AB Grid and Non-Grid
Hi,
Can anyone share with me why there are 2 pools from AB?
And why Grid has no Transfer Limit, whereas Non-Grid has 4%?
Also, I am not sure what "Grid" means here, it maybe because I not working in Canada tho...
Thanks and Warm Regards,
Wilson
Comments
Hi,
The grid pool exists because of the cap that is imposed by Alberta on your charged premium which leads to some risks being charged less than what they should theoretically be charged. Instead of getting charged their commercial premium, they get charged a grid premium which is lower.
For these risks which are "undercharged", Alberta allows insurers to transfer them to the grid pool because they are mandated by law to accept these risks which they have no pricing control over which consequently results in them having no control over the financial results of these group of risks.
The actual RSP pool has a limit because you of course want to cap the number of bad risks that can be sent over and is similar conceptually to the other RSP pools. You would send bad risks that are not grid capped here.
Also, there used to be a syllabus reading on Alberta GRID and non-GRID auto insurance but it has been removed. (A little unfortunate because other readings refer to it.)
Thank You T1 and Graham, now I am more clear about the background and where this GRID is coming from
I have a follow-up question,
In battle card: AB RSP: what are the 2 types of RSPs in Alberta
GRID:
→ for risks subject to statutory maximum premium
non-GRID:
→ for any risks the insurer feels are under-priced (similar to the Ontario RSP)
Isn't a bit contradicting with what you wrote up there (AKA for undercharge risks, AB allows insurers to transfer them into GRID pool?
Thank you!
pools by their very nature would have undercharged risks (you wouldn't ceded profitable business so share with your competitors) so the focus isn't on whether the risk is undercharged but rather why it is undercharged
Yup and to tag on to felixc5, you could be undercharged and be below the GRID premium