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2008 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2008

Canadian Institute of Actuaries. L’Institut canadien des actuaires. 2008 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2008. PD-8 Update on Ratemaking Standards. Blair Manktelow Chairperson, CIA Committee on Property & Casualty Insurance Pricing. Agenda.

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2008 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2008

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  1. Canadian Institute of Actuaries L’Institut canadien des actuaires 2008 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2008

  2. PD-8 Update on Ratemaking Standards • Blair Manktelow • Chairperson, CIA Committee on Property & Casualty Insurance Pricing

  3. Agenda • Notice of Intent • Responses to NOI • Current status of Ratemaking Standards of Practice

  4. Notice of Intent • Released June 25, 2008 to membership • Context • Issues and desired outcomes • Proposed practice-specific standards of practice • Proposed principles • Process and timetable

  5. Context • Limited to principles applicable to the estimation of costs • Currently no practice-specific guidance for ratemaking in Canada • Automobile insurance legislation requires filing of rates with actuarial justification and certification.

  6. Issues and Desired Outcomes • Work needs to be of consistently high quality • Some actuaries work alone and do not have benefit of discussing with peers • Ratemaking is subject to rate filings and hearings • SOX can put ratemaking under the same process and review standards as financial reporting. • Practice-specific standards will help actuaries with auditors • No standard reference for peer reviews

  7. Proposed new Standard of Practice • Applicable to all P&C ratemaking work in Canada performed by all actuaries. • Would “Canadianize” much of relevant CAS Principles and AAA Standards • Sections on Scope, Principles, Definition, Method, Reporting.

  8. Proposed Principles • From CAS Statement of Principles Regarding P&C Insurance Ratemaking • Estimate of expected value of future costs • All costs associated with transfer of risk • Provides for costs of an individual risk transfer • Reasonable and not excessive, inadequate or unfairly discriminatory

  9. Process and Timetable • Approved for distribution on June 5, 2008 • Comments by July 31, 2008. Extended to August 15th at request of one party • Exposure draft by December 2008 • Finalize changes by July 2009 • Effective date of December 2009

  10. Feedback • Six responses from a variety of parties • Company actuaries • Regulators • Consulting actuaries

  11. Issues Raised • Timeline aggressive? • Qualification of opinion • Fluctuating volume of data • Examples of when outside of accepted actuarial practice • Inclusion of government monopoly insurers

  12. Issues Raised (cont’d) • Keep abreast of what is going on south of the border • Is an SOP required, or just guidance? • Would a SOP limit the role an actuary could play in the pricing of a product? • Should it apply to public personal injury compensation plans? • Need for educational note on auto insurance ratemaking

  13. Current Status of Standard of Practice • Currently in rough draft • Committee is currently reviewing feedback of CIA members on NOI • Committee will need some additional members especially for review of French translation

  14. Questions?

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