MANITOBA PUBLIC INSURANCE

Transcription

1 MANITOBA PUBLIC INSURANCE SM.3 PROGRAM REVENUE The Manitoba Public Insurance Corporation relies on four main sources of revenue to fund the basic Autopac program. These are vehicle premiums, drivers licence premiums, service and transaction fees, and investment income. SM.3.1 Vehicle Premiums Vehicle premiums traditionally comprise about 80 to 90 percent of the total revenue of the basic Autopac program. Exclusive of rate changes, total vehicle premium will increase due to increases in the size (volume) and upgrading of the Manitoba fleet. In 2010/11, volume increased by 2.43% and upgrade was 1.96% (based on the Financial Model). Details on vehicle volume and upgrade are found in TI.18. On an overall basis, the Corporation is requesting an average rate decrease of 6.85%. Details outlining this rate requirement are found in TI.19. Vehicle premiums are charged based on the classification system: Rating territory Based on the primary address of the registered owner. Insurance use Based on the primary use of the vehicle. Vehicle Rating Factors Based on factors such as the rate group, gross vehicle weight, body style, engine displacement and seating capacity. Rate groups are based on Canadian Loss Experience Automobile Rating (CLEAR) recommendations, age or declared value. Vehicle premium discounts Based on the registered owner s Driver Safety Rating (DSR) level (i.e. their claim and driving/conviction record). The Corporation s vehicle classification system is described in more detail in Section AI.5. Vehicle premium adjustments due to classification changes for 2012/13 are described in the following SM.3.1 sections. Page 1

2 SM.3.1.A Vehicle Rating Factor Changes SM.3.1.A.1 Rate Group Passenger Vehicle and Light Truck Passenger Vehicle and Light Truck rate groups are assigned by weighting the most recent CLEAR rate group recommendation for collision, comprehensive and injury. For 2012/13, the weights assigned to collision and comprehensive were revised to more closely reflect the Corporation s collision and comprehensive claims costs. Comprehensive claims have declined in recent years due to improved theft deterrent measures. The new weights assigned to collision and comprehensive are 80% and 20% respectively, compared to 72% and 28% previously. As a result of the CLEAR weighting formula change 63.9 percent (383,928 vehicles) of affected vehicles receive the same 2012 rate group as with the previous (72/28) weighting allocation. 24 percent (144,561 vehicles) will move to a higher rate group and 12.1 percent (72,489 vehicles) will move to a lower rate group. Changes to rate group assignments by CLEAR result in revenue changes. Offset adjustments are applied to ensure revenue neutrality. Two offsets are calculated for CLEAR rated vehicles, one for passenger vehicles and one for light trucks. Each of the two offsets are calculated based on the corresponding percentage change in revenue and are then applied to the rate for each rate group. For 2012/13, rate group offsets were applied to all insurance uses for passenger vehicles and light trucks which are not flat rated, including U-Drive uses. The offset adjustments are shown in AP.3. After the application of the offsets, a total of 183,587 (25.5 percent) passenger vehicles, light trucks and heavy trucks rated as light trucks receive lower rates due to rate group reassignments by CLEAR (using the new weighting 80/20 allocation). 484,013 (67.3 percent) of these vehicles receive higher rates. The rates for 51,447 (7.2 percent) remain unchanged. Of those increasing in rate, 364,564 (75.3 percent of those increasing) vehicles increase by less than $20. An additional 116,034 (24.0 percent of those increasing) Page 2

3 vehicles increase by $20 to $50. 3,406 (less than 1 percent of those increasing) vehicles increase by $50 to $100. The remaining 9 vehicles increase between $100 and $150. Heavy Truck As in previous years, heavy truck rate groups are being adjusted down one rate group per model year. As this adjustment results in a change in revenue, a rate group offset is applied to ensure revenue neutrality. Heavy Trucks which do not carry physical damage coverage are flat rated and therefore unaffected by rate group changes. There are 24,358 heavy trucks with physical damage coverage receiving rate group adjustments. Due to rate group adjustments and offsets, rates decrease for 9,768 (40.1 percent) of these trucks and increase for 14,590 (59.9 percent). Of those increasing, 14,046 (96.3 percent of those increasing) vehicles increase by less than $ (3.6 percent of those increasing) vehicles increase by $20 to $50 and the remaining 15 vehicles increase by $50 to $90. SM.3.1.A.2 Rate Line While the individual rate group assigned is an important factor in the premium paid, an equally important factor is how rate groups relate to one another and to the underlying costs of providing the basic Autopac coverage. Rate Line Adjustments are applied to passenger vehicles and light trucks, heavy trucks, motorcycles, motorhomes and trailers with declared values between $2,501 and $50,000. These adjustments modify the relative difference between rates charged across the rate group spectrum. Passenger Vehicles and Light Trucks All insurance uses for passenger vehicles and light trucks, including U-Drive uses and excluding Police/Emergency Trucks which are flat rated, receive rate line adjustments. A rate line offset was applied to ensure revenue neutrality for each vehicle type. Page 3

4 The analytical process consisted of the following steps: Historical loss data is organized by coverage, rate group, territory and insurance use. For each coverage (collision, comprehensive, PIPP, third party liability and property damage), losses are examined for differences across rate groups. Historically, it has been shown that physical damage coverages (collision and comprehensive) increase by rate group, while the other coverages (PIPP, third party liability and property damage) do not have a consistent relationship by rate group. The minimum bias procedure is used to develop combined physical damage relativities. Costs for the other coverages (PIPP, third party liability and property damage) and for operating expenses are added to the selected physical damage costs (based on the selected relativities). The outcome is a set of relativities describing the average cost per rate group. Curves are fitted to the rate line relativities using regression analysis. In general, the fitted curves are used as the selected relativities. However, actual relativities are occasionally used if the experience for a certain rate group does not fit well with the selected regression line. The selected relativities are then credibility weighted with the current relativities. The relativities used for 2012/13 are shown in Section TI.1. In total 42.5 percent (305,889) of passenger vehicles and light trucks (including heavy rated as light trucks) receive a rate decrease due to this change and 51.2 percent (368,174) receive a rate increase. The change does not affect 6.3 percent (44,984) of vehicles. Of those receiving an increase, 359,877 vehicles (97.7 percent of those increasing) receive an increase of less than $20. 8,275 vehicles (2.2 percent of those increasing) increase between $20 and $50. The remaining 22 vehicles receive an increase of $50 to $60. Page 4

5 Heavy Trucks Rate line differentials were applied for all insurance uses that are not flat rated. An offset was applied equal to the amount of the respective revenue change to ensure revenue neutrality. The relativities used for 2012/13 are shown in Section TI.1. Of the 24,358 heavy trucks receiving rate line changes, 8,179 (33.6 percent) will receive a rate decrease and 15,859 (65.1 percent) will receive a rate increase. The change does not affect 320 vehicles. Of those increasing, 14,389 (90.7 percent of those increasing) vehicles increase by less than $20. 1,455 (9.2 percent of those increasing) vehicles increase by between $20 and $50 and the remaining 15 vehicles will increase by between $50 and $100. Motorcycles, Mopeds and Mobility Vehicles Unlike other vehicle types, the vast majority of motorcycle claims costs are injury costs and these costs do not vary greatly relative to the value of the motorcycle. As a result the rate line for motorcycles is much flatter in comparison to most other types of vehicles. For 2012/13, rate line adjustments were applied to all vehicles in the motorcycle major class. Motor scooters, mopeds and mobility vehicles received rate line adjustments for the first time. Rate line adjustments were applied on a revenue neutral basis with a single offset applied to all vehicles in the motorcycle major class. The proposed and target rate lines for the motorcycle major class are shown in section TI.1. Of the 12,319 vehicles in the motorcycle major class receiving rate line changes, 8,774 (71.2 percent) will receive rate decreases, 3,499 (28.4 percent) will receive rate increases and the remaining 46 vehicles will be unchanged. Of those increasing, 1,759 (50.3 percent of those increasing) will increase by less than $20. 1,723(49.2 percent of those increasing) will increase by between $20 and $60. Of the remaining 17 vehicles, 11 will increase by between $100 and $150, 5 will increase by between $150 and $200 and 1 will increase by between $250 and $300. Page 5

6 The following table shows the rate changes by rate group for vehicles in the motorcycle major class. Average Rate Change (Percent) Rate Group Motorcycle Motorcycles Mopeds Major Class *n/a *n/a *n/a *n/a *n/a No units in the rate model Motorhomes Rate line adjustments were applied on a revenue neutral basis with the offset equal to the amount of the respective revenue change. The relativities used for 2012/13 are shown in Section TI.1. There are 5,575 motorhomes receiving rate line changes. As a result of rate line changes, 1,320 (23.7 percent) receive rate decreases, 3,452 (61.9 percent) receive rate increases and 803 (14.4 percent) remain unchanged. Of those receiving rate increases, all increase by less than $20. Trailers Rate line adjustments were applied to trailers with a declared value between $2,501 and $50,000. Rate line adjustments for these trailers were applied on a revenue neutral basis with the offset equal to the amount of the respective revenue change. The relativities used for 2012/13 are shown in Section TI.1. Of the 60,710 trailers valued at over $2,500 receiving rate line changes, 26,032 (42.9 percent) will receive rate decreases, 30,409 (50.1 percent) will receive rate Page 6

7 increases and the remaining 4,269 (7.0 percent) remain unchanged. Of those receiving rate increases, 29,469 (96.9 percent of those increasing) will increase by less than $10 and the remaining 940 (3.1 percent of those increasing) will increase by between $10 and $20. SM.3.1.A.3 Truck Gross Vehicle Weight (GVW) For 2012/13, the Corporation continues to adjust the relationship between rates for the three GVW ranges to better reflect the loss experience. Rates for the GVW ranges were adjusted for the Commercial and Public Major Classes as follows: GVW Range Adjustment 0 to 4,540 kg -5.36% 4,541 to 16,330 kg (10,981 to 16,330 kg for -3.89% Sand/Gravel & Cement/Brick/Exploration) Over 16,330 kg +4.14% These adjustments were derived based on a review of the relativities between GVW ranges. A single offset adjustment was applied equal to the amount of the respective revenue change. The offset for truck GVW relativities is listed in Section AP.3. Of the 34,928 trucks affected by GVW relativity adjustments, 17,375 (49.7 percent) will receive a rate decrease and 17,553 (50.3 percent) will receive a rate increase. Of those receiving rate increases, 17,141 (97.7 percent of those increasing) will increase by between $10 and $60 and 412 (2.3 percent of those increasing) will increase by between $100 and $150. SM.3.1.A.4 Combined Effect of Vehicle Rate Group and Rate Line Changes As was the practice in previous years, combined offset adjustments have been applied equal to the amount of the respective revenue changes for rate group and rate line changes. Page 7

8 Combined Offsets for Rate Group and Rate Line adjustments are listed in Section AP.3. Overall, 340,786 (34.4 percent) vehicles decrease in rate due to combined effect of rate group and rate line changes. An additional 184,412 (18.6 percent) are unchanged and 465,258 (47.0 percent) increase in rate. Of those increasing, 311,870 (67.0 percent of those increasing) increase by less than $20. An additional 152,526 (32.8 percent of those increasing) vehicles increase by between $20 and $ (0.2 percent of those increasing) vehicles increase by between $50 and $ vehicles increase by between $100 and $200 and 1 vehicle increases by between $250 and $300. On a percentage increase basis, 430,309 vehicles (92.5 percent of those increasing) increase by less than 5 percent. 33,606 (7.2 percent of those increasing) vehicles increase by between 5 and 10 percent. 6 vehicles increase by between 10 and 15 percent. 607 (0.1 percent of those increasing) vehicles increase by between 15 and 20 percent. 730 (0.2 percent of those increasing) vehicles increase by more than 20 percent. The majority of those increasing more than 20% are mopeds and motorscooters less than 500 cc. SM.3.1.B Discount for After-Market Anti-Theft Immobilizers The Corporation provides an annual $40 anti-theft discount on the basic premium when an approved aftermarket immobilizer is installed on a qualifying vehicle. Most passenger vehicles and trucks, 2008 and older, qualify for the discount. Vehicles of model year 2009 or newer do not qualify for the discount. This is because the Canadian Motor Vehicle Safety Regulations require all new cars, vans, light trucks and SUVs sold in Canada, or imported into Canada, be equipped with an immobilizer meeting Transport Canada s standard. As of May 1, 2011, there were approximately 123,782 vehicles receiving the $40 anti-theft discount. This number will continue to decline through time as older vehicles are replaced with 2009 or newer vehicles. Page 8

9 SM.3.1.C Vehicle Premium Discounts The driving record portion of the vehicle classification plan has two components: DSR Vehicle Premium Discount Fleet Rebates and Surcharges SM.3.1.C.1 DSR Vehicle Discount For 2012/13, there are no changes to DSR vehicle premium discounts. Refer to AP.1 and AI.5 for further details. SM.3.1.C.2 Fleet Rebates and Surcharges The Fleet Program rewards safe driving and vehicle maintenance through a sliding scale of rebates and surcharges. Fleet rebates and surcharges are determined by the loss experience of the fleet. For 2012/13, the Corporation is proposing expanding the fleet rebate discounts to align with the new scale. If approved, fleets will be eligible for rebates up to 33 percent. The maximum fleet rebate would then match the maximum rebate received by individual customers on the Driver Safety Rating scale. The proposed changes to the fleet rebate scale are located in AP.1. The change results in a reduced fleet revenue of approximately $3 million per year. No changes are proposed to the fleet surcharge scale. Further details on the Fleet Program are located in AI.5. SM.3.1.D Experience Adjustments The goal of setting and adjusting rates is to establish rates for policies issued during a specified time period (in this case, from March 1, 2012 to February 28, 2013) that result in sufficient revenues to cover all expected costs, including costs for claims which may not be settled for many years into the future. To guide the determination of future expected costs, statistical information about past history is developed and analyzed. Expected revenues in the absence of rate changes are also determined, to provide a base from which these changes can be calculated. Page 9

10 The Corporation determines the applied for rate adjustments based on the results of the claims forecast. This method is called the financial forecast method. A complete description of the methodology and related supporting information used in the claims forecast is presented in TI.17. Two additional analyses of claims cost trends to develop rate indicators are also performed. The linear forecast method is based on the assumption that claims costs grow by a constant amount each year. The exponential forecast method is based on the assumption of a constant percentage growth in claims costs each year. Based on the financial forecast method, the overall required (indicated) rate change was a decrease of 6.8 percent for policies issued during the 2012/13 rating year. The Corporation is applying for a decrease of 6.85 percent to the overall required rate. The following table presents the overall required rate change and the major classes required rate changes (credibility weighted) using each of the three methods. This is based on the applied for overall decrease of 6.8 percent for the financial forecast method. A complete description of the methodology and related supporting information used to determine these rate requirements are presented in TI.19. EXPERIENCE RATE REQUIREMENT INDICATORS (PERCENT CHANGE) MAJOR CLASS FINANCIAL EXPONENTIAL LINEAR Private Passenger Commercial Public Motorcycles Trailers Off-Road Vehicles Overall Adjustments for experience are also developed for the following rating variables: Insurance use Page 10

11 Territory developed separately for each major class Gross vehicle weight (GVW) applicable to trucks in the Commercial and Public major classes only Body style and engine displacement applicable to the Motorcycle major class only These adjustments are calculated using actuarial techniques and statistical data. Undertaking the rate calculation at this level ensures that each risk classification is adjusted according to its unique characteristics. The indicated rate adjustment for each risk classification is then subjected to experience adjustment rules as presented below. These rules are similar to those used in prior applications. 1) If the indicated increase or decrease is 10 percent or less, set the initial estimate of the experience adjustment as the amount of the indicator. 2) If the indicated increase or decrease is greater than 10 percent, set the initial estimate of the experience adjustment as 10 percent, plus one-third (1/3) of the difference between the indicated increase or decrease and 10 percent, to a maximum of an additional 5 percent. This results in a maximum increase or decrease of 15 percent. 3) From rule (2), if the indicated decrease is 25 percent or more, the initial estimate of the experience adjustment is a decrease of 15 percent. Similarly, if the indicated increase is 25 percent or more, the adjustment is capped at 15 percent. Since rule (2) above caps the amount of the adjustments at 15 percent, in order to ensure that all adjustments result in the expected overall revenue, they are balanced back on a pro-rata basis. The maximum adjustment of 15 percent still applies. There are four exceptions to the rules listed above. 1) For the Motorcycle major class, the following modifications were made: a. For all mopeds, the indicated rate adjustments range from 8 to 25 percent Page 11

12 increase. These adjustments are in addition to the 10 percent increase from rate line described in SM3.1.A.2. The initial estimates of the experience adjustments were set at a maximum 15 percent increase. Including the 10 percent increase from rate line, mopeds will see a maximum increase of 25 percent. b. For all motorcycles with a Motorscooter body style and an engine displacement less than or equal to 500 cc, the initial estimates of the experience adjustments were set similar to the initial estimates for mopeds by territory and use (all purpose and pleasure). This maintains the synchronization of rates for these vehicles. c. For all motorcycles with an engine displacement greater than 1,000 cc, the initial estimates of the experience adjustments were set to the larger of their experience adjustment or the corresponding figure (by territory, use and body style) for motorcycles with engine displacement between 500 to 1,000 cc. This ensures that the rates for motorcycles with larger engine displacements will be higher than the corresponding rates for motorcycles with smaller engine displacements. 2) For the Antique, Driveaway and Mobility Vehicle insurance uses, the initial estimates of the experience adjustments were set equal to the overall required rate change. 3) For the U-Drive Moped insurance use, the indicated rate adjustments were not calculated due to a lack of experience. Consistent with last year, the rates for this insurance use, by territory and rate group, were set equal to the rates for the All- Purpose Moped insurance use. 4) For the Dealer Moped insurance use, the indicated rate adjustments were not calculated due to a lack of experience. Consistent with last year, by territory, the initial estimates of the experience adjustments were set similar to the initial estimates for the All-Purpose Moped insurance use. The experience rate adjustments to be applied to each risk classification are presented in AP.2. Page 12

13 SM.3.1.E Special Rate Adjustments The Corporation uses relative ranking rules to ensure that less restrictive rating categories do not have lower rates than more restrictive ones, resulting in special rate adjustments. These adjustments are completed subsequent to all classification and experience adjustments being undertaken. For 2012/13, the following insurance uses received such adjustments affecting 584 vehicles. The rates for 25 Common Carrier Local Passenger Vehicles in territory 4 were increased to ensure that their rate was at least equal to All Purpose Passenger rates for that territory. The result was an increase in the applied rates by an additional $3 to $9 compared with the experience adjusted rate. As well, five insurance uses in the Commuter territory were adjusted to ensure that they were not lower than the rates for the same insurance uses in Territory 2. This change affected the applied for rate compared with the experience adjusted rate in the Commuter territory for: 437 Light Farming All Purpose Trucks, where rates increased by an additional $10 to $29 2 All Purpose Motorcycles (Motorscooter Rating), where rates increased by an additional $29 to $ All Purpose Motorcycles (Other Rating), where rates increased by an additional $1 to $57 31 All Purpose Motorcycles (Sport Rating), where rates increased by an additional $14 to $ All Purpose Motorcycles (Touring Rating), where rates increased by an additional $43 to $90 Page 13

14 SM.3.1.F Revenue Adjustment Overall Impacts The average adjustment to each major class from the rate model results are as follows: Major Class Current Avg. Rate $ Proposed Avg. Rate $ Percent Private Passenger Commercial Public 1,628 1, Motorcycles 1, Trailers Off-Road Vehicles Overall On a territorial basis, the impacts of the rate adjustments from the rate model results are as follows: Territory Current Avg. Rate $ Proposed Avg. Rate $ Percent Commuter 1, Overall Page 14

15 SM.3.1.G Impact of Vehicle Premium Adjustments As in the past, the impact of the adjustment of vehicle premiums is simulated through the use of a rate model. The model shows the combined impact on premiums resulting from rate and classification changes. The 2012/13 rate modeling process considered the impact on a vehicle population of 990,456 vehicles, which includes 56,424 off-road vehicles. After all adjustments, 905,610 vehicles (91.4 percent) receive a rate decrease. 195,443 vehicles (21.6 percent of those decreasing) receive a rate decrease of up to $ ,240 (27.3 percent of those decreasing) receive decreases of between $20 and $50. An additional 352,443 (38.9 percent of those decreasing) receive decreases ranging between $50 and $ ,483 (9.5 percent of those decreasing) receive decreases of between $100 and $150. The remaining 24,001 (2.7 percent of those decreasing) vehicles receive decreases of $150 or more. In total, 15,660 (1.6 percent) experience rate increases. Of these, 12,023 (76.8 percent of those increasing) receive an increase of up to $20. 2,753 (17.6 percent of those increasing) receive an increase between $20 and $ (5.6 percent of those increasing) receive an increase ranging between $50 and $ vehicles increase between $100 and $150 while 7 vehicles increase by $150 or more. The remaining 69,186 vehicles (7.0 percent) experience no change in rates. In percentage terms, of the 91.4 percent of vehicles experiencing a rate decrease, 230,080 vehicles (25.4 percent of those decreasing) decrease by less than 5 percent. An additional 463,526 vehicles (51.2 percent of those decreasing) decrease by between 5 and 10 percent. 123,931 vehicles (13.7 percent of those decreasing) decrease between 10 and 15 percent. 78,635 vehicles (8.7 percent of those decreasing) decrease between 15 and 20 percent. These are mainly Off-Road Vehicles with a relatively small rate. An additional 9,438 vehicles (1.0 percent of those decreasing) decrease by more than 20 percent. These are mainly trailers in territory 1 and rate group 1 receiving an overall decrease of $10 or 20.8 percent. Page 15

16 Of the 1.6 percent of vehicles increasing, 12,655 (80.8 percent of those increasing) increase by less than 5 percent. An additional 101 vehicles (0.6 percent of those increasing) increase by between 5 and 10 percent. 188 vehicles (1.2 percent of those increasing) increase by between 10 and 15 percent. 586 vehicles (3.7 percent of those increasing) increase between 15 and 20 percent, and the remaining 2,130 vehicles (13.6 percent of those increasing) increase by 20 percent or more. These are mopeds and motor scooters (0-500 cc) with rate increases capped at 25%. The average change in rates, including adjustments for rate group, rate line, truck gross vehicle weight relativities, experience adjustments and special rate adjustments, are shown in Section TI.3, Part I. The dollar and percent distributions by major class are shown in Section TI.3, Part II. SM.3.2 Drivers' Licence Premiums The proposed Driver Safety Rating (DSR) driver premiums for 2012/13 are shown in AP.1. The Corporation is proposing that driver premiums for DSR demerit levels 2 to 20 will increase to a maximum of $2,000 for 2012/13. This is the second year of the three year phased in increases to driver premiums for the DSR demerit levels, which was originally presented to the Public Utilities Board in April The third and final year of these phased in increases is planned for 2013/14. As a result of the increased driver licence premiums for drivers with 2 or more demerits, driver licence premiums will increase to approximately $29.5 million in 2012/13, a $5.6 million increase over the previous year. Prior to the implementation of DSR, driver premiums were approximately $35 million per year. The phased in rating approach will return driver premiums to pre-dsr levels by 2013/14. Further details about Driver Licence Premiums and the DSR system can be found in AI.4. Page 16

17 SM.3.3 Service and Transaction Fees The basic insurance program received $15.1 million in income from service fees and miscellaneous other revenue in 2010/11. This revenue consists of income from the quarterly and monthly pre-authorized payment plans, late payment fees, motor vehicle transaction fees, dishonoured payment fees and pre-authorized default fees reduced by credit card merchant fees. SM.3.3.A Payment Plan Revenues Under the 4 Payment and 12 Pre-Authorized Payment plans the following revenue was received in 2010/11: Flat administration fees of $2.12 million; and, Interest of $8.64 million. The flat administration fee and interest charges are designed to offset the cost of administering the plans plus the reduction in investment income compared to the case where the customer pays fully for all policies. The administration fee for both the 4-pay plan and 12-pay finance plan is $4 per policy financed. The interest rate is established at the prime rate plus 2 percent, adjusted quarterly. For 2010/11, interest rates averaged 4.69 percent per year. SM.3.3.B Late Payment Fees For 2010/11, late payment fees were $0.88 million. Under the Pre-Authorized Payment plan, late payment fees do not usually apply since funds are transferred electronically. SM.3.3.C Motor Vehicle Transaction Fees For 2010/11, motor vehicle transaction fees were $5.11 million. Refer to Section AP.1 for the various fees included in the motor vehicle transaction fees. SM.3.3.D Merchant Fees For 2010/11, the Corporation paid $5.54 million in merchant fees for credit card transactions. This is the last year for merchant fees to be included as part of Page 17

18 service fees. Starting in 2011/12, merchant fees will be included as part of operating expenses. SM.3.3.E Rental Revenues The Corporation collected $2.05 million in rental revenues in 2010/11. SM.3.3.F Other Fees For 2010/11, other miscellaneous fees were $1.21 million. Refer to Section AP.1 for these miscellaneous charges. SM.3.4 Investment Income The Basic insurance program had cash, equities, short and long-term investments totalling $2.09 billion as of February 28, The funds available for investment are primarily unearned premiums and unpaid claims. Investment income earned from the portfolio reduces the revenue the Corporation is required to collect through premiums. In May 2011, the Corporation paid a $320 million rebate to basic ratepayers. The payment of the rebate resulted in a direct reduction to the Corporation s funds available for investment. As a result, investment income in future years will be reduced considerably. The investment income forecast is approximately $15 million per year lower (or rates are 2% higher) than it would have been without the rebate. Investment income is allocated between the Basic, Extension and SRE lines of business using the equity method. A complete forecast of Investment income is shown in TI.18. Page 18