Chapter 15 - Automobile Insurance C14

Terms	Definitions
Why must automobile insurance be available to any vehicle owner?	insurance for all vehicle owners ensures indemnity in cases of liability and collision damage.
What is another name for regular markets?	"voluntary markets"
What are residual markets?	special programs to ensure insurance availability for risks that are less desirable and more hazardous.
Give an example of a risk that might need to be insured through residual markets?	In "tight" market conditions, a risk that has poor claims history may need to be insured through residual markets.
Identify TWO (2) objectives of residual market programs.	- immediate availability of a market to agents and brokers and the public - equitable sharing of the residual market by all insurers.
What is the Facility Association?	it is an unincorporated association of insurers created on January 28, 1977.
What is the purpose of the Facility Association?	it provides automobile insurance to owners and operators of motor vehicles who may have difficulty obtaining insurance through the voluntary market.
List the provinces where the Facility Association operates.	Alberta, New Brunswick, Newfoundland, NWT and Nunavut, Nova Scotia, Ontario, PEI, Yukon.
Define "car year."	it is the measurement of an insurer's exposure. it means an automobile insured for a period of 12 months.
What are servicing carriers?	Insurers share in the operations of the Association based on their market share of automobile business in the jurisdictions where the Association operates. The underwriting and claims functions are provided by a limited number of designated members, called servicing carriers.
How are servicing carriers compensated?	they receive expense allowances agreed to by the membership to compensate them for the cost of acting on behalf of the Association.
What are risk sharing pools?	these pools allow automobile insurance underwriters to transfer certain private passenger automobile exposures that may meet the companies underwriting guidelines.
Which provinces have risk sharing pools?	Alberta, NB, NS & Ontario.
When a risk is transferred to the Ontario Risk Sharing Pool, who is responsible for servicing the	the company that issues the initial policy (primary writer) remains responsible.
policy", including settling any claims that may arise from the policy?	The PRR allows an insurer to transfer any risk that does not meet its underwriting criteria into a shared pool.
How does the Plan de repartition des risques (PRR) in Quebec differ from the Facility Association in the other provinces?	The PRR allows an insurer to transfer any risk that does not meet its underwriting criteria into a shared pool.
Who belongs to the PRR?	all automobile insurers licensed in Quebec participate in the PRR except those who do not write any automobile third party liability insurance.
Who makes the decision to transfer a risk to the PRR?	the decision to transfer a risk to the PRR is made solely by the insurer. almost unknown to the public.
Who subsidizes the Facility Association or the PRR when premiums are not enough to cover claim costs?	the operations are subsidized the insurance industry.
Why are there no such industry or government programs for insurance availability in British Columbia?	it is not necessary as the ICBC is a crown corporation with a mandate to provide basic insurance to all drivers in a non-discriminatory manner.
Why are there no such industry or government programs for insurance availability in Manitoba or Saskatchewan?	it is not necessary as the governments must provide basic coverage to all residents who drive registered vehicles that fall within the jurisdiction of the acts government auto insurance.