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, 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?