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  1. Role of Facility Association
    • ensure that automobile insurance is available for every owner and licensed driver of motor vehicles who requires it to legally operate their vehicles
    • operates in all provinces except QC (PRR) and BC, MA, SK (provincial public insurance)
  2. FA organization
    • residual market (FARM)
    • risk sharing pools
    • uninsured automobile funds (Atlantic)
  3. FARM
    • provides residual market for drivers and owners unable to get insurance in regular market
    • FA contracts with a few members to issue and administer policies (servicing carriers)
    • all policies are subject to rates, rules, and classification of FA
    • policyholders are aware that their insurance policy is part of the residual market
    • financial results are pooled among insurers based on participation ratios
  4. Risks Sharing Pools
    • allow auto insurers to transfer some of their exposure to an industry-wide pool
    • exposures don’t qualify for FARM, but insurers believe they represent a higher risk
    • acts as an industry-wide reinsurer largely invisible to consumers and intermediaries
  5. Uninsured Automobile Funds
    • administered in Atlantic provinces (NB, NL, NS, PEI)
    • provides financial compensation for damages to persons who can’t obtain satisfaction for their damages under of contract of auto insurance and where there is no or inadequate other insurance with respect to damages claimed
    • FA monitors investigation, defence, settlement through designated law firms and insurers
  6. Board of Directors and membership rights
    • composed of elected or appointed representatives from members and insurance brokers
    • manages and controls affairs and business of FA
    • responsibilities include suggested rate changes and filings, authorizing expenses, standards to be followed by servicing carriers and members, appointing committees to assist them
    • number of votes per insurer is determined by TPL direct WP for latest calendar year
  7. 5 classes of business determining participation in FA
    • PPV and non-fleet non-pool auto
    • all auto business other than (1) or transferred to a RSP
    • business transferred to RSP other than AB, NB, NS
    • business transferred to RSP in AB, NB, NS
    • all uninsured or unidentified motorist claims, and ON cat funds
  8. 5 requirements for a risk to be transferred to RSP
    • PPV
    • not FARM
    • carry at least minimum TPL statutory limit
    • member must follow appropriate classification, rating procedures, documentation
    • premium charged must be the approved premium
  9. RSP volume restrictions
    • ON: covers 85% (all others cover 100%); max 5% of exposure
    • AB: Grid = 100%; Non-Grid = 4%
    • NB: ≥ 1 household member is recently licensed driver with good driving record; 8%
    • NS: all inexperienced drivers with good driving experience (< 6 years, no accident)
Card Set:
2014-04-12 20:01:43
Auto Insurance
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