Updated
June 5, 2006
Q. What does FARM stand for?
A. It stands for Facility Association Residual
Market.
Q. When can we expect the FARM Monthly Participation
Report?
A. While Facility Association makes every
effort to produce and email the report to members within 45
days after the last day of the report month, due to extenuating
circumstances, this report may be delayed on occasion. To
ensure that the Participation report reaches your company,
please be sure to notify Facility Association of any name,
address or e-mail changes with respect to the personnel receiving
this report.
Q. Should we use ‘year to
date’ figures to book every month or use ‘this
month’ figures from the Participation Report?
A. Facility Association does not stipulate
how members book their figures each month. However, if processed
properly, both methods will produce the same correct results.
Q. Can we access the Participation Report on the
internet?
A. Facility Association management is reviewing
this option with its IT service provider.
Q. Why do we have negative unearned premiums on our
Participation Report?
A. This problem has the potential to arise
due to the methodology applied to the calculation of Earned
Premium and becomes most apparent when a member's share base
varies materially from accident year to accident year. The
problem is currently under active review by FA.
Q. What is the Outstanding Loss Transition Adjustment
on the Participation Report?
A. The Outstanding Loss Transition Adjustment
offsets the transition adjustment in the policy year system
and is a result of the amendment made to the Plan of Operation
of the Facility Association to change the sharing by members
to an (earned) accident year basis from a (written) policy
year basis, effective January 1994.
As no future development on the estimated ultimate incurred
losses for policy years 1993 and prior was allowed, the amount
as at December 31, 1993 was captured in the 'Outstanding Loss
Transition Adjustment' amount and includes the outstanding
losses, IBNR, and Provision for Retro Claims Expense.
Q. Will the Facility Association discontinue the
settlement of account with members based on net operating
results and settle based on the Transfer of Members’
Funds?
A. Facility Association will continue to
charge members as stipulated in Article V of the Plan of Operations
– “Profit shall be credited or distributed to
each member and loss shall be charged against each member
in accordance with the member’s appropriate participation
ratio”.
The Facility Association Board of Directors authorized the
transfer to member companies any excess funds that were not
required to meet its short term cash flow needs and these
funds must eventually be returned to the Facility Association
to enable it to pay the policyholder claims to which these
funds relate. This does not represent any change whatsoever
in respect of your company’s obligations for the liabilities
of Facility Association.
Q. Why is the Investment Income Bulletin released
late to the members in January?
A. The Investment Income Bulletin is prepared
after the close of Facility Association’s fiscal year
end and is reviewed by its external auditors prior to being
released to members. Some delay may be expected however every
effort will be made to have it available to members by the
end of December.
Q. When does the most recent annual audited financial
statement become available?
A. It is available and posted on our website
after it is approved by member companies at the Annual General
Meeting.
Q. When is the Outlook available to the members?
A. The Outlook is prepared by our appointed
actuaries, and after it is reviewed by the Actuarial and Accounting
Committees, it is recommended to the Board of Directors for
approval and then made available to the members. It is our
intent to provide the Outlook four times per year.
Q. What is the difference between Alberta Grid and
Non Grid Risk Sharing Pools?
A. The “Grid Pool” provides
a means for Alberta automobile insurance underwriters to transfer
personal use automobile insurance exposures that are subject
to the statutory maximum premium.
The “Non-Grid Pool” provides a means for individual
Alberta automobile insurance underwriters to transfer any
eligible personal use automobile insurance exposures they
underwrite up to 4% of their total written exposures not ceded
to the Grid Pool. The results of both these pools are shared
by all insurers’ personal use automobile insurers in
Alberta in accordance to their (non-ceded) market share. For
eligibility criteria, please refer to section III of the Risk
Sharing Pool procedures manual.
Q. Can a member net the monthly payable and receivable
amounts shown on the Operational Reports of the different
Pools?
A. Facility Association prefers that members
do not net payable and receivable amounts under any circumstances.
Q. We do not use the Pool, why
are we receiving the monthly Operational Report?
A. All members share in the Pool based
on a proportion of their total “voluntary private passenger
non-fleet third party liability direct earned car years”,
the proportion varies depending on which jurisdiction the
Pool is operating in (i.e. Ontario, Alberta, or New Brunswick).
Please refer to Article V of the Plan of Operations for a
detailed explanation of the participation ratios and sharing.
Q. We need help with the Operational Report. Who
can help us ‘walk through’ the report?
A. Please refer to Part II – Chapter
2 of the Accounting and Statistical Manual for a detailed
description of the Operational Report. Alternatively, please
do not hesitate to call our Operations Department or schedule
a meeting at our office if you need further assistance.
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