Updated Accounting & Statistical Manual Summary of Changes Effective December 1, 2017

Transcription

1 September 2017 Accounting & Statistical Manual Updated Accounting & Statistical Manual Summary of Changes Effective December 1, 2017 Facility Association has received approval from the Financial Services Commission of Ontario (FSCO) to make certain rule changes that fall within the following change categories and are effective December 1, 2017: Rule Change: To reflect new/revised rule Procedure Change: To reflect new/revised procedure : Wording revised for clarity Please refer to bulletin All Canada SC Updated Accounting & Statistical Manual, Summary of Changes Effective December 1, 2017 distributed to Project Managers of All Servicing Carriers on September 25, 2017.

2 Rule Change: To reflect new/revised rule Procedure Change: To reflect new/revised procedure : Wording revised for clarity Rule Current Wording Proposed Wording Change from Current Impact CHAPTER 3 ACCOUNTING PROCEDURES FOR SERVICING CARRIERS 3.5 Use of Books of Record (page 14) 1. Cash Receipts Journal - should include sufficient detail to identify all receipts from Association agents/brokers and Insureds, receipts on account of salvage and subrogation and other cash receipts. Deposits of all receipts should be made to the Facility Association bank account(s) maintained by the Servicing Carrier within 48 hours after receipt. When the cheque includes salvage and/or subrogation items for both Facility Association and their regular book of business, the Servicing Carriers are permitted to deposit the cheque no later than the last workday of the following month in which the cheque was received. (See Section 3.9 for cash transfer confirmation procedures). 1. Cash Receipts Journal - should include sufficient detail to identify all receipts from Association agents/brokers and Insureds, receipts on account of salvage and subrogation and other cash receipts. Deposits of all receipts should be made to the Facility Association bank account(s) maintained by the Servicing Carrier within 2 business days after receipt. When the cheque includes salvage and/or subrogation items for both Facility Association and their regular book of business, the Servicing Carriers are permitted to deposit the cheque no later than the last workday of the following month in which the cheque was received. (See Section 3.9 for cash transfer confirmation procedures). Rule change Specify time based on business days for Servicing Carriers to deposit all receipts to FA bank account. To allow for weekend and statutory holidays. CHAPTER 3 ACCOUNTING PROCEDURES FOR SERVICING CARRIERS 3.9 Submission Trial Balance of Servicing Carrier General of Accounting Reports (page 18) Ledger Exhibit 3-B The trial balance is a statement of the General Ledger account balances at the close of each accounting month. All account balances must be provided by jurisdiction exceptions may be made for "Cash", "Transfer to/from F.A." and "Bank Charges". Trial Balance of Servicing Carrier General Ledger Exhibit 3-B The trial balance is a statement of the General Ledger account balances at the close of each accounting month. All account balances must be provided by jurisdiction. Rule change All accounts must be allocated, no exception allowed. Servicing Carriers are required to split all accounts by jurisdictions, and can use an appropriate basis for the split where required. Anticipated requirement under IFRS 17. Page 1 of 6

3 Rule Change: To reflect new/revised rule Procedure Change: To reflect new/revised procedure : Wording revised for clarity CHAPTER 3 ACCOUNTING PROCEDURES FOR SERVICING CARRIERS 3.11 General Ledger Analysis (page 22) It is the responsibility of the Servicing Carrier to maintain detailed information for audit purposes which shall be balanced monthly to the appropriate general ledger control accounts as follows: Allowance for Doubtful Accounts (GL Account 1030) Other Assets (GL Account 1050) Commissions Payable (GL Account 2000) Outstanding Claims Drafts (GL Account 2010) Uncashed Cheque Reserve (GL Account 2020) Other Liabilities (GL Account 2050) Bad Debts (GL Account 5000) Miscellaneous Income/Expenses (GL Account 5020) It is the responsibility of the Servicing Carrier to maintain detailed information including subledgers as required for audit purposes which shall be balanced monthly to the appropriate general ledger control accounts as follows: Premiums Receivable (GL Account 1020) Allowance for Doubtful Accounts (GL Account 1030) Other Assets (GL Account 1050) Commissions Payable (GL Account 2000) Outstanding Claims Drafts (GL Account 2010) Uncashed Cheque Reserve (GL Account 2020) Other Liabilities (GL Account 2050) Bad Debts (GL Account 5000) Miscellaneous Income/Expenses (GL Account 5020) Rule change Added GL Account Servicing Carriers are required to maintain subledger for Premiums Receivable GL a/c 1020 Premium Receivable. CHAPTER 6 MEMBERS PARTICIPATION IN FACILITY ASSOCIATION RESIDUAL MARKET RESULTS 6.1 Calculation of Members Share of Facility Association Residual Market shall be credited or distributed to each member and loss shall be charged against each member in shall be credited or distributed to each member and loss shall be charged against or collected from each Updated to reflect the place for FARM. (FARM) Results accordance with the member's appropriate member in accordance with the member s participation ratio. appropriate participation ratio. Each member's participation ratios for an accident Sharing, Section 3 (i), (ii), (iii). Each member s participation ratios for an accident Sharing, Sections 3 (a) and (b). OVERVIEW RISK SHARING POOL Overview Risk N/A (No current wording) Sharing Pool (page 38) Submission of Risk Sharing Pools Data Details on submission of Risk Sharing Pools data can be found in the Risk Sharing Pool Procedures Manual. Added to reflect the place for RSPs.. Page 2 of 6

4 Rule Change: To reflect new/revised rule Procedure Change: To reflect new/revised procedure : Wording revised for clarity CHAPTER 7 SERVICING CARRIER CLAIMS EXPENSE ALLOWANCE RETROACTIVE ADJUSTMENT 7.3 Frequency of Adjustment (page 34) Interim retroactive claims fee adjustments will be calculated on an ultimate loss ratio (that is, including IBNR), as calculated by the Facility Association based on September 30 valuation assumptions provided by the Facility Association s Appointed Actuary. Interim retroactive claims fee adjustments will be calculated on a projected 72-month recorded loss ratio as estimated by Facility Association on a basis consistent with September 30 valuation assumptions provided by the Facility Association s Appointed Actuary. Procedure change Update to reflect revised procedure. Chapter 9 (page 41) Chapter 9 Chapter 9 Members Sharing in Risk Sharing Pools Results Added to be aligned and consistent with FARM. Chapter 9 N/A (No current wording) (page 41) 9.1 Calculation of Members Share of Risk Sharing Pools Results At the end of each fiscal year, profit or loss for each class of business, Risk Sharing Pools, shall be determined separately for each accident year in each jurisdiction in accordance with accounting procedures approved by the Board of Directors. shall be credited or distributed to each member and loss shall be charged against or collected from each member in accordance with the member s appropriate participation ratio. Each member s participation ratios for an accident Sharing, Sections 3 (c) and (d). Added to be aligned and consistent with FARM and reflect the place for RSPs.. Page 3 of 6

5 Rule Change: To reflect new/revised rule Procedure Change: To reflect new/revised procedure : Wording revised for clarity Chapter 9 (page 41) 9.1 Operational Report 9.2 Operational Report Update the section number accordingly with the addition of section 9.1 Chapter 9 (page 43) 9.2 Government Line Report 9.3 Management Information Report 9.3 Government Line Report 9.4 Management Information Report Update the section number accordingly with the addtiion of section 9.1 PART III UAF CHAPTER 12 MEMBERS PARTICIPATION IN UNINSURED AUTOMOBILE FUNDS RESULTS (NEW CHAPTER) Chapter 12 N/A (No current wording) Chapter 12 Members Participation in. Members Participation in Uninsured Automobile Funds Results Added to be aligned and consistent with Uninsured 12.1 Calculation of Members Share of FARM and reflect the Automobile Funds Results (new) Uninsured Automobile Funds Results At the end of each fiscal year, profit or loss for each class of business, Uninsured Automobile Funds, shall be determined separately for each accident year in each jurisdiction in accordance with accounting procedures approved by the Board of Directors. place for UAF. shall be credited or distributed to each member and loss shall be charged against or collected from each member in accordance with the member s appropriate participation ratio. Each member s participation ratios for an accident Sharing, Sections 3 (e). Page 4 of 6

6 Rule Change: To reflect new/revised rule Procedure Change: To reflect new/revised procedure : Wording revised for clarity PART III UAF CHAPTER 11 GENERAL DESCRIPTION OF DATA PROCESSING, ACCOUNTING & REPORTING RESPONSIBILITIES Chapter Member Participation Statement Chapter 12 Members Participation in General Uninsured Automobile Funds Results Moved due to the Description of The Facility Association's Central Office will insertion of a new Data Processing, produce a quarterly Participation Statement for 12.2 Member Participation Statement chapter number. Accounting & each Uninsured Automobile Funds for each Reporting Responsibilities (page 51) member. The report (see Exhibit 11-A for sample report) will in particular display, by current fiscal year and accident years, the member's shares of the following amounts: Paid loss Subrogation Servicing Fee Legal Expense General Administration Member Participation statements are available on the Facility Association Portal at The headings below correspond to those used in the sample Report shown as Exhibit 14-A. a) Industry Earned Premium b) Member Earned Premium c) Member Sharing Ratio Percentage d) Operating Results - This Period - Years to Date e) Share (Year to Date) f) Share (Previous Period) g) Share (This Period) h) Statement of Financial Position items - Outstanding Losses - IBNR Provision (including Actuarial Present Values) - OS Losses Including IBNR (including Actuarial Present Values) i) Net assessment The target date for the release of each Participation Report is 25 business days after the close of the reporting quarter. Members are advised via bulletin that the reports are available on the FA Portal. The Facility Association's Central Office will produce a quarterly Participation Statement for each Uninsured Automobile Funds for each member. The report (see Exhibit 11-A for sample report) will in particular display, by current fiscal year and accident years, the member's shares of the following amounts: Paid loss Subrogation Servicing Fee Legal Expense General Administration Member Participation statements are available on the Facility Association Portal at The headings below correspond to those used in the sample Report shown as Exhibit 14-A. a) Industry Earned Premium b) Member Earned Premium c) Member Sharing Ratio Percentage d) Operating Results - This Period - Years to Date e) Share (Year to Date) f) Share (Previous Period) g) Share (This Period) h) Statement of Financial Position items - Outstanding Losses - IBNR Provision (including Actuarial Present Values) - OS Losses Including IBNR (including Actuarial Present Values) i) Net assessment The target date for the release of each Participation Report is 25 business days after the close of the Page 5 of 6

7 reporting quarter. Members are advised via bulletin that the reports are available on the FA Portal. Rule Change: To reflect new/revised rule Procedure Change: To reflect new/revised procedure : Wording revised for clarity TABLE OF CONTENTS Overview Overview Overview Facility Association Residual Market Added the wording for clarity. CHAPTER 2 SERVICING CARRIER-AGENT/BROKER-POLICYHOLDER ACCOUNTING 2.2 Collection of Accounts Receivable (page 8-9) EXHIBITS 1. The Servicing Carrier will be responsible for following normal collection procedures when dealing with accounts receivable and will also be responsible for representing the interests of the Facility Association in any case where a recovery may be possible. Where legal/collection expenses are expected to be incurred on behalf of the Facility Association, these shall require review by the Provincial Operating Committee and approval by the Facility Association Board of Directors or the President. 1. The Servicing Carrier will be responsible for following normal collection procedures when dealing with accounts receivable and will also be responsible for representing the interests of the Facility Association in any case where a recovery may be possible. Where legal/collection expenses are expected to be incurred on behalf of the Facility Association, these shall require review by the Provincial Operating Committee for recommendation to the Facility Association Board of Directors or the President for approval. Changed the wording for clarity. Exhibit 3-J FA Unclaimed Property Guidelines and Procedures N/A (No current wording) Exhibit 3-J Added the footer for clarity.. No footnote to show Exhibit 3-J Page 6 of 6