Financial Services Commission of Ontario FSCO

1
Financial Services Commission of Ontario (FSCO)

• Automobile Insurance Rate Filing Process
• Presentation for OCCA
• December 6, 2006

2
OUTLINE

• Summary of 2006 Private Passenger Rate Changes
• Updates to Rate Filing Guidelines
• ARCTICS

3
Summary of Private Passenger Rate Changes

• 122 PPA Rate Filings Approved to date (101
  filings approved in 2005)
• 49 CLEAR Filings approved to date (48 in 2005)
• Average rate change approved in
• 2004 -10.6
• 2005 -2.43
• Q3/2006 -1.32

4
Summary of Changes to Rate Filing Guidelines and
Technical Notes 2006

• Consolidated set of guidelines to be released
  this month. Last consolidated version issued in
  2001.
• The titles of the filing guidelines have changed.
  Easier to understand and changes do not have to
  be made every time the legislation changes.
• Filing Guidelines are
• Private Passenger Automobile - Major
• Private Passenger Automobile - Simplified
• Private Passenger Automobile - CLEAR Simplified
• Other Than Private Passenger Automobile - Major
• Other Than Private Passenger Automobile Minor

5
Summary of Changes to Rate Filing Guidelines and
Technical Notes 2006

• Includes any Regulation changes over the last 5
  years
• fleet, Group membership, prohibition of lifestyle
  rating variables, standard deductibles
• Reference to ARCTICS is made
• Rate Manual section of Filing Guidelines (to be
  submitted in hard copy and electronic copy
  (e-mail/CD))

6
Summary of Changes to Rate Filing Guidelines and
Technical Notes 2006

• Some changes to Appendix A
• e.g. Change question 9. to reflect Return on
  Premium
• e.g. Change the dislocation requirement from
  15.0 to 10.0

7
Summary of Changes to Rate Filing Guidelines and
Technical Notes 2006

• Amend current Certificate of Officer to reflect
  pre or post approval Certificate/Attestation
  regarding implementation and testing of rate
  changes (Appendix B)
• New CLEAR Simplified Filing Guidelines
• Filing is required annually
• Vehicle rate group table update
• Companies can use the CLEAR Simplified Filing
  Guidelines to update the vehicle rate group table
  and/or make the required changes to the physical
  damage base premiums if the rate group drift has
  not been taken into account within the last 9
  months

8
Summary of Changes to Rate Filing Guidelines and
Technical Notes 2006

• Other Than Private Passenger Filing Guidelines
• Major Minor - Updated risk profiles
  companies will be notified to complete and submit
• Added a new criteria for Major Company will
  have to submit a Major filing if it has not
  submitted a filing within the last 3 years and
  the proposed rate change is greater than 10

9
Summary of Changes to Rate Filing Guidelines and
Technical Notes 2006

• Updates to Technical Notes
• Current GST level and Health Services Levy
• Splitting of BI and PD for credibility reasons
• Use of prior indications as compliment of
  credibility issues have been raised
• Updated benchmarks for loss trends/auto reform
  factors

10
Summary of Changes to Rate Filing Guidelines and
Technical Notes 2006

• Updates to Technical Notes
• Further details on Profit allowance, including
  Investment Return on cashflow updated to
  reflect the actual formulas
• Edit regarding discounts/surcharges data to
  support proposal is required (FSCO will consider
  non-Ontario data)
• Territorial Definition Changes - require colored
  maps when territorial definition changes are
  being made

11
ARCTICS Canadas First On-Line Auto Insurance
Rate Filing System
Automated Rates and Classifications Technical
Information Communication System
12
Benefits of ARCTICS

• Improve Delivery of Service
• Efficiency through technology
• Improves speed of filing and approval process
• Reduces paper use and record storage
• Provides a historical on-line record of insurers
  filings

13
Background

• Launched in May 2005
• 12 usage in 2005
• 37 usage in 2006
• 165 Registered Users with Passwords
• Released ARCTICS Newsletter and updated User
  Manual in November 2006
• Training is available
• Access Form must be completed to obtain passwords
• One main contact for each company
• Actuarial Consultants can use ARCTICS once
  insurance company provides authorization

14
ARCTICS uses SSL technology during the login
process
15
Clients can start a new ARCTICS filing on-line
16
Options are highlighted as the client navigates
ARCTICS screens
17
Files can be attached to ARCTICS Table of
Contents and submitted
18
Appendix questions can be filled in on-line
19
and validation of completion checked
automatically
20
ARCTICS auto-fill feature fills in fields based
on previous data
21
ARCTICS automatically calculates totals whenever
possible
22
Certificates can be completed on-line using
ARCTICS
23
The submitted filing is available for viewing in
ARCTICS
24
Clients can view details of their new ARCTICS
filing
25
ARCTICS incorporates a calendar tool
26
ARCTICS logs events during client sessions for
future reference
27
Entries are automatically checked for validity in
ARCTICS
28
ARCTICS has online help available
29

• Thank You