F10-033 AGM DRAFT Minutes by dandanhuanghuang

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									TO:                 MEMBERS OF THE FACILITY ASSOCIATION

ATTENTION:          CHIEF EXECUTIVE OFFICER

BULLETIN NO.:       F10 - 033

DATE:               MAY 17, 2010

SUBJECT:            DRAFT MINUTES OF THE ANNUAL GENERAL MEETING



Please find attached, for your information, the draft minutes, Chairman’s remarks and
President’s remarks from the Facility Association Annual General Meeting held April 8, 2010.




David J. Simpson, M.B.A., FCIP
President & CEO



Attach.
                                  Facility Association
                  DRAFT MINUTES OF THE ANNUAL GENERAL MEETING
                        HELD AT THE DELTA CHELSEA HOTEL
                       TORONTO, ONTARIO ON APRIL 8TH, 2010

1.      The President read the notice of meeting dated March 4, 2010 (Bulletin F10-016) and
        confirmed the presence of a quorum.

        Residual Market                    Votes represented in person                    849
        Residual Market                    Votes represented by proxy                     267
        Residual Market                    Total represented (out of 1364 votes)         1116

        Ontario RSP                        Votes represented in person                    602
        Ontario RSP                        Votes represented by proxy                     155
        Ontario RSP                        Total represented (out of 924 votes)           757

        Alberta RSP                        Votes represented in person                    176
        Alberta RSP                        Votes represented by proxy                      77
        Alberta RSP                        Total represented (out of 327 votes)           253

        New Brunswick RSP                  Votes represented in person                      31
        New Brunswick RSP                  Votes represented by proxy                       13
        New Brunswick RSP                  Total represented (out of 63 votes)              44

        Nova Scotia RSP                    Votes represented in person                      37
        Nova Scotia RSP                    Votes represented by proxy                       16
        Nova Scotia RSP                    Total represented (out of 69 votes)              53

2.      On a MOTION made by Mr. Shawn DeSantis, SECONDED by Mr. Gary Quon and
        CARRIED, the Minutes of the Facility Association Annual General Meeting held on
        April 9th 2009, as previously circulated, were approved.

3.      THE CHAIRMAN’S REMARKS – ATTACHED

4.      THE PRESIDENT’S REMARKS – ATTACHED

5.      REPORTS OF THE PROVINCIAL OPERATING COMMITTEES

        The written reports were attached to the Agenda. The Chairman noted that not all of the
        Chairpersons were present, however, their representatives would be responding to
        questions on their behalf.

        On MOTION made by Mr. Noel Walpole, SECONDED by Mr. George Kalopsis and
        CARRIED, the reports were adopted.

Minutes of the Facility Association Annual General Meeting – April 8, 2010           Page 1 of 3
6.      REPORTS OF THE TECHNICAL COMMITTEES

        The reports of the Technical Committees were circulated with the Agenda. The
        Chairman asked if there were any questions arising from these reports and indicated that
        representatives of these committees were present to answer any questions.

        On MOTION made by Mr. Robert Tisdale, SECONDED by Mr. Shawn DeSantis and
        CARRIED, the reports were adopted.

7.      NOMINATING COMMITTEE REPORT

        Mr. Gary Quon presented the Nominating Report on behalf of the Nominating
        Committee.

        Nominated for election to the Board of Directors by the Insurance Brokers
        Association of Canada for a two-year term expiring in the year 2012:

        Thom C.J. Young                             Lundgren & Young Insurance Ltd. (Western
                                                    Region)

        Nominated for election to the Board of Directors for a two-year term expiring in the
        year 2012:

        Martin Beaulieu                             Intact Insurance
        Andrew Cartmell                             SGI Canada Insurance Services Ltd./Coachman
                                                    Insurance Company/Insurance Company of Prince
                                                    Edward Island
        Shawn DeSantis                              Royal & SunAlliance Insurance
        Francois Faucher                            TD Meloche Monnex Group
        James Russell                               Aviva Canada Inc.
        Robert Wesseling                            The Sovereign General Insurance Company

        The continuing members of the Board of Directors with terms expiring in 2011 are:

        Barbara Bellissimo                          State Farm Insurance Companies
        George Kalopsis                             Echelon General Insurance Company
        Gary Quon                                   Northbridge Financial Corporation
        J. Robert Tisdale                           Pembridge Insurance
        Jamie Reid                                  AP Reid Insurance (Atlantic Region)
        Peter Blodgett                              Darling Insurance (Ontario Region)


        Mr. Quon noted that the President is a member of the Board by virtue of his office.



Minutes of the Facility Association Annual General Meeting – April 8, 2010                Page 2 of 3
8.      ELECTION OF DIRECTORS

        On MOTION by Mr. Noel Walpole, SECONDED by Mr. George Kalopsis and
        CARRIED, IT WAS RESOLVED that nominations be closed. As there were no further
        nominations, the Chairman directed that a single ballot be cast in favour of those
        nominated.

9.      FINANCIAL STATEMENTS

        Mr. Doug Gray from the firm of Deloitte & Touche advised that they were presenting an
        unqualified opinion with respect to the Financial Statements of the Facility Association
        Residual Market Segment as at October 31st, 2009, and the Risk Sharing Pools as at
        October 31st, 2009.

        On MOTION made by Mr. Gary Quon, SECONDED by Mr. Bob Tisdale and
        CARRIED, all of the above Financial Statements for the fiscal year 2009 as previously
        circulated were accepted.

10.     APPOINTMENT OF AUDITORS

        Upon MOTION made by Mr. Shawn DeSantis, SECONDED by Mr. Gary Quon and
        CARRIED, the firm of Deloitte & Touche was appointed as the auditors for Facility
        Association for the fiscal year 2010, with terms to be negotiated by the Board of
        Directors.

11.     OTHER BUSINESS

        No other business was brought before the meeting.

12.     TERMINATION OF MEETING

        There being no further business, on MOTION made by Mr. Noel Walpole, SECONDED
        by Mr. George Kalopsis and CARRIED, IT WAS RESOLVED that the meeting be
        terminated.




                                                 M. Beaulieu
                                                  Chairman




Minutes of the Facility Association Annual General Meeting – April 8, 2010            Page 3 of 3
                         CHAIRMAN’S REMARKS

             ANNUAL GENERAL MEETING – April 8, 2010



2009 was a year marked by uncertainty and change. In the first quarter

of the year, international equity markets were described by many

commentators as being “priced for Armageddon”. Ontario automobile

claims costs, particularly for Accident Benefits, continued to

deteriorate significantly, and then very near the end of the year, the

Supreme Court took what we believe to be the appropriate view of the

Minor Injury Regulation in Alberta, bring years of product uncertainty

to a close in that province.



Against that backdrop, Canadian automobile residual market volumes

remained remarkably stable and in fact declined in almost all

jurisdictions.



In my remarks today, I would like to provide you with some highlights

of the issues and initiatives the Facility Association Board of Directors,



FA AGM – April 8, 2010         Page 1 of 8               Chairman’s Remarks
staff, and volunteer committees have, and are continuing to, address

last year and this.



At the top of that list is the Hearing by the New Brunswick Insurance

Board, or NBIB, into the principle of including a cost of capital

provision in Facility Association rates. Virtually all stakeholders know

that it is essential for market stability and consumer choice for Facility

Association rates to be, in a general way, at the top of the market. It is

difficult, however, to achieve that appropriate market position when

the rate indication is not permitted to include all the cost elements of

the risk transfer. The NBIB recognized that not including a cost of

capital provision in Facility Association rates was, in fact, providing a

subsidy to the higher risk driving element insured through the Facility

Association and rendered a decision allowing the inclusion of a cost of

capital provision in Facility Association rates. New Brunswick is the

second province to allow the inclusion of all cost elements in Facility

Association rates, following Prince Edward Island. We are continuing

to pursue the inclusion of a cost of capital provision in other


FA AGM – April 8, 2010        Page 2 of 8                Chairman’s Remarks
jurisdictions. Most recently, the Nova Scotia Utility and Review Board

held a similar hearing to that of the NBIB on March 11th of this year

and we are hopeful of a similar rational outcome from that Board.



Also in Nova Scotia, 2009 saw us return to a risk classification system

there that is more closely aligned with general industry practice and

that has lead to both a decline in new business applications overall and

a shift in the composition of those applications to a mix more typically

associated with the FARM mechanism.



Sometimes, what does not happen is just as significant as what did

happen, and that might be the appropriate way to view Prince Edward

Island. In the early part of the year there were some who believed a

Risk Sharing Pool was necessary there to accommodate the “Stay Safe

Driver Discount” for inexperienced drivers with clean records.

Throughout the year, however, the industry was able to demonstrate

convincingly the ability to deliver the discount without an RSP.




FA AGM – April 8, 2010        Page 3 of 8               Chairman’s Remarks
Last year, at this podium, the past Chair talked about the deterioration

in Ontario Accident Benefit Claims costs, and the President will show

the impact that has had in our results. I am pleased to note the recently

announced reforms that will take effect September 1st contain both

elements of choice and of cost control to the benefit of consumers

generally. Facility Association staff and committees will be working to

ensure we are compliant with the reforms moving forward.



In regulatory relationships, 2009 saw Facility Association Executive

management and the leadership of the Automobile Branch at FSCO

hold a series of four meetings around structured agendas of mutual

interest and concern, and this has lead to perhaps the best level of

shared understanding between our association and the Ontario

regulator in recent memory. We have also taken advantage of the

opportunity to provide input to the Canadian Council of Insurance

Regulators strategic planning process. In our comments, we stressed

the importance of keeping residual market mechanisms small to avoid

destabilizing the competitive market, and highlighted the opportunities


FA AGM – April 8, 2010        Page 4 of 8               Chairman’s Remarks
to help ensure those mechanisms remain small by reducing the

restrictions on underwriting and rating currently in place in a number

of the jurisdictions we serve.



From a management and governance perspective, the Facility

Association Board of Directors has tasked management with two

significant initiatives. The first is to embrace a comprehensive

Enterprise Risk Management framework, and we look forward to

seeing that integrated fully into Facility Association management in a

lasting way as the year progresses. The second is a review of the

governance and oversight surrounding actuarial and member reporting

processes. While residual market mechanism results are, by their very

nature, inherently more volatile than those of insurance companies, the

Board of Directors has charged management with, where possible,

reducing the number of “surprises” member companies receive from

the FARM and Risk Sharing Pools.




FA AGM – April 8, 2010           Page 5 of 8           Chairman’s Remarks
Other initiatives management will be pursuing throughout the year

include improving member and consumer communications, and an

overall governance review.



Operationally, I am pleased that we were again able to provide our

members with a comprehensive, audited report on the quality of our

internal control environment and I am even more pleased to announce

that the two control objectives identified as being “non-achieved” have

been remediated.



In terms of organizational structure, we have combined the Internal

Audit and Underwriting and Claims Compliance under a single leader,

Colin George, and we are already seeing the benefits of that integrated

approach as Colin has assembled his team.



Before I conclude my remarks, I would like to express special thanks

on behalf of the Board of Directors and indeed all members to two

long-serving Board members who will be leaving the Board as of


FA AGM – April 8, 2010       Page 6 of 8               Chairman’s Remarks
today: George Cooke of The Dominion and Noel Walpole of

Economical Mutual. Both George and Noel have served for almost 2

decades, not only as Board members but members of the Executive and

Investment Committees as well. I know I speak for all members of the

Board when I say how deeply impressed I am by the ability of these

gentlemen to set aside their competitive natures and approach the

governance of Facility Association from a true industry perspective.

On behalf of the Board, I wish them all the very best for the future. We

will miss them greatly.



As I begin my second year as Chair, I am looking forward to seeing

through to completion the initiatives I have outlined today, and I would

like to thank my fellow Directors, Facility Association management

and staff, and all of our volunteers for their continued efforts as we

move the work of the Association forward. I look forward to providing

you with the results of our efforts from this podium next year.




FA AGM – April 8, 2010        Page 7 of 8               Chairman’s Remarks
I will now turn the podium over to our President, David Simpson, for

his remarks.




FA AGM – April 8, 2010      Page 8 of 8              Chairman’s Remarks
               y                             y     g            gg g
       Thank you Mr. Chairman. I said last year given the “lagging
       indicator” nature of residual market volumes that most of us
       would be genuinely surprised if volumes did not go up last year
       or this. I am very pleased to report we have, so far, genuine
                       surprised. Because,                 mentioned,
       reasons to be surprised Because as the Chair mentioned
       residual market volumes are stable or declining in almost all
       jurisdictions.

       As is my usual custom, I will take a few minutes to summarize
       the financial results and market shares of the residual market
       segment and, where appropriate, Risk Sharing Pool, for each
       j
       jurisdiction. The financial results are based on our audited
       financial statements for fiscal year 2009. That means they are
       presented on an undiscounted basis as at the fiscal year end of
       October 31, 2009. The market share shown is for private
                    ehicles                ear 2009.        shown
       passenger vehicles for calendar year 2009 It is sho n on a
       preliminary basis as we await finalized industry data.

President's Remarks - FA AGM April 8, 2010                               1
            The market share of the Residual Market segment for
            all jurisdictions combined was 0.5% down marginally
            from 0.6% in 2008 and 0.7% in 2007.




President's Remarks - FA AGM April 8, 2010                        2
            The combined operating ratio for all jurisdictions
            combined improved to 94%. The improvement was
            influenced significantly by the release of the provisions
            for the challenge to the Minor Injury Regulation, or
            MIR, in Alberta following the Supreme Court’s decision
            on that matter. MIR provisions remain in Prince Edward
            Island, Nova Scotia, and New Brunswick.




President's Remarks - FA AGM April 8, 2010                              3
            Moving through th j i di ti
            M i th                                    from E t t
                         h the jurisdictions we serve f    East to
            West, starting in Newfoundland & Labrador we can see
            that the market share in that province rose from 2.4% in
                    3.4% in 2009.             h is i ifi
            2008 to 3 4% i 2009 In some ways that i a significant
            increase, on the other hand, as the graph shows, 3.4% is
            at the low end of historical norms there.




President's Remarks - FA AGM April 8, 2010                             4
            The   bi d       ti     ti for Newfoundland &
            Th combined operating ratio f N f     dl d
            Labrador came in at exactly 100% and as the graph
            shows, the relatively small volumes in this province
                 l     ih    l il financial results through the
            correlate with volatile fi  i l     l    h    h h
            years.




President's Remarks - FA AGM April 8, 2010                         5
            In Nova Scotia, we have seen a steady, and significant,
            decline in market share over the last three years. This is the
            result of two forces at work: the continued uptake in
            volume for the inexperienced driver Risk Sharing Pool and
            the implementation on May 1st of last year of a new risk
            classification plan for the residual market segment that is,
            broadly speaking, aligned with general industry practice.




President's Remarks - FA AGM April 8, 2010                                   6
            Last              dramatic, t say th l t change i
            L t year we saw a d    ti to      the last, h   in
            the combined ratio, as a prior estimates of the impact of
            the product reform of 2003 were replaced with current
                d        i
            trend assumptions.

            The changes appear exaggerated on a percentage basis
            as the impact on prior years with much larger premium
            volumes “flow through” to the current fiscal period.




President's Remarks - FA AGM April 8, 2010                              7
            As I mentioned, we saw increased use of the Nova
            Scotia Risk Sharing Pool for inexperienced drivers, with
            the market share of that Pool moving up from 2.1 to
            2.6%.




President's Remarks - FA AGM April 8, 2010                             8
           The Combined Ratio of the Nova Scotia Risk Sharing
           Pool showed                  a similar, but not as dramatic,
           improvement to the residual market segment for similar
           reasons.




President's Remarks - FA AGM April 24 2008                                9
            Our market share in Prince Edward Island in 2009
            stablilized at 2%, which remains an “all time low” for
            the province.




President's Remarks - FA AGM April 8, 2010                           10
            The PEI combined ratio improved to 86% and we are
            maintaining a provision for the Challenge to the Minor
            Injury Regulation there.




President's Remarks - FA AGM April 8, 2010                           11
                   Brunswick,
            In New Brunswick the residual market segment market
            share moved up marginally from 1.5 to 1.6%, and it has
            been remarkably stable the last few years.




President's Remarks - FA AGM April 8, 2010                           12
            The combined ratio in New Brunswick moved up to
            174, largely due to the inclusion of a provision for a
            challenge to the Minor Injury Regulation in that
            province.




President's Remarks - FA AGM April 8, 2010                           13
                                      First Chance
            The market share for the “First Chance” New
            Brunswick Risk Sharing Pool moved up marginally
            from 2.5 to 2.7% and it seems to have “settled in” at
            around 2.5% of the market since 2006.




President's Remarks - FA AGM April 8, 2010                          14
                                        First Chance
            The combined ratio for the “First Chance” New
            Brunswick Risk Sharing Pool deteriorated to 174%, also
            reflecting the inclusion of a provision to reflect the
            challenge to the MIR.




President's Remarks - FA AGM April 8, 2010                           15
            The Ontario residual market segment market share
            moved down to 0.1% in 2009, matching record low
            levels in a year that was extremely challenging for the
            industry in terms of deteriorating claims costs. It
            remains to be seen whether the product reforms
            announced by government and rate action by voluntary
            companies will prevent a repeat of the 2002-2004
            period, when our record low volumes were followed by
            a sudden surge, as can be seen plainly from the graph.




President's Remarks - FA AGM April 8, 2010                            16
            The Ontario Residual Market segment combined ratio
            deteriorated further in 2009. We continue to review the
            private passenger rate program semi-annually and have
            filed on that basis. Our next private passenger rate
            increase is for 12% effective May 1st, following
            significant increases in March and November of last
            year.




President's Remarks - FA AGM April 8, 2010                            17
            The market share for the Ontario Risk Sharing Pool
            moved up to 2.7%, its highest level since 1997.




President's Remarks - FA AGM April 8, 2010                       18
           The combined ratio for the Ontario Risk Sharing Pool
           increased          significantly   in   2009,   reflecting   the
           deterioration of claims costs across the industry
           generally, especially in Accident Benefits.




President's Remarks - FA AGM April 8, 2010                                    19
               Alberta,
            In Alberta the Residual Market segment remained
            steady at 0.3% for the fourth year in a row.




President's Remarks - FA AGM April 8, 2010                    20
            The combined ratio for the Alberta Residual Market
            segment improved significantly, reflecting the release of
            the provision held for the challenge to the Minor Injury
            Regulation there following the Supreme Court’s
            decision not to hear an appeal on the matter.




President's Remarks - FA AGM April 8, 2010                              21
            The market share of the Alberta Grid Risk Sharing Pool
            continued to decline, moving down to 5.2% in 2009.
            Policies eligible for this Pool are only those policies
            capped by the Alberta premium grid.




President's Remarks - FA AGM April 8, 2010                            22
            The combined ratio of the Alberta Grid Risk Sharing
            Pool improved due to the release of the Minor Injury
            Regulation challenge provision.




President's Remarks - FA AGM April 8, 2010                         23
                                            Non-Grid
            The market share of the Alberta Non Grid Risk Sharing
            Pool, a Risk Sharing Pool for “grey” risks, somewhat
            analogous to the Ontario Risk Sharing Pool, declined to
            2.4% from 2.7%.




President's Remarks - FA AGM April 8, 2010                            24
        The   bi d ti f the Alberta Non-Grid Risk Sharing Pool
        Th combined ratio of th Alb t N G id Ri k Sh i P l
        improved, again largely the result of the release of the
        provision held for the MIR challenge.




President's Remarks - FA AGM April 8, 2010                         25
           In the northern territories, we see the usual “mixed bag”
           of volatile results and market shares.




President's Remarks - FA AGM April 8, 2010                             26
President's Remarks - FA AGM April 8, 2010   27
President's Remarks - FA AGM April 8, 2010   28
President's Remarks - FA AGM April 8, 2010   29
President's Remarks - FA AGM April 8, 2010   30
President's Remarks - FA AGM April 8, 2010   31
           On behalf of the Board and the staff I would like to
           recognize the following committee members who have
           moved on from their volunteer responsibilities with us since
                                            p
           the last Annual General Meeting:

           Diane Vincent , Herb Cline and Sheetal Savani of the
                    g
           Accounting Committee

           Andrew Cartmell and Benny Zhou of the Actuarial
           Committee

           Terry G
           T             f the Rates Rules Committee and th
                 Geroux of th R t & R l C      itt     d the
           Ontario Operating Committee.

           Mark Rouleau and Rosalind Staples of the Operating
           Committee f Alb t and th T it i
           C   itt for Alberta d the Territories.

           I will truly miss the contributions of George Cooke and
           Noel Walpole to our Board dialogue. Both of them are true
           statesmen, willing and able to take a long-term, broad view
           of the issues facing our Association and our industry. I wish
           them all the very best for the future.




President's Remarks - FA AGM April 8, 2010                                 32
       I would like to recognize publicly two employees who will be
       retiring in June after many years of dedicated service.
       Georgette Chan, our Vice President of Operations, will be
                                   us.
       leaving after 36 years with us Underwriting Auditor Ed
       Poyner will be leaving us after 11½ years. We will miss them
       both very much and I have a high personal regard for their
                                                         best.
       dedication and loyalty and wish them all the very best

       I would like to end my remarks by thanking the Board, the
       Facility Association staff and our business partners for their
       support and guidance over the past year.

       As always, I enjoyed working with and learning from
       everyone. And, as I always do, I am looking forward to doing
       more, and doing it better, in the year ahead.

       Mr. Chairman, that concludes my remarks.




President's Remarks - FA AGM April 8, 2010                              33

								
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