The Financial Services Commission of Ontario (FSCO) is releasing updated Technical Notes to assist insurers in preparing rate filings and to provide criteria for filing under the Respond to Market (R2M) process for 2003.
Background
Technical Notes are considered to be part of the application (filing) for approval and authorization of rates and risk classification systems under the Insurance Act. FSCO last released Technical Notes to insurers in December 2001 with Bulletin No. A-12/01. Changes made to the Technical Notes from the last version are denoted by a side bar (l).
Benchmark assumptions have been provided to assist insurers in preparing filings. These benchmark assumptions are based on a review of commonly used assumptions by insurers in filings as well as based on FSCO’s own actuarial analysis.
Summary Points
Here are some key points to take note of when preparing rate filings:
Loss development - insurers must provide Ontario loss development data for the applicable category of automobile insurance.
Premium trend - insurers need to consider the rate level impact of the rate group tables when determining their premium trend. The IBC will publish the estimated rate group drift of the CLEAR rate group tables by coverage, but insurers should take into consideration their own premium distribution by coverage when estimating the premium trend.
Tax rates - have been reduced in Ontario. Please refer to the Technical Notes for the effective rates in 2003 and 2004.
To assist insurers, we have also included a "Rate Filing Checklist for Major Filings" that insurers can use at their discretion. Using this checklist may help ensure that the filing being submitted contains all the necessary information and the filing being deemed complete upon receipt by FSCO.
R2M Filings
These Technical Notes reflect the updated criteria for the R2M process that were communicated in a letter dated January 13, 2003, to chief executive officers of insurers. For your assistance, an example of a filing that qualifies for the R2M process is included in the Technical Notes.
Filing Process
Insurers are encouraged to engage in open dialogue with staff from the Automobile Insurance Division on filings or potential filings. Full understanding of issues is important in timely review and approval of filings. In calendar year 2002, the average approval time for complete filings for private passenger automobile insurance was 33 days. This includes filings submitted under the R2M process where the average approval time was 11 days, and major filings where the average approval time was 42 days.
FSCO’s web based electronic filing system for automobile insurance filings called "ARCTICS" is currently in final testing stages. You will hear more about this system soon, as we move closer to full implementation. We expect that the system will be beneficial for both insurers and FSCO by improving efficiency, communication and consistency.
Contact
Should you have any inquiries regarding this Bulletin, please contact your rate analyst in the Automobile Insurance Division at FSCO. Please note that this bulletin and the Technical Notes are posted on FSCO’s website at: www.fsco.gov.on.ca
Bryan P. Davies
Chief Executive Officer and
Superintendent of Financial Services
January 31, 2003
Attachments (PDF):