Financial Services Commission of Ontario (FSCO)

www.fsco.gov.on.ca

Financial Services Commission of Ontario

(FSCO)

Automobile Insurance Rate Filing Process

Presentation for OCCADecember 6, 2006

www.fsco.gov.on.ca

OUTLINE

• Summary of 2006 Private Passenger Rate Changes

• Updates to Rate Filing Guidelines

• ARCTICS

www.fsco.gov.on.ca

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%

www.fsco.gov.on.ca

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

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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))

www.fsco.gov.on.ca

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%

www.fsco.gov.on.ca

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

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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%

www.fsco.gov.on.ca

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

www.fsco.gov.on.ca

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

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ARCTICS: Canada’s First On-Line Auto Insurance

Rate Filing System

Automated Rates and Classifications Technical Information Communication System

www.fsco.gov.on.ca

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

www.fsco.gov.on.ca

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

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ARCTICS uses SSL technology during the

login process…

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Clients can start a new ARCTICS filing on-line…

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Options are highlighted as the client navigates ARCTICS’ screens…

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Files can be attached to ARCTICS’ Table of

Contents and submitted…

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Appendix questions can be filled

in on-line…

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…and validation of completion checked automatically

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ARCTICS’ auto-fill feature fills in fields based on

previous data…

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ARCTICS automatically calculates totals whenever

possible…

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Certificates can be completed on-line using

ARCTICS…

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The submitted filing is available for viewing in

ARCTICS…

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Clients can view details of their new ARCTICS filing…

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ARCTICS incorporates a calendar tool…

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ARCTICS logs events during client sessions for

future reference…

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Entries are automatically checked for validity in

ARCTICS…

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ARCTICS has online help available…

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Thank You