Facility Association changes reporting timelines for transferring claims to risk-sharing pools

Facility Association is changing its rules for transferring claims to the risk-sharing pools (RSP) as of July 1, 2011, effectively reducing reporting time, but also giving insurers a little bit more time to investigate a loss to see if it is really a loss.
The new rule states that for a policy already transferred to the RSP, any initial reserves, paid losses or expenses shall be reported to the RSP within 30 days from the date the claim is posted to the member’s own system. In addition, once the loss has been reported to the RSP, changes to the loss amounts, expenses paid or reserves shall be updated to the RSP within 30 days of the company posting to its own system.
“This proposed change not only greatly reduces reporting time, but clarifies the wording,” FA wrote in a Nov. 5 bulletin to members announcing the changes. “By changing the reporting requirement to report within 30 days of the member posting to its own system, rather than when they are first notified of the loss, it allows member companies time to investigate the loss and determine of there is really a loss.
“As well, reducing the reporting lags should provide the potential to enhance the accuracy of the actuarial analysis of RSP experience.”
The second part of the rule change deals with consequences. If a member fails to comply with the above reporting requirement, there is a fine of $500 for the first infraction, $1,000 for the second and $2,000 for the third infraction within any three-year period.
After the third infraction, a member may be barred from ceding risks to the RSP for a period of up to one year.
The new rule will be incorporated in the RSP Manuals for Alberta, New Brunswick and Nova Scotia immediately and be effective on July 1, 2011. The rule will be effective in Ontario when regulatory approval is obtained.