Facility Association, a residual market of last resort for high-risk claims, is asking brokers in Alberta to place certain risks into the voluntary auto insurance market to help depopulate the residual market.
The Facility Association Residual Market (FARM) is intended only for high-risk drivers who cannot find insurance elsewhere. But after reviewing its book of business in Alberta, Facility Association issued two bulletins outlining opportunities for the province’s brokers to help FARM reduce the amount of business it is currently writing.
“After analyzing our Alberta book of business, we see an opportunity for the voluntary market to help depopulate the FARM, especially for non-private passenger vehicles,” Facility Association noted in a bulletin to its members. “For example, the better-than expected loss performance of interurban, taxis and public buses insured through the FARM in recent years would seem to be inconsistent with our position as the market of last resort.”
The bulletin notes that 2010 premium volumes for these classes of business in Alberta were $58.6 million for interurban vehicles, $11.7 million for taxis and $5.5 million for public buses.
In a separate bulletin, FARM noted a similar, “better-than-expected loss performance” for motorcycles, All Terrain Vehicle (ATVs), and snow vehicles. FARM saw the same opportunity for brokers to place this class of business in the voluntary non-private passenger vehicle market instead.
Approximate 2010 premium volume for these classes of business were $12.1 million for motorcycles, $3.8 million for ATVs and $11 million for snow vehicles.
“We encourage member companies to revisit their risk appetites and marketing approaches for these classes of vehicles,” the FARM bulletins said.