FSRA’s webinar on filing submissions for changes in Statutory Accident Benefits options

0:05

Hello, everyone, and welcome to today's webinar, FISRA's Filing Specifications Auto-Reform SABS Optionality Webinar.

0:14

And before we get started, I'd like to go over a few items so that you know how to participate in this event.

0:21

You have the opportunity to submit any questions you have to our presenters by typing them into the questions pane of the GoToWebinar control panel.

0:29

You can send those questions in at any time during the presentation.

0:32

we will collect these and address them during the Q &A portion after the presentations.

0:38

And with that, I would now like to introduce Kelly Bruce, Special Advisor and Technical Expert Auto Insurance Supervision. Thank you, Karina.

0:48

Good morning, everyone. Thank you for attending today's webinar on the SABS Optionality Filing Specifications.

0:55

As Karina mentioned, my name is Kelly Bruce, Special Advisor and Technical Expert in Auto Insurance Supervision here at FISRA, and I will be your host for today's meeting.

1:05

I hope you find today's webinar informative.

1:07

Let's get started.

1:12

Our agenda for today will begin with speaker introductions, followed by a land acknowledgement.

1:18

Our first speaker will review a summary of the SAP's optionality changes and the industry working groups that were instrumental in the development of the filing specifications.

1:28

We will then complete an overview of the filing requirements and end with a summary of key points and Q &A.

1:36

Please enter your questions as they come to you so that we can address them during the Q &A period at the end of the presentation.

1:44

Please note that a link to the recording on the FISR website will be sent next week.

1:55

Please allow me to introduce our speakers for today, Michelle Dodokin, Head of Auto Supervision, Nada Frej, Director of Auto Insurance Supervision, and Kong ****, Chief Actuary Auto Insurance Supervision. Let's begin with a land acknowledgement.

2:16

It is important to acknowledge the land we are on is the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to diverse First Nations, Inuit and Métis peoples.

2:35

We acknowledge that Toronto is covered by Treaty 13 with the Mississaugas of the Credit and the Williams Treaties signed with multiple Mississaugas and Chippewa bands.

2:47

I'll now hand it over to Michelle to begin with a review of the SAAB's optionality changes.

2:54

Thanks, Kelly, and good morning, everyone.

2:56

Thanks for joining us today.

2:58

We're starting with, next slide, please.

3:02

We're starting with an overview of the government auto insurance reforms that are coming next year.

3:07

As many of you know, starting July 1st, 2026, Ontario auto insurance will undergo significant changes to optional accident benefits to provide consumers with more choice.

3:19

Medical, rehab and attendant care benefits will continue to be mandatory while all other benefits such as income replacement, non-earner, caregiver support and funeral coverage will become optional.

3:32

Another significant change is the introduction of the first payer rule.

3:36

Under this rule, auto insurers will become the first payer for medical and rehab benefits.

3:41

This eliminates the requirement for claimants to exhaust collateral benefits before claiming from their auto insurer.

3:48

These changes aim to give consumers more control and allow them to tailor their coverage to better suit their individual needs and circumstances.

3:57

Next slide, please. One more.

4:05

To implement the new reforms, FISRA, along with several major stakeholders such as the IBC, REBO, IBAO, and members of CADRI have been working together to provide industry support for the implementation of the reforms.

4:19

There are several industry work streams supporting pricing and underwriting, consumer and broker education, and technology implementation.

4:27

Today we'll be focusing on preparations for upcoming filings as well as the cost and rating benchmarks that were shared by email last week.

4:36

But before Before we move on, I want to recognize the massive effort behind this implementation.

4:42

In particular, I'd like to recognize the collaboration of Amanda Deane at the IBC, Jessica Harper from Rebo, and Colin Simpson from the IBAO, as well as the 80 plus industry members of the working groups.

4:55

Thank you on behalf of FISRA as we look forward to a smooth and successful implementation next year.

5:01

And now I'll hand it over to Nada to walk you through the filing requirements.

5:06

Thank you Michelle and good morning everyone. It's a pleasure to be here.

5:12

Today I will discuss the filing requirements for auto reform and we will start with the filing submission period.

5:21

As we work through the filing specifications within our industry working group that Michelle referenced, we received feedback from many insurers that participated in this workstream about the need for additional flexibility to manage business priorities outside of the reform.

5:40

We heard your feedback, and in response, FISRA is introducing two filing options to provide the additional flexibility that you're looking for.

5:51

First option, an accelerated path, where you can file any time after August 1st, 2025, and you will receive a decision within 30 business days.

6:04

Second option is a non-accelerated path, where you can file by September 30th, 2025, and you will receive a decision by the end of this year.

6:16

But regardless of the filing path you choose, you remain ultimately accountable for ensuring implementation by July 1st of 2026.

6:26

Next slide, please.

6:31

Choosing a filing path will depend on the complexity of your change.

6:37

If you choose the accelerated path, you must use costing benchmarks for BI and AB rate adjustments and for optional AB pricing.

6:49

You must use FISRA's benchmarks assumptions for your optional AB uptake rate as well.

6:55

It is preferred that you offer coverages individually, but for the more expensive coverages such as income replacement, you should offer them individually so that customers have the option to opt out or decline the coverage.

7:14

And you have the flexibility to introduce bundles through this path, and you cannot introduce new limits or eligibility through this path.

7:24

and you can only offer existing limits.

7:29

And you must use the new standard SAP's optionality endorsement, endorsement 47R. That's the new endorsement that we're introducing.

7:40

So you're not able to file a non-standard one through this path.

7:47

You may also wish to file your standard or non-standard certificate of auto insurance.

7:54

If you choose the non-accelerated path, you may deviate from the costing benchmarks for BI and AB rate adjustments and for optional AB pricing.

8:06

But you must provide actuarial justifications for your proposed changes using your own credible data.

8:14

You must also use the benchmark uptake rates and it is preferred that you offer coverage individually.

8:25

You have the flexibility to introduce bundles and you may introduce new limits and eligibility through this path.

8:35

You have the option to use the standard endorsement or you can also introduce a non-standard one that will be subject to the same requirements.

8:47

You may also wish to file your standard or non-standard certificate of auto forms.

8:55

To summarize, if your filing is more complex, where you may deviate from the benchmarks for pricing, introduce new limits and eligibility, or create a non-standard endorsement, you must choose the non-accelerated path.

9:13

However, if you're planning to keep it simple by using the FISRA benchmark for pricing, using the standard new endorsement, and only offering existing limits, you may use the accelerated path.

9:30

However, I would like to highlight that for both options, you must use the FISRA benchmarks AB uptake rate.

9:41

Next slide.

9:45

We will cover the overall filing approach for auto reform.

9:51

You are all very familiar with the current process where you submit separate filings for rates, underwriting, endorsements, and other components, but for a complex change such as auto reform, this process can be time consuming for both insurers and FISRA.

10:12

Therefore, with the auto reform, FISRA is introducing a new approach, a single filing format that consolidates all components from different filing types into one single filing, which will include the cover letter, rate changes, underwriting rules, forms, and endorsements.

10:35

This approach will facilitate a comprehensive review of all information, saving time and enhancing efficiency for both the submission process and the review process.

10:49

A last note on this slide, insurers must submit one filing per vehicle category.

10:55

For example, PPA in one filing and motor homes in another separate filing and so on.

11:04

Next slide.

11:08

I am going to hand it over to Kong to cover the reform benchmarks.

11:17

Thank you, Nada.

11:19

Good morning, everyone.

11:21

Thank you for providing me this opportunity to guide you through Fizra's auto insurance product benchmark assumptions for auto insurance policies with an effective day on and after July 1st, 2026 for both new business and renewable business.

11:37

My name is Khan.

11:38

I'm the chief actuary for auto insurance supervision here in Fizra.

11:42

Within this session, I'm going to provide you more information and insight into benchmark analysis, the deviation of the benchmark assumptions, and underlying data and results.

11:54

First of all, some highlights.

11:57

The major part of this reform is to provide optionalities to consumers.

12:02

So within accident benefit coverage, for coverage that are outside of the medical rehab and attendant care where it becomes optional, effective July 1, 2026.

12:14

The benchmark analysis has been derived based on the private passenger vehicles data at industry aggregated level as of December 31, 2023.

12:25

Insurers who rely on these benchmark factors will be able to use accelerated filing approach.

12:33

Insurance companies that are writing non-PPA lines of business may also consider the use of the PPA benchmark in their initial filing in order to enjoy the accelerated filing approach for the reformed change.

12:46

Please note that as per the requirements in the statutory accident benefit schedule, insurance companies are required to offer renewal business the same benefit limit the policyholder had in the preceding policy term.

13:02

This is the reason that FISRA is more comfortable to set 80% uptake rate as a benchmark assumption in the initial reform funding application for all fundings for both accelerated and non-accelerated funding approaches.

13:19

Please note that FISRA also welcome insurance companies to make any adjustment to their optional accident benefit pricing and options at a later time when the actual uptake rates where it becomes available.

13:33

Referring to the consulting actuaries costing report, there's different analysis performed varying by uptake assumption anywhere between 55% and 100%.

13:47

The overall premium impact under different scenarios are all centralized around 0%.

13:53

That is the reason Fisher is more comfortable to expect the insurance company to achieve the overall premium revenue neutrality at individual coverage level.

14:04

This means that insurance companies will need to achieve 0.0% premium revenue change for both BI and accident benefit coverage.

14:14

No other changes are permitted in the final application for things that are outside of the auto reform.

14:20

Next slide.

14:26

FISRA formed a reform working group in October last year.

14:31

And between October last year and this month, there's multiple iterations of the reform analysis, reform costing report, benchmark document has been produced.

14:41

The feedback received from working group has been reviewed and incorporated in finalizing the final benchmark document.

14:50

We encourage all pricing actuaries on the call to have a comprehensive review of the change to the statutory accident benefit schedule, the reform costing analysis, the reform costing report, to gain a comprehensive understanding how FISRA informs its deviation of the benchmark factors.

15:10

Please note that within an accident benefit coverage, for coverage that are outside the medical rehab attendant care, they will become optional for policies effective on and after July 1st, 2026.

15:23

But insurance companies continue to need to offer them to policyholders who have the needs.

15:30

Those optional coverage will include disability income, caregiver, housekeeping, home maintenance, non-earner coverage, visitations, desk benefits, funeral benefits, and more.

15:44

What insurance companies will need to do is to remove those 9 optional coverage from existing accident benefit based product, and then develop new pricing options for each of those 9 optional coverage in the new AB product.

16:00

This requires the insurance company to reduce their accident benefit base rates by 18.9% as the first step.

16:08

When insurers are developing their new pricing options for each of the 9 optional coverage for the future products, two factors are considered as per the reform costing report.

16:20

Anti-selection and error rates.

16:24

Anti-selection refers to the risks that do not have access to collateral disability income benefits, but decided to opt into the new future optional accident benefits in the future.

16:36

Error rates refers to the risks that do not have collateral benefit access, and also they decided not to opt into the future optional accident benefit products.

16:49

Based on these two factors and under the 80% uptake assumption, insurance companies were multiplied by their current cost for the optional coverage by a factor of 1.1 in order to account for anti-selection and error rates, to arrive at the required premium for nine optional coverage combined bases in the new product.

17:11

This is also going to be the maximum premium insurance company can charge for the nine optional coverage combined in the future product.

17:21

Please refer to the statutory accident benefit schedule as well as this rest reform costing analysis for details.

17:31

Next, the change to the first payer will require insurance company to make adjustment of their AB base rates by additional 2.3%.

17:42

Combining the optionality and first pair, insurance companies may see a small decrease in their overall premium revenue for accident benefits.

17:53

As FISRA expects insurance companies to achieve overall premium neutrality at coverage level, insurance companies are permitted to make additional adjustments of 0.5% increase into accident benefits base rates in order to achieve the overall premium revenue neutral for accident benefit coverage.

18:13

Now, we're switching over topics to bothering injury coverage.

18:18

There will be a product reform for accident benefits, so there might be a potential loss transfer from accident benefits to bothering injury coverage.

18:30

As Pfizer expects the premium-level neutrality at coverage level, which means 0.0 for BI and 0.0 for AB on premium revenue level.

18:40

The potential increase due to the loss transfer from AB to BI will need to be offset by the required off-balancing procedure for bodily injury coverage.

18:52

Having said that, effectively, there's no net adjustment required for bodily injury coverage base rate as part of this auto reform.

19:04

After the deviation of the benchmark, now we're looking at the summary of the benchmark factors.

19:11

Insurance companies will need to reduce their AB current base rates by 16.7%.

19:19

This accounts for the combination of reform optionality, the first payer, and off-balancing procedure for accident benefit.

19:31

Reducing the base rates by 16.7% will permit insurance companies to achieve overall premium revenue neutral for accident benefit coverage.

19:41

Then, insurance companies will need to use their current accident benefit premium multiplied by a factor of 20.8% in order to derive the required premium for the nine optional coverage combined in the future product.

19:59

This is also the maximum premium insurance company can derive for the nine optional combined basis for the new product in the future.

20:07

Insurers will then use this combined premium and use the benchmark to distribute the required premium into each of the nine optional coverage, including disability income, non-earner, visitation, caregiver, housekeeping, home maintenance, death benefits, funeral benefits, and more.

20:31

Please note that it is FISRA's expectation that insurance companies need to offer each the nine optional coverage on an individual basis.

20:39

When insurance companies decide to bundle, insurers will need to consider the associated waiting rules and underwriting rules.

20:48

As not mentioned in the previous conversation, there will be one single filing permitting insurance companies to submit all changes associated to the reform, including rates, risk classification, forms, and endorsements, waiting rules, and underwriting rules.

21:03

So it is the efforts require insurance companies to collaborate internally between pricing, underwriting and product to ensure that all required a document including reading rules and underwriting rules associated with the reform to be submitted in this one single file.

21:23

Now I want to emphasize a little bit more on the caregiver housekeeping and home maintenance coverage.

21:31

Please note that The catastrophic impairment of the caregiver and the catastrophic impairment of the housekeeping home maintenance are included in the current auto insurance product.

21:45

As per the requirement of the statutory accident benefit schedule, insurers will need to offer the same coverage the policyholders had at their renewal compared to the same coverage they had in the preceding term.

22:01

So having said that, all policies in the current insurance product does have CAD component of the caregiver and catastrophic impairment component of the housekeeping home maintenance and insurance company will need to offer the same catastrophic impairment portion to those renewal policies on and after July 1st, 2026.

22:24

At the same time, insurance companies are required to develop pricing options for all impairment options for caregiver and all impairment options for housekeeping and home maintenance as per the requirement of the statutory accident benefit schedule.

22:43

Having said that, insurance companies will need to have two sets of rates for caregiver as part of the reform requirements, catastrophic impairment rates and all impairment rates.

22:56

At the same time, insurers are required to have two sets of rates for housekeeping and home maintenance as well.

23:04

Again, catastrophic impairment rates and oil impairment rates.

23:11

Next slide.

23:15

On the final slides, I will do a recap.

23:18

Again, FISRA encourages insurance companies to use accelerated approach by relying on FISRA's benchmark assumptions for auto insurance reform in the reform application.

23:31

80% uptake rates will be the benchmark for both accelerated and non-accelerated funding approach.

23:38

FISRA does not permit insurance companies to make any deviation to the 80% uptake rates in the initial funding application.

23:46

However, Fizra welcomes insurance companies to make any adjustment to its optional accident benefit pricing, options, bundlings, in the future, when actual uptake rates where it becomes available.

23:59

When insurance companies decide to deviate from Fizra's benchmark using non-accelerated filing approach, Fizra expects insurance companies to provide detailed data, assumptions, judgments, rationale, methodology, and analysis result as part of the non-accelerated funding approach.

24:18

We encourage that within insurance companies' examination, there should be very close collaboration between expertise in pricing, underwriting, and product, to ensure we have a comprehensive understanding of all statutory accident benefit changes, to ensure that all required documentation that are associated to auto insurance reform to be submitted in the funding application.

24:42

Again, this would not only include the rating component, but also include associated risk classification, rating rules, underwriting rules, forms, endorsements, and more.

24:56

The intent of the auto reform is to provide options to consumers.

25:01

We hope that the pricing actuary during the work of designing the pricing options will consider meaningful choice will be provided to consumers in Ontario.

25:12

Finally, the GISA Star Plan changes will require insurance companies to submit the coverage code, benefit limit, and individual coverage premium for each of those nine optional coverage at individual risk level.

25:27

Please identify the subject matter expertise in your Who is responsible for a GISA stop-plan reporting in order to ensure that the accurate stop-plan reporting requirement will be fulfilled for all policies to be effective on July 1, 2026?

25:45

Thank you.

25:46

I will hand it over to Nada.

25:53

Thank you so much, Kong.

25:55

We will review the consumer education and transparency part, so next slide.

26:02

Before we jump into the details of this slide, I would like to give you some background.

26:08

As you know, this auto reform will significantly impact consumers.

26:14

Therefore, consumer education is a crucial aspect of this reform, and insurers are responsible for it.

26:22

We expect insurers to give their customers ample time to review information and understand their available choices.

26:32

In the past, you were prescribed the communication to be used in reforms.

26:38

However, this time it's a different approach where you have the control and flexibility to drive your own customer communication.

26:46

The advantage of this approach, it will allow you to design your communication strategy in line with your brand and style of communication with your customers.

27:00

To support you on this journey, Fizzra is creating an auto-reforms communication toolkit with products you can use to inform and educate your customers.

27:12

The toolkit will include resources such as key messages, a standardized letter, news release, fact sheets, Q &A, and more.

27:25

These products will be generic, allowing you to download and use them in any way you see fit.

27:33

The use of these products is not mandatory, but they can act as a guide.

27:40

You have the flexibility to create your own communication materials tailored to the needs of your consumers and your business.

27:52

FSRA is working with the consumer education workstream to seek feedback as the products are developed to make sure that we include your input.

28:04

The toolkit is scheduled to be posted on the FSRA website in the fall.

28:09

So it should be available soon.

28:12

So what does FISRA require in the filing submission?

28:18

We simply need to see a summary of the intended training plans for brokers and agents and a summary of the intended customer communication plan.

28:32

We're only asking for the plans and not the actual communication material.

28:38

So I will emphasize again, we do not need to see the actual communication material.

28:44

It is only the plans that we're looking to see.

28:48

For example, your plan could include, and this is just an example, organizing training webinars for agents and brokers to be completed in Q1, Having additional resources available for agents and brokers, such as FAQ documents to be completed in Q1.

29:11

A policy renewal insert explaining the changes to SAPs to consumers.

29:18

A link and resources for consumers to find additional information.

29:25

and referring your customers to your agents and brokers if they have additional questions.

29:32

And so on, there's many other things that you can add to your plan.

29:38

You may reference use of the FSRA toolkit in your communication plans and the items you will be using from the toolkit.

29:47

You may also choose to just use items from the toolkit.

29:52

Next, you should be prepared to answer customers' questions through your communication rather than redirecting them to FISRA.

30:05

Next slide, please.

30:10

On to next steps.

30:12

Next slide.

30:15

Okay.

30:16

So this is just a quick recap.

30:18

insurers can start submitting filings beginning August 1st of 2025.

30:27

If you're choosing the accelerated path, you can file any time, and if you're choosing the non-accelerated path, you must file by September 30th.

30:40

We encourage you to talk to your FSRA relationship manager with any questions or concerns related to your specific business needs.

30:51

We're always here to help.

30:53

As you know, all reforms must be implemented by July 1st of 2026, and planning starts now.

31:03

Please don't forget to allow enough time for all the tech implementation.

31:09

Best of luck with your planning.

31:11

Back to you, Kelly.

31:17

Thank you, Nada, Michelle, and Kong.

31:21

We'll now take some time to respond to the questions we've received so far.

31:25

If you have any questions, you can still enter them now using the Q &A icon on your screen.

31:32

Onto our first question.

31:34

This question is for both Kong and Nada, really.

31:39

You mentioned CAT and non-CAT for caregiver.

31:43

Can you elaborate a little bit more?

31:45

will the catastrophic only option for caregiver and home maintenance be available to purchase for new business after July 1st or renewals only? I'm happy to jump in first.

32:02

So the new regulation is an all-imperment or it refers to it as imperment, which is both cat and non-cat.

32:16

However, existing customers must renew with their existing coverage that they have today.

32:25

So I will emphasize, existing customers must renew with their existing coverage.

32:31

But for new business, what is required from a regulation perspective is to offer an impairment, which is all impairment, cat and non-cat.

32:42

We're also giving the flexibility to insurers, if they wish to offer at cat only, they're able to do that for a new business.

32:51

So you have the flexibility to offer cat only.

32:55

I also want to mention in the new endorsement that we introduced, we're also changing the language from cat, non-cat to all impairment or an impairment and cat only.

33:13

Kong, anything else to add?

33:16

Yeah, so as I mentioned during the webinar, insurers will be required to offer two sets of rates.

33:21

They will need to submit two sets of rates to FSRA for both caregiver and housekeeping home maintenance.

33:30

So again, the first set of the rates will be cat only, and the second set of rates will be the all impairment, which includes the cat and non-cat.

33:40

So, having said that, for caregiver insurers will need to file both catastrophic impairment and all impairment to FISRA.

33:49

Same happens to housekeeping and home maintenance.

33:52

Insurers are required to file two sets of rates including catastrophic impairment and all impairment to FISRA as part of the all insurance product reform filing application.

34:06

Thank you.

34:06

Our next question, our loss distribution for the new optional coverages is a bit different than the one shared in the benchmarks.

34:17

Do we still need to use the distribution shared in the benchmarks?

34:24

The night coverage distribution benchmark is derived based on industry data as of December 31st, 2023 using industry private passenger vehicles.

34:34

So this benchmark won't be perfect at the beginning for all lines of business and for all insurance companies.

34:41

Insurers are strongly recommended to assess their own data by comparing to the benchmark and benchmark distribution for each of the nine coverage and decide whether they're going to use accelerated funding approach or non-accelerated funding approach.

34:55

FSRA's recommendation is if the difference is not material enough insurers should still consider use of FSRA's benchmark at least in the initial funding application with FSRA by using accelerated funding approach.

35:07

If there's any change based on emerging claims experience, such as the actual experience is different from the estimated initially, the actual uptake rates will be different from the initially estimated in the benchmark, insurers will always have the privilege to make an adjustment to any actual assumptions including pricing and options in the future based on actual experience. Thanks, Kong. All right, this question is for Nada.

35:38

Do all vehicle categories need to go through the same filing path, either all accelerated or all non-accelerated? No, they don't all need to go through the same filing path.

35:52

An insurer, for example, can make a choice for PPA where it goes, for example, through a non-accelerated path and for motorhomes it could go through an accelerated path.

36:07

So we're really given the flexibility to insurers to decide which path is the best for your vehicle category.

36:19

This question is also for you as well Nada.

36:22

For insurers who do not write ERCA business, are filings also required?

36:30

Say that again, Kelly.

36:33

So for insurers who do not write ERCA or do write ERCA, sorry, are filings also required?

36:40

Yes, they are required.

36:43

Thank you.

36:46

Can an insurer set a time limit on how long customers can renew with coverages and limits that were in place before July 2026.

36:57

Will there be any future adjustments to regulations that put an end date to this grandfathering?

37:03

So as of now, there is no end date to grandfathering these coverages, which means renewal customers must continue to renew with their existing coverages and limits as they are until the customer agrees to make changes in writing.

37:24

So, there is no time limit based on the existing regulation.

37:30

In the future, I don't anticipate there's going to be changes to this, so I would advise all insurance companies to continue to make plans to continue to offer this for as long as the customer need the coverage.

37:48

Thank you.

37:49

This question is for Kong.

37:50

Kong, can you provide some more insight into that 1.1 adjustment factor on optional AB base rates? Thanks.

38:01

So as I mentioned during the webinar, there's two factors play a role as in the deviation of this factor 1.1, the error rates and anti-selection.

38:13

So it is a common understanding that when there's less people are going to purchase the future products, the individual's pricing will be increasing for each of those nine optional coverage. So this is considered as anti-selection.

38:26

At the same time, there will be an error rate factor considered as part of over auto insurance reform costing analysis, which means that people currently do not have access to collateral benefits.

38:39

They're also decided not to elect into purchasing those optional coverage in future.

38:44

So there will be some decrease in the optional accident benefit pricing as a kind of offset.

38:51

So if you're looking to the cost in reports that were presented in the executive summary page, the costing analysis has been performed under different uptake assumptions between 55% and 100%.

39:06

So under different scenarios, they're all centralized around 0% overall premium impact.

39:12

So that's the reason we have a 1.1 factor applied to the existing cost of the optional accident benefit in order to help insurance companies derive the new optional coverage combined pricing for the nine optional coverage on the combined basis.

39:32

Thank you, Kong. This next question is also for you again, Kong.

39:37

Can insurers adjust their rates based on observed uptake?

39:44

80% uptake rates is a benchmark assumption that we have decided in the funding specification.

39:50

So 80% uptake rates has been consulted in different working groups as part of the reform working group stream.

39:57

So we find it's comfortable to set 80% uptake rates primarily due to the fact that renewal policy will need to be offered in the exact same benefit limit they had in the preceding policy term.

40:08

We understand 80% uptake rates won't be the most accurate rates of the uptake in the future, but we ask insurance companies to use this 80% uptake rates in the initial filing application with Fizzra and consider any adjustment at a later time when the actual uptake rates will become available.

40:27

And if I may add as well, when you have more data and you wanna file, we're more than happy to work with you to expedite the process for you.

40:38

So it does not need to be a very complex and long process.

40:42

So please reach out to your relationship manager to come up with a plan on how to do a quick follow-up filing.

40:54

Thank you.

40:55

Nada, this question is for you.

40:57

Will the new standard endorsement be flexible enough to allow insurers to create their own bundles?

41:03

Can you elaborate more on what can be bundled?

41:08

Very good question. Thank you for that.

41:11

So we've designed a new endorsement in a way that can accommodate new bundles and coverage offerings.

41:20

So really insurers can come up with their own bundles and still use this new endorsement.

41:28

You will notice once you see the endorsement, once it's available on our website, that there will be blank rows in the document where you can utilize for your bundles and coverage offering.

41:43

In terms of what you can bundle, that's a very, it's a good question, a very common question.

41:52

We're leaving this to insurers.

41:54

We're not dictating what can be bundles, but we just ask you to keep in mind consumer fairness and transparency while you're coming up with your bundles and make sure that it's very clear and that it's of use for consumers so there is an evidence for consumer needs.

42:16

I also want to emphasize while the standard endorsement accommodate the bundles, you still need to file for these bundles and I'm going to hand it over to Kong to speak to the filing requirements for bundle.

42:33

Yeah, thank you, Nada.

42:34

I think you said perfectly, you know, insurance companies will be provided options and flexibility to design their own bundles because they understand their customers much better. They understand their needs.

42:47

But the intent of the reform is to ensure consumer choice.

42:50

So we truly hope that insurance companies, when designing the bundles, will ensure that they're really going to provide meaningful choice to consumers, first of all.

43:00

Secondly, I want to emphasize again on the GISA StarPlan reporting requirements.

43:06

For example, when insurance companies decide to bundle death benefit and funeral benefits together, they may have a single premium for that bundle.

43:15

However, as part of the StarPlan reporting requirements that are prescribed by GISA at a later time, insurers are still obligated to report death benefits and funeral benefits premium and coverage limit individually to GISA StarPlan.

43:32

So one pricing actually is to keep in mind that when you are designing your pricing and options and bundles, there's also a requirements by GISA to require that insurance company have to report individual risks, benefit limit, the premiums, as well as the coverage code to GISA StarPlan at individual risk level for each of those nine coverage.

43:55

My last point here related to a bundle, again is a re-elaboration of what I said during the webinar, is related to any reading rules, underwriting rules, forms that are associated to those bundles has to be fined altogether with the pricing options in the filing application.

44:11

As we're not talking about separate filings for underwriting, separate filings for forms and endorsement anymore, all reading and underwriting forms and endorsements associated with the filing has to be filed within this single reform filing.

44:28

Thank you, Kong. This other question is also for you Kong.

44:33

Are we allowed to convert the current flat dollar premium of the current optional AB coverage to percentage of highest rated AB premium?

44:42

For example, say current death benefit or dependent care dollars and convert it to a percentage.

44:51

I think FISRA does not prescribe a particular way insurance companies should be pricing its accident benefit optional coverage, the statutory accident benefit also does not prescribe a particular approach, whether the pricing should be based on dollar amount or based on the percentage basis.

45:09

I think based on our observations, some insurance companies charge optional coverage based on dollar amount, some of them are based on percentage, more or less, some of them are due to internal IT constraint, they have to go with one or the other way.

45:22

Some insurance companies also charge accident benefit based on policy level, Some of them are based on vehicle levels, some of them are based on the highest read it risk level.

45:32

So it's all company unique situation based on their IT constraints or their pricing constraints.

45:39

So in the new product, again, we're not going to prescribe the particular way that insurance company have to price in a certain way, whether it should be percentage or dollar amount, or based on what kind of exposure insurance company should be using AB optional pricing base.

45:53

But we require an insurance company to elaborate this in greater details in application for physical review in the reformed filing accompanied with their rating rules, whether they're going to rate accident benefit optional coverage by driver, by vehicle, or at highest rated vehicles and the alignment between the pricing and rating rules and on the rating rules as well.

46:22

Thank you, Khan. There was a follow-up to this question as well.

46:25

For the optional accident benefits coverages, are you expecting a flat premium charge or expecting a base rate that is still modified by accident benefit differentials?

46:37

For example, driving record, drive age, AB clear RGs, et cetera?

46:44

Again, so each insurance company may have a different rating algorithm and they may have different system constraints, we ask insurance company to demonstrate their proposal in the final implication whether it's going to be based on the final AB premium in the new products and present optional coverage premium as a percentage of that AB premium or based on the flat dollar amount.

47:09

Insurance company will have its own flexibility to design that.

47:13

Fisher doesn't want to prescribe that because we understand that if we prescribe that there might be insurance company won't be able to fulfill this expectation given their unique situation and IT system constraints. Thank you. This question is for Nada.

47:29

Will the OPCF 47 be available in the future? You mentioned a new endorsement.

47:36

Yes, so the 47 endorsement or OPCF 47 will be retired with this reform and we are introducing a new endorsement.

47:47

It's called OPCF 47R and as part of this reform and just for clarity the 47 it handles the SAP's priority of payments and we made sure with the new endorsement that we're going to carry the spirit of that 47 into the replaced. Yeah. Thank you. This other question is also for you, Nada.

48:19

Do we have to offer A-B optionality to all existing customers as of July 1st?

48:26

What are the expectations for handling requests from existing customers after July 1st that would like to take advantage of new products before they renew?

48:38

Yeah, so that's a very common question actually and I think insurers are worried about their systems constraints and operational constraints.

48:49

So what I will say, the regulation says that it must be available to all customers as of July 1st, 2026.

48:58

So optionality should be available to all, but there is no expectations that you will proactively offer optionality to customers prior to their renewal date.

49:11

So the expectation is that you offer it on renewal date.

49:15

However, if a customer requests that they need to take advantage of optionality prior to their renewal date, then you must make it available to them.

49:28

Now we understand there are a lot of constraints probably within your systems and your operation, as I mentioned earlier.

49:36

So I would say just work within these constraints as long as you offer a solution to the customer and we would ask you to be transparent and very clear and fair to your consumers while you do this. So again, yes, it must be available.

49:53

No proactive offering prior to renewal, but if the customer is asking for it, you should offer it in one way or another. Yeah.

50:07

So we had a question that someone has asked for us to just rephrase the question just to make it a little bit clearer.

50:14

It was a question earlier about ERCA.

50:17

Are filings required if we only write fleet policy, we do not write ERCA?

50:23

So you write fleet, but not ERCA.

50:29

Okay, so you do require, so I think fleet uses ERCA's rates and rules, which you require to file, But I will hand it over to Kong to see what's required from a rate perspective.

50:50

I assume this statutory accident benefit schedule change applies to all categories of the vehicles.

50:55

So it's a matter of reading change in alignment with the product change.

51:03

When the product changes, the rating will have to change for all categories of the vehicles.

51:07

Okay, so, but there is a requirement to submit forms and endorsement for a fleet.

51:17

I think according to different regulation and legislation within Ontario, there are certain part of the forms and endorsement underwriting rules for fleet might be very different from other categories such as private passenger vehicles, but because FISRA decided to include all reading and underwriting change, foreign and endorsement change in a single filing.

51:41

So even the fleet business may have less to change from a reading perspective.

51:49

There are still a lot of other things they will need to change in order to get their product ready on day one, effective July 1st, 2026.

51:55

So having said that, the insurance companies writing fleet-only business were still be required to submit this filing application to ensure that the products they offer were aligned with the new product for policies effective July 1st and after.

52:11

Thank you both. This will be our last question.

52:13

I just want to say we will take this fleet question away and respond in writing with the exact requirements, but overall there is a requirement to submit a filing.

52:27

Now some of the details might not be required within the filing, but we'll respond in writing for that one.

52:37

Thank you.

52:39

This will be our last question.

52:41

Please note that any questions not answered during the Q &A today will be answered and shared.

52:46

So the last question for today is for you, Nada.

52:49

What are the transparency outcomes FISRA is trying to achieve?

52:54

It's a very good question.

52:55

As I mentioned earlier, transparency is crucial and consumer education is very important for this reform.

53:05

And there are a few things that we would like to make sure that gets done through this reform.

53:12

We want to make sure that your customers understand the changes because they are big changes.

53:19

We want to make sure that customers know what options and coverages are available to them.

53:25

And also, we want to make sure that these options are, they can find them easily and get the information easily.

53:37

And also, you need to be clear on what options they're buying and what coverages they're declining and also the impact it will have on your consumers.

53:49

So, for example, if they decline income replacement, then what does it mean for them?

53:55

they need to make sure that they have another alternative in the case of a claim.

54:01

So just make sure that your customers understand whether it's new business or renewal, it's the same concept. So it's all about educating your customers.

54:10

So these are the outcomes that we're looking for. Okay, thank you. Thank you everyone for taking the time to be with us today.

54:21

For those you listed as the main contacts in Arctic's for your organization, you will be receiving a survey shortly after the webinar asking for your anticipated filing path and time of filing.

54:35

Please take a moment to complete the survey when it is received.

54:38

The information will assist FISRA in managing internal resources and supporting intermediaries and vendors through the transition, helping to ensure a smooth and coordinated implementation process.

54:50

I would also like to remind you that a link to the recording will be on the FSRA website and will be sent next week.

54:57

Please visit the FSRA website, the Auto Reform Optionality landing page, where you will find the filing specifications, costing analysis, and the FSRA benchmarks.

55:08

Thank you again for your time and participation.

55:11

We hope you found this session helpful.

55:13

Have a great rest of your day.

1. Will Catastrophic only option for Caregiver and Home Maintenance be available to purchase for new business after July 1^st? Or renewals only?

2. For the Optional Accident Benefits Coverages: Are you expecting a flat premium charge? Or expecting a base rate, that is still modified by accident benefits differentials? EG: Driving Record, Drive Age, AB CLEAR RGs, etc.

3. What customer communication details are going to be required with the filing? If the toolkit will not be available until later in the fall? What are insurers expected to include in the plan?

4. If the toolkit is not published by FSRA until fall, but insurers are asked to file by Sept 30, how will our filing refer to toolkit items we are planning on using or communications?

5. If we bundle death & funeral benefits for customers to select, can we use the standard form without showing the "bundle" on it but only check both death and funeral separately in the already existing lines for those coverages?

6. For insurers who do not write IRCA business, are filings required or is our obligation focused on customer/broker education i.e. FAQ document insert? Are filings required if we only write fleet and do not write IRCA?

7. When can we expect specific Items from FSRA to submit with filings such as the AB benchmarks, certificates, and endorsements? What are the endorsement forms affected by the reform and when will they be published to the FSRA website? A lot of the stress and uncertainty around this change is from not knowing when we will get the inputs we need and/or if they will look as expected.

8. Will we (non-PPA) still be required to offer all current increased optional AB coverage as well such as $600, $800, and $1000 income replacement for example?

9. If insurers introduce a limit for coverages that currently have no limit (e.g., visitors’ expenses, personal items), will this disqualify the filing from the accelerated route? Will FSRA provide guidance on what constitutes a reasonable limit? Please confirm the underlying assumption used in the costing analysis.

10. Will FSRA have another webinar session?

11. Will there be a new, special filing type option in ARCTICS since the Single Filing Format covers current components of rate classification, endorsement, forms, and UW rules?

12. Is Garage auto in scope for this change and if so are the rates required to be filed?

13. You have stated implementation by July 01, 2026. Cong mentioned reforms are for policies with an effective date of July 01, 2026 for new and renewing business. Does this mean if an insurer is issuing renewals 60 days in advance of renewal they must implement by May 01, 2026 for renewals?

14. Can you elaborate more on what can be bundled in the filing or what can be offered to insureds as a bundle for new optional coverages?

15. Given that all AB coverage options must be available for consumers to purchase individually, will FSRA require a rate for each option and each limit within the options?

16. Will the webinar be recorded?

17. You mentioned changing the language around impairments. So will we no longer have the 3 impairment categories Minor, Non-CAT and CAT? What will these categories be called?

18. What are the expectations for handling requests from existing customers after July 1 that would like to take advantage of the new products before they renew under the new SABS offer?

19. Follow-up question on mid-term change prior to renewal - can this include cancellation and reissue as new business (incl. MVRS process)?

20. Will the industry data be shared with insurers, similar to the TLE territory data?

21. Can we bundle new optional coverages with the current optional coverages, or is it only for the new optional coverages?

22. Will there be any future adjustments to regulations that put an end date on the 'grandfathered' coverage - i.e., Cat/Non-Cat migrating to 'Impairment' - or will it continue indefinitely?

23. Will FSRA be publishing an FAQ?

23. For the OPCF 47R [and O.E.F. 47R] - the final form looks like there is a radio button. Is there a standard approach for this (check mark vs. fill in)? Also, there appears to be a text box below - should insurers fill in limits or is confirming/declining via radio button enough?

24. What is the broker’s role in educating the customer? Has IBAO made any commitments?