Question 10:   How does the Board’s rate filing review process work?

Automobile insurance rates are determined on a company specific basis in Newfoundland and Labrador. This means that every insurer must file its own unique set of rates and rating factors for each category of automobile insurance it writes.

Generally speaking, insurers develop rates by using past claims experience to predict future expected losses. This is done by way of an actuarial analysis using various mathematical and statistical methods, as well as professional judgement. The rates proposed by insurers are designed to cover the estimated losses and expenses for the effective period, as well as provide a reasonable provision for profit. Insurers may also take into consideration the current market conditions and its competitive philosophy before selecting the final rates that will be presented to the Board for approval.

The Board has developed various filing categories to determine the type of filing and review to be conducted when an insurer wishes to file rate changes. The nature and magnitude of the proposed rate changes influence which filing category should be used. Detailed filing guidelines for each filing category can be found at: http://www.pub.nl.ca/insurancefilingguidelines.htm

The filing guidelines are designed to ensure that sufficient information is provided for the Board to determine if the proposed rates in a filing are just and reasonable, among other considerations. The filing guidelines outline the specific types of information and data required to support rate changes, and also provide guidance of how filings should be prepared for the Board’s review.

Review of a rate filing begins as soon as it is received by the Board. Board staff scrutinize all aspects of the filing to ensure it is in line with the filing guidelines, as well as any applicable legislative provisions. Larger and more complex rate filings are referred to the Board’s consulting actuaries for an in-depth review and analysis of the actuarial standards, models and assumptions used to develop the proposed rates. A review by the Board’s consulting actuaries often includes requests for information, teleconferences with the filing company and Board staff, as well as a detailed report of findings.

Following completion of the filing review, the Board will issue a written decision in which it will approve, prohibit or vary the proposed rates. Insurers are required by law to wait until Board approval is received to implement any proposed changes.

Details regarding past Board decisions can be found as follows:
http://www.pub.nl.ca/phpwebsite/AI_orders2022.php