General Insurance Statistical Agency (GISA) Presentation to Ontario Conference of Casualty Actuaries November 9, 2005

2 1.Background Regulators have authority under their respective insurance legislation to appoint a statistical agent to collect information from all licensed insurers. IBC has been designated as statistical agent for three statistical plans: –Automobile Statistical Plan (eight jurisdictions); –Commercial Liability Statistical Plan (Ontario only); and the –Ontario Statutory Accident Benefits Statistical Plan (Ontario only). IBC collects data from insurers and compiles the exhibits for the jurisdictions and recovers its costs via assessments to insurers and deficiency fees charged

3 2.Need for Action Recent auto insurance crises and reforms have increased the focus on the ASP. Changes to ASP required to monitor impact of changes. In Atlantic provinces, Alberta and Ontario there have been increasing questions on automobile insurance costs and in some cases the reliability of data raised by various stakeholders. Increased scrutiny of the auto insurance system and the need for quality data on a more timely basis to review costs and rates, understand the issues and develop appropriate solutions.

2. Need for Action – cont’d Technological advances and increased access to data has resulted in new and more sophisticated rating, classification and underwriting techniques From time to time, the ASP needs to be updated due to: -product or legislative changes -emerging issues or trends -changes in rating practices -technological or system changes 4

5 3.Action Taken Canadian Council of Insurance Regulators (CCIR) established a working group in February, Working group conducted a comprehensive review of the issues and identified options. CCIR accepted recommendation to establish an independent, non- profit agency to act as the statistical agent. Effective June 28, 2005, GISA is a federally incorporated not-for- profit agency and will be individually named the statistical agent by each participating provincial and territorial government by their respective regulator. Each participating regulator is a member of GISA.

6 4. Governance GISA is governed by a Board of Directors with the majority membership comprising the regulators. Board Of Directors is a tri-partite board, comprising regulators, insurance industry representatives and public representatives. Board has also established 3 committees: Executive Committee Finance & Audit Committee Technical Advisory Committee Executive Committee: Consisting of a Chair and 2 Vice-Chairs, provides oversight and direction on the general operation of the agency and the Secretariat.

7 4. Governance Cont’d. Finance & Audit Committee: Oversees, provides advice and makes recommendations to the Board on: External Audit; Internal Control and Risk Management; and Financial performance and planning. Technical Advisory Committee: Comprised of 10 members, provides advice and makes recommendations to the Board on: Possible changes to the Statistical Plan and associated exhibits and reports; Significant data requests; System changes requested by members or by the service provider; Data quality issues; and Emerging issues on the statistical plan. Actuarial services.

8 4.Governance Cont’d. GISA Secretariat –Provides support and consists of 2 staff: a Manager and an Administrative Assistant –FSCO will provide supporting functions to the Secretariat

9 4.Governance Cont’d.

10 5.Cost Recovery GISA will be fully cost recoverable, non-profit organization. GISA will recover its expenditures by assessments and deficiency fees collected by the IBC as service provider.

11 6. Service Contract with IBC A commercial contract will be made between GISA and the IBC to provide statistical services. Draft contract developed by regulators and currently under discussion. Discussions are being facilitated by a consultant.

12 7. Outstanding Data Elements Regulators had requested additional data elements be collected to keep the Stat Plan more current with industry classification plans These include: territory and use of FSA, expanding fields such as year licensed, year claims free, value coding for deductible/liability limits Benefits: –Actuarial support for class changes –Address data credibility concerns –Improve access to industry-wide data –Reduce time lag with quarterly report GISA needs to approve final data elements

13 8. Technology Redesign Current system is dated and at capacity. 20 outstanding changes to ASP as requested by regulators. IBC is proposing a major software and technology redesign to support ASP and other IBC functions. IBC had original proposal reviewed by an external consulting firm and had consultations with industry. IBC has revised its proposal based on the feedback. IBC to present redesign plan to GISA

14 9. GISA Designated the Statistical Agent January, 2006