PAA

sant93sant93
in CIA.IFRS17-1

In the battle cards it says "PAA is OK to be used outside Quebec since policy terms are generally <1 year".
Curious about this.. why are policy terms > 1 year in quebec? what is the average policy term in quebec?

Comments

  • Staff-T1Staff-T1

    Hi,

    Referring to Auto here. 2 year terms for Auto policies are an option in Quebec so you wouldn't be able to automatically use PAA for QC Auto

  • sant93sant93

    ah I did not know that! thank you

  • oxalisoxalis

    Question: identify considerations under PAA for reclassifying a group from non-onerous to onerous

    • judicial decisions (landmark court cases)
    • regulatory changes
    • economic changes (trends, interest rates)
    • RA changes (Risk Adjustment)
    • expense allocations

    I wonder why are these considerations specific to PAA, are they not valid under GMA as well when a group change from non-onerous to onerous?

  • Staff-T1Staff-T1

    Hi,

    So here's my take on it. It's important for PAA because if you are a non onerous group under PAA, you would not have to calculate the loss component. However, any of the above considerations could make you onerous which would then mean you'd now have to calculate a loss component.

    I wouldn't say that they are not valid for GMA in so far that they are not as important because under the GMA, you would already have gone through the tedious steps of calculating the CSM which is about as complex as the LC (You can think of the LC as the opposite of the CSM). So a non-onerous contract turning onerous does not necessitate more complex calculations under the GMA (just flip the CSM switch to LC) while it does for a contract currently under PAA.

  • oxalisoxalis

    Thank you!!

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