Dutil.FA
Hello,
In this paper, it notes at the heading that something important to note is the "application of RSP concepts to other types of insurance such as flood" - how would you go about that? The paper doesnt discuss it, but does this mean like if you were to suggest a RSP for flood what would you reccommend (like sending risks with worse loss ratios than the pool so the company can profit)?
Thanks!
Comments
You can check out 2014.Fall #13c (and the associated battle card in BattleQuiz 4) for a prior question that discusses the application of RSP concepts to overland flood coverage.
The question discusses how participation ratios should be structured when applied to overland flood. Note that the solution accepts either option, as long as the student justified their reasoning.
Dutil.FA TechNotes PPA
There seems to be some (in)direct overlap here. There are some conflicting arguments:
These are all in the 'quiz within the quiz'
These are just the jist of the Q&A
1) what must be provided if a great change is made from industry/industry benchmark?
PPA says: 'detailed rationale & support needed'
TechNotes says: Reduce proposed rate change accordingly.
2) when rating rules or risk class changes, a major filing required was the Q&A.
How about a base rate change, wouldn't that trigger a major filing also?
3) What is the use of ext benchmarks appropriate? A was when OSFI tells you to do so.
Surprised not for uncred/low volume.
4) company MUST disclose methodology for trend bc of stat agency report structure
what is that?
5) what problem member companies face ceding to RSP: some companies were ceding disproportionately - creates imbalance
That's why you have 5% cap or w.e depending on province?
I'm not I fully see your first part of the question - but I'll try and best answer your 5 points
Both comments/answers are correct. Similar thing I told other students, but don't try to always take a question and answer at face value, as the same thing could have potential course of actions (like this one) so it's important to understand the why and how things work.
PPA - Of course, if you are proposing rate changes and your assumptions differ from the industry benchmark you will have to justify it in order to get the rates you are asking for.
TechNotes - While you might be able to justify and to you it might make sense, there are often times when the assumptions you are proposing if too different from benchmark will be dis-regarded and therefore the rate change you are proposing/asking for will be reduced.
Maybe I can re-word the question/answer but the question was being asked at the angle that while rating rules/risk class changes would require a major filing, something like a base rate change might not (standard filing, if less than 5%) always require a major filing.
https://www.fsrao.ca/industry/auto-insurance/regulatory-framework/guidance-auto-insurance/standard-filing?utm_source=chatgpt.com)
Can be for uncred/low volume as well, but often with regulators or filings, even if volume is good, they might just tell you to use their benchmarks (This happens in other provinces with regulators as well)
Maybe I can better re-word question/answer here as well, but basically there is the General Insurance Statistical Agency Automobile Statistical Plan, and your data/numbers should be able to reconcile with that to show that your data/picks are accurate. I put an excerpt from PPA for you below (Basically you have to attest that your data/methodology is true and can be validated"
"I confirm that any changes that are ultimately approved in this rate filing will be
reviewed both internally and, if needed, with the General Insurance Statistical
Agency and/or its data provider to ensure that the required data can be properly
and correctly delivered for inclusion in the Automobile Statistical Plan."
Yes. Think of it like this, if we are both insurers, both I cede all 100% of my work risks and you cede only 25% of your work risks, there will be imbalance and I will be having much more benefit than you.
Hope these help clear things for you!