Annual Report of the Directors. General Insurance Statistical Agency (GISA)

Transcription

1 Annual Report of the Directors General Insurance Statistical Agency (GISA)

2 TABLE OF CONTENTS Message from the Chair 1 Mandate 2 Statistical and Financial Information 3 Governance 4 Accomplishments Technology Renewal Plan 7 Financial Information Collection 7 Data Query Tool 7 Exhibit Refresh 8 EPS Consequence Process Integration 8 Early Warning System Enhancements 8 Capitalization Policy 8 Financial Reporting Requirements 9 Appendix A: Board and Committee Membership 10 Appendix B: Audited Financial Statements 15 GISA Report of the Directors Contents

3 MESSAGE FROM THE CHAIR I am pleased to present the General Insurance Statistical Agency (GISA) s Annual Report, for the fiscal year ended March 31, During the fiscal year; we continued to focus on delivering timely and accurate exhibits and our successes this year were a result of the outstanding commitment of our Board, and staff that remain focused on delivering an exceptional member experience. The report that follows describes GISA s mandate and governance structure, provides highlights of our activities and achievements, and presents its audited financial statements as at the end of the fiscal year. In maintaining an emphasis on strong governance, our board and management participated in a strategic planning process which resulted in the approval of a new plan which includes the priorities and initiatives to be undertaken over the next three years. This strategic plan builds on our efforts in previous years to support an ever changing marketplace and reaffirms an ongoing focus on improving the harmonized collection and reporting of accurate, timely and relevant data. It is with thoughtful planning and careful execution that GISA has developed into a focused and effective Agency. I believe the Board, supported by a committed team of talented staff and a strong strategic plan, positions GISA as a valued partner in delivering values-based data services to its stakeholders. GISA has worked consistently towards accurate exhibits in a timely fashion as well as working with its Service Provider to gather information required by Regulators in participating jurisdictions. The data and financial information collected assists these Regulators in carefully overseeing the insurance industry in their jurisdictions and our Public and Industry Directors provide a wider perspective to issues facing Canada s insurance industry. Within this report you will find details of GISA s projects. The Technology Renewal Plan, the first and largest project to date, has come to completion. Other projects include automated data verification to increase data accuracy and enhancement of Financial Information processes to improve and maintain ongoing operations going forward. Each carefully thought out project is oriented to supporting regulators in monitoring and responding to Canada s insurance marketplace and is conducted in a cost conscious and quality focused manner. Looking forward to 2015, I am encouraged and confident that with the support of GISA s staff, the regulatory representatives and a strong strategic plan we will continue to build on our capacity and continue to seek incremental improvements as we effectively deliver on our mandate. Mark Prefontaine Chair General Insurance Statistical Agency GISA Report of the Directors Page 1

4 MANDATE GISA was incorporated as a not-for-profit corporation in June 2005 and appointed, effective April 1, 2006, as the statistical agent for insurance regulators in the following participating member jurisdictions: Alberta New Brunswick Newfoundland and Labrador Northwest Territories Nova Scotia Nunavut Ontario Prince Edward Island Yukon GISA was established to improve the governance, accountability and oversight, as well as the reliability and objectivity, of insurance statistical data in Member jurisdictions. GISA s mandate is to collect, and make available, timely statistical and financial information to support a healthy, accessible and responsive marketplace for property and casualty insurance. Detailed information on GISA s business and objectives, governance structure, Board and Committee responsibilities and publications can be found on GISA s website at GISA Report of the Directors Page 2

5 STATISTICAL AND FINANCIAL INFORMATION There are two mandatory statistical plans: Automobile Statistical Plan insurers operating in Alberta, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, Yukon, Nunavut and the Northwest Territories must report statistics for automobile insurance under this statistical plan. Ontario Commercial Liability Statistical Plan insurers operating in Ontario must report statistics for commercial liability insurance. In addition, GISA collects financial information from automobile insurers amongst GISA s participating jurisdictions which began with the 2012 automobile insurance experience. Automobile experience data is collected to provide premium and claim information, which is used to develop and support fair automobile insurance rates. The statistical and financial data collected support the following public policy objectives: Monitoring the adequacy of rates to ensure that they are not excessive or unfairly discriminatory; Monitoring the adequacy of market structure and performance, and taking steps, if necessary, to restore competition or remedy the problems caused by market instability; and Ensuring informed pricing decisions based on aggregate industry experience. Automobile insurance experience is published in a series of exhibits and reports which are compiled from data that has been collected from all licensed automobile insurers by GISA and contains experience from all participating jurisdictions. GISA Report of the Directors Page 3

6 GOVERNANCE GISA has established the following governance structure to fulfill its mandate and carry out its activities: Board of Directors Executive Committee Finance & Audit Committee Statistical Plan Committee GISA Operations Statistical Service Provider Insurers The structure creates a direct link between the statistical agency, the provider of statistical services to the agency and its stakeholders. It provides provincial and territorial regulators with oversight of the statistical plans and clarifies that the integrity of the data assembled is ratified by a body independent of the industry. In short, this governance structure best serves the industry and the public interest. Board of Directors GISA is governed by a Board of Directors comprised of nine Member Directors, three Industry Directors and two Public Directors. During the year, GISA s Board met five times to address matters referred to it for decision and to receive progress reports on GISA s strategic initiatives and matters related to its operations. Information on GISA s Board of Directors including membership in its various Committees is detailed in Appendix A, Board and Committee Membership. The Board undertook its annual performance review and competency inventory matrix in order to examine the Board s effectiveness and make improvements where necessary. GISA Report of the Directors Page 4

7 Board Committees The GISA Board has established the following Committees: Executive Committee Finance & Audit Committee Statistical Plan Committee Executive Committee The Executive Committee provides stewardship and strategic management for GISA. Its mandate is to provide ongoing oversight and direction in the operation of the agency. During the year, the Committee met eight times. The Executive Committee: provides ongoing direction and advice to GISA Management in implementing decisions of the Board; acts as the Nominating Committee for appointments to the Board and its Committees; reviews and approves key communication documents and correspondence; establishes priorities and approves agenda for Board meetings; and makes ongoing decisions as necessary. Executive Committee: Mark Prefontaine, Chair Angela Mazerolle Brian Mills Brigid Murphy Finance & Audit Committee The Finance & Audit Committee assists the Board in fulfilling its financial oversight responsibilities. The Committee reviews GISA s financial risks, results, and reporting systems and provides advice and makes recommendations to the Board with respect to: external audits; internal control and risk management; financial performance and planning; and any other issues as requested by the Board. During the year, the Committee met four times. Finance & Audit Committee: Ralph Peterson, Chair Fiona Charbonneau Bonnie Lovelace Brigid Murphy Doug Murphy Craig Whalen GISA Report of the Directors Page 5

8 Statistical Plan Committee The Statistical Plan Committee assists the Board in fulfilling its oversight responsibilities pertaining to the collection, analysis and reporting of statistical and financial information. The Committee oversees, provides advice and makes recommendations to the Board with respect to: GISA s Data Rationalization Strategic Initiative; GISA s Data Collection, Analysis and Reporting Strategic Initiative; (Data Management Working Group) Non-financial aspects of the Technology Renewal Program (TRP); Systemic issues affecting statistical plan data integrity; and any other issues as requested by the Board. Statistical Plan Committee: Mark Prefontaine, Chair Dan Carlson Brian Mills John Mitchell Sylvie Paquette Barry Cotnam Del Dyck During the year, the Committee met four times. GISA Report of the Directors Page 6

9 ACCOMPLISHMENTS This section provides highlights of GISA s accomplishments over the period April 1, 2014 to March 31, Technology Renewal Plan The Technology Renewal Plan began in 2006 to move data collection and reporting systems from a legacy environment into a renewed environment. The last phase of the Technology Renewal Plan involved moving the Commercial Liability Statistical Plan and ancillary systems to the renewed environment as well as decommissioning the legacy environment. This last phase was concluded at the end of this fiscal year. All systems and applications are now running from and all reports and exhibits are being generated in the renewed environment. Financial Information Collection GISA started collection of the financial information from insurers in The financial information assists the regulators in fulfilling their responsibility to understand and monitor insurance industry financial performance and to respond appropriately to stakeholders. The data collected is used to provide financial information reports to regulators by company as well as by jurisdiction. During the fiscal year, all financial information reports were completed and distributed as planned. The Financial Information Collection Development Project has now been concluded. At the end of the fiscal year, the required collection and reporting processes were transitioned to ongoing operations. Data Query Tool A Data Query Tool project was initiated in 2013 to implement a data query tool for regulators to ensure easier and faster access to custom reports, with the ability to create ad-hoc reports. During this fiscal year, GISA worked with its statistical service provider to evaluate the size of the hardware infrastructure required to support the implementation of the data query tool. Hands-on training will be provided in the coming fiscal year to facilitate more in-depth understanding and effective use of the data query tool. GISA Report of the Directors Page 7

10 Exhibit Refresh GISA has initiated an Exhibit Refresh project to update and enhance a number of existing exhibits. The objective for this fiscal year was to produce Catastrophe exhibits as a part of the Exhibit Production System (EPS) for the Automobile Statistical Plan (ASP). The project is completed and the Catastrophe exhibit is now being produced as part of the EPS. EPS Consequence Process Integration The EPS Consequence Process Integration project was initiated during the fiscal year to implement enhanced functionality in the Automobile Exhibit Production System that will make the generation and application of exhibit data exclusions more efficient. Currently, when anomalous data is identified earlier in the exhibit production, consequences are generated outside of the EPS and then applied to the exhibits in EPS. This project will allow the consequence generation and application of the consequences to be done within the EPS. Early Warning System Enhancements The Early Warning System (EWS) Enhancements project was also initiated during the fiscal year to enable automated verification of data accuracy, management of resulting issues, and creation and maintenance of the Anomaly Rules. It has a warning mechanism to identify potential issues with the specific fields in the reported Automobile Statistical Plan (ASP) and Commercial Liability Statistical Plan (CLSP) data. In order to continue to improve data accuracy, reduce data exclusions within GISA exhibits and ensure stakeholder confidence in the exhibits, the EWS Enhancements project was undertaken to allow internal EWS business users to create Anomaly Rules. This new functionality will considerably improve the ability of introducing the new Anomaly Rules into production by reducing the time and amount of manual effort. Capitalization Policy To strengthen internal controls, GISA regularly conducts a review of all Finance and Governance related policies. This year, the GISA Board approved a new capitalization policy which has been developed to reflect the current GISA environment and help guide project capitalization decisions. As GISA projects become more complex, this policy establishes the various amortization criteria to consider when technology projects have future economic benefit. Each project's useful life will be taken into consideration in making capitalization decisions. GISA Report of the Directors Page 8

11 FINANCIAL REPORTING REQUIREMENTS Audited Financial Statements GISA is a not-for-profit association, as described in the Income Tax Act (Canada). Audited financial statements and the Audit Findings Report, for the fiscal year ending March 31, 2015, were presented to the Board by GISA s auditors, PricewaterhouseCoopers, at its meeting on September 30, In accordance with the governing By-Law, upon approval by the Board, the audited financial statements and report were presented to the Members of the Corporation at their Annual Meeting also held on September 30, The audited financial statements can be found in Appendix B. GISA Report of the Directors Page 9

12 APPENDIX A: GISA BOARD AND COMMITTEE MEMBERSHIP (As of the period ending March 31, 2015) Mark Prefontaine, Chair of GISA Member Director Committee: Executive Committee and Statistical Plan Committee Mark Prefontaine is the ADM, Financial Sector Regulation and Policy with Alberta Treasury Board and Finance (ATBF). This includes the roles of Superintendent of Pensions, Insurance, and Financial Institutions. He has held several positions within ATBF, including Deputy Superintendent of Pensions, Senior Manager of Risk Management, and Senior Compliance Officer. Prior to joining ATBF he worked in a family financial planning practice and was an officer in the Canadian Armed Forces. He holds an Honours Economics and Commerce degree from Royal Military College and an MA in Interdisciplinary Studies Angela Mazerolle, Vice Chair of GISA Member Director Committee: Executive Committee Angela is the Superintendent of Pensions and the Superintendent of Insurance for the Financial and Consumer Services Commission in New Brunswick. As Superintendent, she is responsible for the administration and enforcement of New Brunswick's Pension Benefits Act and Insurance Act. She s been involved for the past thirteen years in both the regulation of pension plans and policy development. She is a member of many related organizations including Chair of the Canadian Association of Pension Supervisory Authorities (CAPSA). She holds a Bachelor of Commerce degree (Honours - Economics) from Mount Allison University and her Bachelor of Laws degree from the University of Alberta. Brian Mills Member Director Committee: Executive Committee and Statistical Plan Committee Brian Mills was appointed Interim CEO and Superintendent of Financial Services, effective October 18, At the time, Brian had served at FSCO for over six years, most recently as Deputy Superintendent, Pensions. He brings to the position over 27 years of experience in both the private and public sectors. He began his career in the OPS in policy at several Ontario ministries including the Ministry of Financial Institutions. He spent five years as Vice President of Pension Administration at the Ontario Pension Board. He was also a Managing Partner at Towers Perrin, responsible for running the firm's pension and benefit outsourcing business operations in Canada, Europe, Australia and Latin America. He holds an Honours BA in Economics from Queen's University. GISA Report of the Directors Page 10

13 Robert Bradley Member Director Robert Bradley is the Superintendent of Insurance and Real Estate with the Department of Justice and Public Safety for Prince Edward Island. He currently serves as Vice Chair of the Canadian Council of Insurance Regulators. Robert has also held public sector positions with the Office of the Auditor General and in health administration. In the private sector, he has held positions with a major accounting firm and a regulated electrical utility. He holds a Bachelor of Business Administration degree and a Chartered Accountant designation. Dan Carlson Member Director Committee: Statistical Plan Committee Dan Carlson is the Superintendent of Insurance and Director of Fiscal Policy for the Government of Nunavut. Prior to joining Nunavut's Department of Finance in 2009 he worked with the federal Department of Finance Canada. He holds an Honours BA in Economics from Queen's University, as well as a Masters of Public Administration and a Masters of Economics from Dalhousie University. Fiona Charbonneau Member Director Committee: Finance & Audit Committee Fiona Charbonneau is the Superintendent of Insurance and Director of Professional Licensing & Regulatory Affairs for the Yukon Government. She has public sector experience in program management, health care insurance, workers compensation, regulatory matters, operations and corporate governance. From 1998 to 2007, she served on the Yukon Hospital Corporation Board holding the position of Vice-Chair for a majority of those years. GISA Report of the Directors Page 11

14 Douglas Doak Member Director Douglas Doak is the Superintendent of Insurance for the Northwest Territories. He previously held several positions in the private sector, including: CFO for companies in Vancouver, Jakarta and Hong Kong; Director of Finance, Bell Canada International; and Assistant Treasurer, Genstar Ltd. Doug is a Chartered Accountant and holds a Bachelor of Arts degree from Concordia University in Montreal. Doug Murphy Member Director Committee: Finance & Audit Committee Doug Murphy is the Superintendent of Insurance, Credit Unions and Trust and Loan Companies for Nova Scotia. He is a Vice Chair of the Canadian Council of Insurance Regulators and a member of the Canadian Insurance Services Regulators Organization. He holds a Bachelor of Business Administration degree with a major in Economics. Craig Whalen Member Director Committee: Finance & Audit Committee and Statistical Plan Committee Craig Whalen is the Deputy Superintendent of Insurance with the Financial Services Regulation Division of Service Newfoundland and Labrador and is also the Manager of Licensing Registration and Compliance with responsibilities, in addition to Insurance, for Securities, Real Estate and Mortgage Brokers. He has also held other government positions including Deputy Superintendent of Real Estate, Deputy Registrar of Mortgage Brokers, Administration of the Private Investigation and Security Services, Deputy Registrar of Collection Agencies and Deputy Registrar of Consumer Protection. He holds a Certified General Accountant designation and a Diploma in Business Management (Accounting). GISA Report of the Directors Page 12

15 John Mitchell Industry Director Committee: Statistical Plan Committee John Mitchell is the President and CEO of Portage Mutual Insurance. He has held several positions, including Junior Computer Programmer, Computer Programmer, Business Analyst, Marketing Representative, Corporate Marketing Analyst, Corporate Marketing Manager, Manager Corporate Business Strategies, and Vice President. He holds a Diploma in Computer Programming from Red River Community and a Diploma from Canada Risk Management. He is also a Fellow of the Insurance Institute of Canada. Brigid Murphy Industry Director Committee: Executive Committee and Finance & Audit Committee Brigid Murphy is President & CEO of Travelers Canada. She was previously President & CEO of The Dominion, which she joined in Brigid has been involved in the P&C industry, in both broker and company roles, for many years and is also an advocate for children's mental health and The George Hull Centre, where she chaired the Board for 10 years. Sylvie Paquette Industry Director Committee: Statistical Plan Committee Sylvie Paquette is President and CEO of Desjardins General Insurance Group and Senior Executive Vice-President and General Manager of Property and Casualty Insurance at Desjardins Group. Sylvie joined DGIG in 1984, and has held a number of progressive leadership positions including Senior Executive Vice-President of Corporate Development prior to being appointed to her current roles. Sylvie is currently Chair of the Insurance Bureau of Canada is also a Member of the Board of the Centre for insurance and financial services development in Quebec. Sylvie has an Actuarial Sciences degree from Laval University and is a Fellow of both the Canadian Institute of Actuaries and the Casualty Actuarial Society. GISA Report of the Directors Page 13

16 Bonnie Lovelace Public Director Committee: Finance & Audit Committee Bonnie Lovelace is currently Executive Director of the Waugh Family Foundation. Bonnie has held several positions in the public and private sectors, including Assistant Deputy Minister of Strategic Services, Senior Financial Officer, CIO, business planner and tax policy analyst for Alberta Finance; Commercial Officer with TD Bank; private Management Consultant; and as a Regional Director in Alberta for the Public Service Commission of Canada. She holds a Bachelor of Commerce (Hons) from the University of Manitoba and an MBA from the University of Alberta. Ralph Peterson Public Director Committee: Finance & Audit Committee Ralph Peterson was a partner with PricewaterhouseCoopers. Between 1994 and 1998, he was Managing Partner of the Edmonton office. In 2003, he left public practice to join industry and performed as Vice President, Finance, Corporate Risk & Strategy and Chief Financial Officer. In 2011, he was appointed Chief Executive Officer of a private equity held steel fabrication company. In 2013, he semi-retired to devote more time to his family and his Corporate Boards and other activities. His professional qualifications include: Chartered Accountant and Member of both the Alberta and Ontario Institutes, Fellow Chartered Insolvency and Restructuring Professional (FCIRP (Ret)), Institute-Certified Director and member of the Edmonton Chapter Executive of the Institute of Corporate Directors. GISA Report of the Directors Page 14

17 APPENDIX B: AUDITED FINANCIAL STATEMENTS GISA Report of the Directors Page 15

18 General Insurance Statistical Agency Financial Statements March 31, 2015

19 September 30, 2015 audit opinion. pwc PI r.,. s:,. >,,s, ic t;z:;-,,3._ron:d, rsl 1-a I I c (I(CI( rh(1tls(c(u)j (, S LL? ib,s (i3 223,3, F: +2 4 lb 30,3 à:2 1,3 lax lijii ci. 1,5 link- Sued, Siifle :2600, Toioiito, Oiittti vi, Cuiiodu MJ 0112 We believe that the audit evidence we have obtained is suthcient and appropriate to provide basis for our overall pi e.sentnt!on of the financial stitc Inents. used and the reasonableness of accounting estimates made by management. as well is evaluating the the financial statements. The procedures selected depend on the auditor s judgment, including the the entity s internal control, An audit also includes evaluating the ippi opnateness of accounting policies assessment of the risks of material misstatement of the financial statements, whether due to fraud or preparation and fair presentation of the financial statements in order to design tuc lit procedures I hat arc appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of error. In making those risk assessments, the auditor considers internal control relevant to the entity s An audit involves n rforming procedures to obtain audit evidence about the amounts and disclosures in about whether the financial statements are free from material misstatement. our audit in accordance with Canacliiin generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance Our respoiisihi ity is to express an opinion on these financial statements based on our audit. Wi conducted Auditor s responsibility free from material misstatement, whether due to fraud or error. accordance with Canadian accounting standards for not for profit organizations, and for such intermd control as management determines is ii ecessary to enable the preparation of financial statements that are Management is responsible for the prel )anition and hur presentation of these financial statements in Management s responsibility for the financial statements and net assets and cash flows for the year then e ncled, and the related notes, which comprise a xii iumaty of significant ic rounting p01a1 and other explamttoiy information, which comprise the statement of financial position as at March ii, 101,5 and the statements of operations We have audited the acco in,anying financial statements of General I nsura ace Statistical Agency (( HSA), General Insurance Statistical Agency To the Members of Independent Amlitor s Report

20 pwc Opinion In stir opinion, the finanenil statements present fairly. in all material respects, the financial posit ion of (;ISA as at March md the results of its operations and its cash flows for the Year tllcfl ended tn accordance with Canadian accounting stand irds for not for pront organizations. Chartered Professional Accountants, Licensed Public Accountants

21 General Insurance Statistical Agency Statement of Financial Position As at March 31, 2015 Assets Current assets Cash Interest receivable Prepaid insurance Accounts receivable Due from participating insurers Due from members (note 5) GSTIHST receivable Short-term investments (note 6) 2015 $ 2,553,056 29,296 5, , ,599 2,681, $ (note 10) 2,986,931 25,500 5, , , ,736 2,652,493 5,627,060 6,391,594 Intangible assets - custom developed appl cation software, net of accumulated amortzat on of $17,285,529 (2014 -$16,500,368) (note 4) 2, ,889,618 7,758,270 8,281,212 Liabilities Current liabilities Accounts payable (note 7) Due to secretariat service provider (notes 3 and 8) Due to statistical plan service provider (notes 2 and 8) 60,849 57, , ,365 2,926,116 3,206,024 3,202,594 3, Long-term liability due to related party (note 8) Deferred assessment revenue for Technology Renewal Program 14, ,082,407 3,208,359 7,299,298 6,594,048 Net Assets Commitments (note 9) 458,972 1,687,1t4 7,758,270 8,281,212 of Directors Chair Director The accompanying notes are an integral part of these financial statements,

22 Other charges General Insurance Statistical Agency Statement of Operations and Net Assets For the year ended March 31, $ $ (note 10) Revenue Assessments for Mandated Statistical Plan Assessment for Technology Renewal Program Deficiency fees Investment income 6,782, , ,979 53,577 8,855, , ,361 29,212 8,576, ,294 Expenses Production of Mandated Statistical Plan (note 8) Amortization and technology project Salaries and benefits Travel and communication Office and utilities Board and committees Professional services 7,830,689 8,349, , , , ,423 7,122 2, ,613 99,090 45,951 49, , ,116 3,306 6,103 9,804,937 9,975,804 Excess (deficiency) of revenue over expenses for the year Net assets - Beginning of year Net assets - End of year (1,228,192) 391,490 1,687,164 1,295, ,972 1,687,164 The accompanying notes arc an integral pail of these financial slatements.

23 To other suppliers General Insurance Statistical Agency Statement of Cash Flows For the year ended March 31, $ $ Cash provided by (used in) Operating activities Cash receipts From participabng insurers for assessments and deficiency fees From members for GST/HST Interest received GST/HST Refund received Paid Cash paid To statistical plan service provider for contracted services To secretariat service provider for services and expense reimbursement 9,581,452 1,064,523 49, ,874 (637,449) (9,159,669) (762,573) ( ) 11,059,810 1,172,601 10, ,293 (622,959) (8,794,824) (538,265) (444,577) 715,789 2,630,446 Investing activities Redemption of short-term investments Purchase of short-term investments Purchase of intangible assets from statistical plan service provider 2,652,493 2,642,840 (2,681,671) (2,652,493) (1,120,486) (1,330,907) (1,149,664) (1,340,560) Net change in cash during the year Cash - Beginning of year (433,875) 1,289, ,931 1,697,045 Cash - End of year 2,553,056 2, The accoiiipanying notes are an integral part of these fi tiancial statements.

24 General Insurance Statistical Agency Notes to Financial Statements March 31, Purpose of General Insurance Statistical Agency ((USA) (USA is an liii er jurisdictional ;issoci;ilion, membership of which is Ii nited to the insurance regulators (meiubers) of the provinces and territories of Canada, whose objectives include: to act as a statistical agent on behalf of the participating members in jurisdictions in Canada, where so designated; to promote I inieli tess, integntv, reliability and credibdity of statistical data generated by and on behalf of the 11W inhe rs; to coordinate the slatistical data requirements of the members; to assist the pa it ieipating members in the enforcement of insurers compliance with data filing and requ irenients; to promi te Lhe coordination, liarmoniza tion and efficiency of data filing requirements for the members; and to discuss and take action on issues of common interests to the members. (USA was incorporated by letters patent tinder the Canada Corporations Act on June 28, (USA is a not for profit association, as described in the Iticoine Tax Act (Canada); therefore, no income taxes are pron led in these fi mumcial statements. 2 Agreement with statistical 1an service provider (lisa has an agreement with i statistical plan service provider for the provision of services, which shall end on fyiirehi :31, 20 is. As good governance practice, (USA embarked on a competitive Request for Proposal (RIP) for its statistical service provider on May 14, On September ab, 2012, following the RI] process, the (USA Board of I)irectors made a decision to renew the Insurance Bureau of Canada (IBC) as (USA s statisticd service provider. The (HSA IBC Service Agreement covers the live year period from April 1, 2013 to vlarchi 31, The agreement retains the statistical phill service provider to provide collection, processing and analysis of industry data, eertai i I inancial services, including hilling services and budget preparation, and the development of approved capital projects, as required by (USA. (i)

25 General Insurance Statistical Agency Notes to Financial Statements March 31, Agreement with secretariat service provider Effect we January 1, 2006, C USA entered in to an agreement with a secretariat service pro id r. This agreement has been ext ended fi r tile three year period from April i, 2013 to March 31, 20 i6. Services pn wided by the secret aria service provider i milude the establishment and maintenance of the (USA office, financial ailministrat ion and human resources iclmirnstration. Certain employees of the Ontario Public Xe ivice (DI S) are assigned to Cl SA. Ui e seeretitria t service provider bills CISA on a quarterly basis. 4 Basis of presentation and summary of significant accounting policies These flininejal statements have been prepared in accordance with Canadian accounting standards for not for profit organizal ions (ASNI O) and are in accordance with Canadian generally accepted accounting principles, which require that tnanagement make estimates and assumptions that affect the reported ainouiits of assets and liabditic as-at the date of the financial statements and the reported aimmnts of revenues and expenses for the report lug period. Act tnt! anumuts could differ from these estimates. The significant accounting policies are as follows: Revenue recognilion The participating insurers are assessed annually, billed quarterly in advance, for their portion of the estimated costs associated with the production of the statistical plans, the costs for the development of capital assets and for the costs of regular maintenance of the custom developed software that are considered to be non capital costs, as required 1w (USA. The programs herein are refer red to as the Mandated Statistical Plan (MSP) the Technoli > Renewal Pngra in (TRI ). Assessment revenue for the production of the MSP is billed to the participating insurers based on the approved animal budget. The budget is established to recover (USA s expected operating costs for the year. Revenue is recognized in income iii the year it is billed. Assessment revenue for the TRI represents timnints billed to participating insurers for the development of custom developed application software is well is for the expenses for the regular innntenanee of the custom developed software that ire considered to be non cipit al costs, Assessment revenue for thc TRI related to the (leveloplileilt ofcustoin software is deferred and recognized over the same period as the amortization of the related capital assets. Assessment revenue for the T also represents amounts billed to participating insurers for the expense of non capitalized oilier pruects and is recognized in income in the year as other project expenses are recorded. Deficiency fees, I nlled n ionthly, are fi r late and inaccurate submissions that create processing delays and eom pro in ise the t inieliness and value of the mandated data required to be filed by the participating insurers. l lie ftes are rec( )gnized in i scoine as I )illed. Interest income from short te i-in investments is recorded as earned. (2)

26 General Insurance Statistical Agency Notes to Financial Statements March 31, 2015 Assessnwnt revenue in excess of actual expenses incurred by GISA in a particular year, including any deficiency fees and investment income, will be applied to reduce annual assessments for the participating insurers in the following year. Intangible assets Custom developed application software is recorded at cost, less.ic(un1ult(d aniort ization. Amortization is calculated on a straight li LW basis over three or five years, the estinut ted useful life of the asset. Effective.lanna iy 7, 2008, Phase I of the TIW was implem ruled and all of the Phase I projects were completed by December The finl phase commenced in.jti ne 2010 a ml was completed in M;irch Financial instruments On initial recognition, financial assets and financial liabilities ire measured at fair value and subsequently measured at amortized cost. l in;tncial assets measured at amortized cost include cash, short term investments and receivables. Financial liabilities measured at amortized cost include accounts payable and due to related parties. flie main risks GISA s financial instruments are exposed to are credit risk, liquidity risk and market risk. Credit risk Credit risk is the risk the counk rparty to a financial instrument may fail to discharge an obligation or commitment that it has entered into. GISA is exposed to credit risk relating to the cash, interest rccchible, accounts receivable from participating insurers, aect nints receivable from members, GST/l 1ST receivable, and short term investments, in the total amount of 55,621,425 (2ot4 56,385,642). The credit risk exposure is considered to be low. Liquidity risk Liquidity risk is the risk rn entity may encounter difficulties in meeting cash flow coinniitnients associated with financial instruments. To manage cash flow needs, (HSA maintains a portion of assets is short term investments in cishalile guaranteed invesl ment certificates (GICs). (HSA believes it has low liquidity risk, given tl e mi hire of its accounts payable, cash anti shi,rt terin investment pi sitions. GISA manages its Ift n ft lily risk through a regular budgetaty process, tin) ely billings to insurers intl regular review of colleeth )ns a ml budgets. Market risk Market risk arises fnmi the possibility that changes in market prices will ffeet the value of the financial instruments of (IISA. Short term financial instruments (receivables, short term investments and accounts payable) are not subject to significant market risk. (USA s market risk is considered to be low. (USA manages its market risk by investing assets in low risk, liquid securities with short term maturities. (:i)

27 $24,188) 82,652,49:3). General Insurance Statistical Agency Notes to Financial Statements March 31, 2015 Accounts receivable due from members Accounts receivable due from members consists of GST/ 1 1ST (barged cifl services perfo rined by GISA that are outstanding as at year-end. 6 Short-terni investments Siu)rt tcrin investments consist of cashalile (tics. As at March 31, 2015, (HSA held two ciisliahle (tics with one year terms in the total iniouiit of ,671 (2014 The GIL s interest rates are 1.25% ( %). 7 Accounts payable Included iii accounls payable is snil (2014 S6) owing in respect of government remittances for payroll taxes and S6,424 (2014 Snil) owint in respect of harmonized sales taxes. H Related party transactions Transactions with statistical plan service provider During the year, the su tislical plan service provider billed (USA S7,8:o,6%q (2014 S%,349,72:3) for the provision of data collection, compilation and reporting services and Si,ioo,i8i ( ,112,018) for the development of the TRP and other technology projects. All transactions with the statistical plan service provider were accounted Ii r at the exchange amounts and were transacted at regular market terms. Transactions with secretariat service provider During the year, the secretariat service pro; ider incurred expenditures on behalf of GISA ft w salaries and benefits, direct operating expenses and certain indirect expenses, including office rent, lighting and heating, IT and website support, in the amount of S65i,65q ( ,434). MI transactions with the secretariat service pro; ider were iccou ated for at the exchange aim nints and were at ngtilar market terms. Employees assigned to (lisa ire en t tied to benefits tin it have been negotiated cent rally for 01 S employees. The fnture liability for benefits earned by these employees is included in the estimated liability for dl provincial empli >yee.s and is recognized in the Province of Onta rio s consolidated financial statements. Certain of these benefits are accounted for by GISA as follows: Defined benefit pension plans The l rovince of Ontario provides defined pension benefits to its classified full time employees through part icipat ion iii the Public Service Pension Fund and the Oh S Employees Union Pension Fund (the pension plans). GISA is unable to identi y its share of the underlying assets and liabilities ot these pension plans; therefore, no pensu m asset or liability has been recorded in these financial statements and defined contribution accounting has been applied. (USA s required contributions to the pension plans for the year ended March 31, 2015 were S:34,79o (2014 and are included in sahiries and benefits expenses. (4)

28 General Insurance Statistical Agency Notes to Financial Statements March 31, 2015 Termination and other benefits flic Province of Ontario proides ternllnation benefits to its 01 S employees, subject to service and eligibility requirements, as defined in the employee contracts. laabihties are recorded by the Province of Ontario based on the actuarial present value of benefits earned to date. GISA records a proportionate share of termination benefits, based on each eniployt e s years of service with (HSA. rhe ammint outstanding of S14,297 (2014 s15,142) for termination benefits is recorded in long term liability due to related party and due to secretariat service provider. The amounts outstanding of S24,:38 ( ) for any unused vacation enlitlements earned by tlnployees;lnd Snil ( ,363) for any unused compensation option credits earned by employees are recorded in due to secretariat service provider. 9 Commitments The boa RI of directors approved the flu in lebru try 2006 to be completed by the statistical pan service provider. The I RP is a five year prqjeet develc )pe(l I y t he statistical plan service provider to replace core collection, processing and analytical systems for automobile insurance data. l he TRP includes infrastructure overhead, servers and storage infrastructure, custom developed applications and licensed applications. Costs are shared on a proportional basis among GISA, the statistical plan service provider and other parties. Tue completed final five year TRP Phases I and II cost was 812,954,379 for GISA (originally budgeted at 816,376,000) and $4,028,030 overall (originally budgeted at S23,269,000). In tii e tii I rd quarter of 2010, the (SA board of directors approved tile statistical plan service provider s pn mosal Ibr the final phase of the TRI to upgrade dl of the remaining GISA related systems fn m the legacy envirc,nni ent. TRP Final Phase, a niult i year project, commenced in Q: and has been completed as of March G1SA s share of project costs $ , , , ,295 These estim ites are based on tilt! inform atmn wail able at April 30, 2015 and are subject to change in the future. (5)

29 General Insurance Statistical Agency Notes to Financial Statements March 31, Restatement of prior year comparative figures During the 2015 fiscal year it was dewrmined that custom developed application software was hot properly ainort wed in the ricr x ear. The amounts are detailed below and have been adjusted in the current year financial statements. There was no net impact on the net assets as a result of these restaternents. The impact on the prior eir statement of financial pus it IC) H and statement of operations and net assets was as lollows: Prior to restatement Adjustment Restated $ $ $ Assets Accumulated amortization 17,231,417 (731,049) 16, Liabilities Deferred assessment revenue for Technology Renewal Program 2,477, ,049 3, Revenue Assessment revenue for Technology Renewal Program 1,190,636 (488042) 702,594 Expense Amortization and technology project 1190,636 (488,042) 702,594 (6)