{ Net investment income,
  • avg net unpaid claims & AE (net of reins and S&S)
  • + avg net unearned premiums (net of reins and S&S)
  • + avg unearned commission
  • + avg premium deficiency
  • - avg DPAE
  • - avg receivables
  • (agents, brokers, p.h.'s and instalment premiums) }
• x investment yield
• note: apply investment yield to BS items that are currently on hand that are related to insurance operations (e.g. receivables from other insurers are irrelvant)

• Total net investment income
• - net investment income from insurance

• UW income/loss
• + net investment income from insurance

• 2 x NII (incl realized G/L) / (Vb + Ve - NII (incl realized G/L))
• V = cash
• + investment income due and accrued
• + total investments

2 x net income after tax / (Eb + Ee)

• Short term investments
• + bonds and debentures
• + mortgage loans
• + preferred shares
• + common shares
• + investment properties
• + other loans and investment assets

• Unaffiliated agents and brokers
• + p.h.'s
• + instalment premiums
• + other insurers
• + FA and PRR
• + subsidiaries, associates and joint ventures
• + other recoverables

• Unearned premium recoverable from reinsurance
• + unpaid claims & AE recoverable from reinsurance

• Total investments
• + receivables
• + recoverable from reinsurance
• + other recoverable on unpaid claims
• + property and equity
• + DPAE
• + current and deferred tax assets
• + goodwill
• + intangible assets
• + DB pension (profit)
• + other assets

• Payables
• + expenses due
• + taxes due
• + p.h. dividends
• + unearned premiums (gross)
• + unpaid claims & AE
• + unearned commission
• + premium deficiency
• + self-insured retention portion of unpaid claims
• + DB pension (loss)
• + subordinated debt
• + preferred shares debt

• Common and preferred shares
• + contributed surplus
• + retained earnings
• + reserves
• + AOCI
• + non-controlling interests

• Net premiums written (direct+assumed-ceded)
• - Change in net unearned premiums (end - begining)

• Net premiums earned
• + service charges

• Net claims & AE
• + acquisition expenses
• + general expenses

• UW revenue
• - claims and expenses

• UW income
• + NII
• + other revenue and expenses
• - income taxes

• (Change UCAE & IBNR
• - claims paid for subsequent years
• + investment income from UCAE & IBNR) / opening UCAE & IBNR

Net premiums written / adjusted equity

• think of this as opposite of net income
• = commission expense - commission income
• = net comission + change unearned commission - change deferred commission

• Direct commission
• + assumed commission
• - change deferred commission

• Ceded commission
• - change unearned commission

• net commission attributable to period (commission expense - commission income)
• + net contingent commission
• + net other non-deferrable commission

Commissions not readily varying with acq of premiums and therefore are not recoverable.