Facility Association Risk Sharing Poolstrictly Confidential

Facility Association Risk Sharing PoolStrictly Confidential

Member Survey for Valuation Purposes (June 2010)

Introduction

The data used in the valuation of Facility Association’s Risk Sharing Pools (“RSPs”) is assembled from premium and claims transactions pertaining to risks ceded to the RSPs by its member companies. In addition to industry-wide issues such as product reform and constitutional challenges, the valuation of RSPS experience can be affected by company-specific issues such as changes in reserving practices, reporting practices, and changes in the quality or quantity of risks ceded to the RSPs.

The purpose of this survey is to collect information, both quantitative and qualitative, to which Facility Association does not have access, to facilitate the interpretation of Risk Sharing Pool experience.Your participation in this survey will be helpful to Facility Association and ultimately to you as a member company, as we expect the information to provide some of the insights necessary to identify and better allow for changes in RSPS experience.

Survey Question 1 is general to all five Risk Sharing Pools, while Questions 2 through 8are specific as to issue or jurisdiction. In Ontario, for example, the unique RSPS valuation issues currently include the following:

Significant growth in the volume of business ceded to the RSP
Apparent deterioration in the experience of the business ceded to the RSP
Product reform being implemented effective 1 September 2010, and
HST being introduced effective 1 July 2010.

Most of the questions are either actuarial in nature, or should be considered in an actuarial context. If complete answers are not practical for you, partial answers may still be helpful and should be submitted. If a company is part of a group, it is perfectly acceptable to respond to the qualitative questions on a group basis.

All responses will be keptstrictly confidential, and should be provided by email to where they will be reviewed by Mrs. Cynthia Potts, FCIA, FCAS of Eckler Ltd., Facility Association’s valuation actuary. The same email address can be used if questions arise during the completion of the survey.Please send your completed survey by July 5, 2010. Your prompt attention to this survey is important. Thank you for your co-operation.

Identification:
Company or Group Name:
Company Number(s):
Prepared by:
Telephone & Email:
Date Completed:
Members Cession (Car Years) YTD per December 2009 Transfer Limit Report:
2009 Cessions
RSP Total / Threshold / 2009 Cessions
Group Total* / Above
Threshold?
Ontario RSP / 175,542 / 10,500
Alberta Grid RSP / 112,921 / 6,800
Alberta Non-Grid RSP / 52,658 / 3,200
New Brunswick RSP / 11,714 / 1,200
Nova Scotia RSP / 13,075 / 1,300

*Please obtain this information from your December 2009 transfer limit report.

If the Group’s 2009 cessions to all RSPs amount to less than 500 car years in total, please complete this page only, and return it by email to .

RSP Reporting - General

The Portal allows Facility Association to monitor member reporting on a monthly basis, but not in the detail necessary to adequately assess reporting patterns for actuarial purposes.
Please respond to this question if the Group’s 2009 cessions to all RSPs amount to more than 500 car years in total (i.e. for all RSPs combined).

a)Uniformity Across RSPs.

i.Do the same reporting protocols apply to your cessions to all RSPs? [In this context, “reporting protocols” refer to any rules/guidelines/practices affecting the frequency or timing of reporting ceded transactions to Facility Association Risk Sharing Pools.]

Yes
No

ii.If not, please explain below, and/or provide details in your answers to 1b) through 1e).

b)Premiums.

i.Please describe your standard reporting protocol for premium transactions. For example, are premium transactions submitted on a monthly basis, or a weekly basis, etc?

Daily
Weekly
Monthly
Other (specify)

ii.Under normal circumstances, would premium transactions reported in a given month relate to transactions effective in the same month, or one month prior, etc?

Same month
1 month prior
2 months prior
Other (specify)

iii.Comments:

c)Claims.

i.Please describe your standard reporting protocol for claims transactions. For example, are claims transactions submitted on a monthly basis, or a weekly basis, etc?

Paid / Outstanding
Daily
Weekly
Monthly
Other (specify)

ii.Under normal circumstances, would claim transactions reported in a given month relate to transactions effective in the same month, or one month prior, etc?

Paid / Outstanding
Same month
1 month prior
2 months prior
Other (specify)

iii.Comments:

d)Reporting Delays.

i.In a typical year, how often would there be a material deviation from the standard reporting protocols described above?

Premiums / Paid / Outstanding
Once a year
Twice a year
Three times a year
Other (specify)

ii.Please provide examples of the causes of such deviations?

e)Changes in Reporting Protocols

i.Please describe any significant changes made to the reporting protocols for premiumsduring the last three years.

ii.Please describe any significant changes made to the reporting protocols for claims during the last three years.

Case Reserving Practices - Ontario

a)OntarioThird Party Liability Bodily Injury.

i.Please describe your procedures for setting and monitoring case reserves, with particular attention to the use of formula reserves, tabular reserves, or average initial reserves.

ii.Have these procedures changed within the last 3 years? If yes, please explain.

iii.Have significant changes been made to average initial reserves (if any) within the last 3 years? If yes, please explain.

iv.Have case reserves been subject to non-routine review within the last 3 years?If yes, please explain.

b)Ontario Medical Expense.

i.Please describe your procedures for setting and monitoring case reserves, with particular attention to the use of formula reserves, tabular reserves, or average initial reserves.

ii.Have these procedures changed within the last 3 years?If yes, please explain.

iii.Have significant changes been made to average initial reserves (if any) within the last 3 years? If yes, please explain.

iv.Have case reserves been subject to non-routine review within the last 3 years?If yes, please explain.

c)OntarioDisability Income.

i.Please describe your procedures for setting and monitoring case reserves, with particular attention to the use of formula reserves, tabular reserves, or average initial reserves.

ii.Have these procedures changed within the last 3 years?If yes, please explain.

iii.Have significant changes been made to average initial reserves (if any) within the last 3 years? If yes, please explain.

iv.Have case reserves been subject to non-routine review within the last 3 years?If yes, please explain.

d)OntarioHST.

i.To what extent is HST expected to be reflected in case reserves at 30 June 2010?

ii.As at 31 December 2010?

Case Reserving Practices – Alberta

The following questions relate to Private Passenger business in the Province of Alberta
Please answer this question if either of the Group’s 2009 Alberta Grid and Non-Grid RSPscessions exceed the relevant thresholds of 6,800 car years and 3,200 car years, respectively, as indicated on page 1.

a)Alberta Third Party Liability Bodily Injury.

i.Please describe your procedures for setting and monitoring case reserves, with particular attention to the use of formula reserves, tabular reserves, or average initial reserves.

ii.Have these procedures changed within the last 3 years?If yes, please explain.

iii.Have significant changes been made to average initial reserves (if any) within the last 3 years? If yes, please explain.

iv.Have case reserves been subject to non-routine review within the last 3 years?If yes, please explain.

b)AlbertaConstitutional Challenge.

i.At any time, was an explicit provision included in case reserves in respect of constitutional challenges in Alberta?

ii.If yes, when were such case reserve adjustments first made?

iii.If yes, have they since been eliminated, and if so when?

Case Reserving Practices – New Brunswick

The following questions relate to Private Passenger business in the Province of New Brunswick
Please answer this question if the Group’s 2009 New Brunswick RSP cessions exceed the threshold of 1,200 car years, as indicated on page 1.

a)New Brunswick Third Party Liability Bodily Injury.

i.Please describe your procedures for setting and monitoring case reserves, with particular attention to the use of formula reserves, tabular reserves, or average initial reserves.

ii.Have these procedures changed within the last 3 years?If yes, please explain.

iii.Have significant changes been made to average initial reserves (if any) within the last 3 years? If yes, please explain.

iv.Have case reserves been subject to non-routine review within the last 3 years?If yes, please explain.

b)New BrunswickConstitutional Challenge.

i.At any time, was an explicit provision included in case reserves in respect of constitutional challenges in New Brunswick?

ii.If yes, when were such case reserve adjustments first made?

iii.If yes, have they since been eliminated, and if so when?

Case Reserving Practices – Nova Scotia

The following questions relate to Private Passenger business in the Province of Nova Scotia
Please answer this question if the Group’s 2009 Nova Scotia RSP cessions exceed the threshold of 1,300 car years, as indicated on page 1.

a)Nova Scotia Third Party Liability Bodily Injury.

i.Please describe your procedures for setting and monitoring case reserves, with particular attention to the use of formula reserves, tabular reserves, or average initial reserves.

ii.Have these procedures changed within the last 3 years?If yes, please explain.

iii.Have significant changes been made to average initial reserves (if any) within the last 3 years? If yes, please explain.

iv.Have case reserves been subject to non-routine review within the last 3 years?If yes, please explain.

b)Nova ScotiaConstitutional Challenge.

i.At any time, was an explicit provision included in case reserves in respect of constitutional challenges in Nova Scotia?

ii.If yes, when were such case reserve adjustments first made?

iii.If yes, have they since been eliminated, and if so when?

Ontario Product Reform (Effective 1/Sep/10)

a)Rate Filing.

i.Have you received approval from FSCO for rate levels effective 1 September 2010?

Yes
No

ii.If YES, please indicate the approved rate level change for each of the following coverages:

Third Party Liability
Accident Benefits (Total)

iii.If NO, please indicate the filed rate level change for each of the following coverages:

Third Party Liability
Accident Benefits (Total)

iv.Comments:

b)Policies Effective on or after 1/Sep/10.

i.For each relevant coverage or sub-coverage, please indicate the estimated change in loss costs pertaining to product reform.

Third Party Liability (specify sub-coverages)
Total
Accident Benefits (specify sub-coverages)
Total

ii.Comments:

c)Portion of Policies Earned on or after 1/Sep/10, but effectiveprior to 1/Sep/10.

i.For each relevant coverage or sub-coverage, please indicate the estimated change in loss costs pertaining to product reform (i.e. the effect of changes in settlement processes), assuming optional extension of coverage applies?

Third Party Liability (specify sub-coverages)
Total
Accident Benefits (specify sub-coverages)
Total

ii.Comments:

d)Losses Outstanding at 1/Sep/10.

i.For each relevant coverage or sub-coverage, please indicate he estimated change in outstanding losses pertaining to product reform (i.e. the effect of changes in settlement processes).

Third Party Liability (specify sub-coverages)
Total
Accident Benefits (specify sub-coverages)
Total

ii.To what extent have adjustments been made to case reserves or IBNR to reflect the expected change in outstanding losses (please be specific)?

iii.Are adjustments (further adjustments) planned for 1/Sep/10?

iv.Comments:

e)Differences by Territory. With respect to any of a) through d), please comment on the extent to which the impact of product reform is expected to differ by territory (particularly in Toronto as compared to the remainder of the province)?

Loss Ratios on Business Ceded to the Ontario RSP

This question relates to Private Passenger business in the Province of Ontario.
Please respond to this question if the Group’s 2009 Ontario RSP cessions exceed the threshold of 10,500 car years, as indicated on page.
Please respond to question 7d), even if you cannot provide any of the quantitative information requested in 7a), 7b) and 7c)).

a)Actuarial Estimate of Ultimate Loss Ratios on Business Ceded to the RSP.

i.If available, please provide your most recent estimate of the ultimate loss ratios (including IBNR and Development) for each of accident years 2006 through 2010. If possible, the loss ratios should be:

by coverage (e.g. Third Party Liability, Accident Benefits, Physical Damage, All Coverages Combined);

exclusive of all loss adjustment expenses;

exclusive of explicit bulk provisions for HST and 2010 product reform; and

prior to the effect of discounting.

In addition to providing your estimate of the ultimate loss ratios by coverage, please provide your estimate of the ultimate loss ratio for all coverages combined.

Actuarial Estimate of Ultimate Loss Ratios
Valuation Date
2006 / 2007 / 2008 / 2009 / 2010
Coverage or Sub-Coverage (specify)
Total

ii.Please indicate the basis for presentation of the loss ratios in part i above. Please be very specific:

Yes/No / Comments
Excludes ALAE
Excludes ULAE
Excludes provision for HST
Excludes provision for 2010 product reform
Prior to Discounting
Other (specify)
Other (specify)

iii.Please describe how these estimates were derived, including a description of the data used, the actuarial methodologies, and whether the estimates were derived on the basis of losses ceded to the RSP, or as an allocation of a broader-based estimate)

iv.Were these estimates detailed in the appointed actuary’s report(s) on the valuation of policy liabilities for year end 2009? If not, please comment.

b)Earned Premiums Ceded to the RSP.

i.If you provided estimated ultimate loss ratios in 7a) above, please provide the earned premiums underlying those estimates.

Earned Premiums Ceded to RSP
Valuation (Accounting) Date
2006 / 2007 / 2008 / 2009 / 2010
Coverage or Sub-Coverage (specify)
Total

c)Reported Loss Ratios on Business Ceded to the RSP.

i.If you provided estimated ultimate loss ratios in 7a) above, please provide the reported loss ratios underlying those estimates (i.e. based on paid losses and outstanding case reserves).

Reported Loss Ratios
Valuation (Accounting) Date
2006 / 2007 / 2008 / 2009 / 2010
Coverage or Sub-Coverage (specify)
Total

ii.Please indicate the basis for presentation of the loss ratios in part i above. Please be very specific:

Yes/No / Comments
Excludes ALAE
Excludes ULAE
Excludes case reserve adjustments for HST
Excludes case reserve adjustments for 2010 product reform
Prior to Discounting
Other (specify)
Other (specify)

d)General Comments.

Please comment on any matters that you consider significant to the interpretation of the experience you have ceded to the Ontario RSP since approximately 2006. Relevant considerations might include, but should not be limited to significant changes in underlying rate level and changes in ceding criteria.

Requests for Reports & Data Files- Ontario

This question relates to Private Passenger business in the Province of Ontario.
Please respond to this question if the Group’s 2009 Ontario RSP cessions exceed the threshold of 10,500 car years, as indicated on page.
You are asked to provide the following information by separate attachment. As with all responses to this survey, the information will be kept strictly confidential.

a)Appointed Actuary’s Report.

Please consider providing those portions of your most recent appointed actuary’s report that might be helpful in estimating the ultimate loss ratios on business you ceded to the Ontario RSP, e.g. development triangles and other data or assumptions underlying the estimates provided in 7a)..

Comments:

b)Ontario Private Passenger Vehicles AIX Development Data at 31/Dec/09, from the AU74-X Exhibit.

For each company in the group, please authorize the release ofthe referenced data file and the corresponding hard copy for reconciliation purposes. An authorization form will be provided under separate cover to each group for which the 2009 Ontario RSP cessions exceed the threshold indicated on page 1.

Company specific development data is being requested by Facility Association’s valuation actuary to allow her to estimate future development on a company’s cessions to the Ontario RSP. It has been requested in this format to allow for meaningful comparisons to Industry development patterns as well as comparisons to the development patterns of other member companies.

Comments:

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