Pricing Threshold No-Fault Automobile Insurance in Canada

The purpose of this paper is to illustrate a methodology which Canadian actuaries have used to price no-fault automobile insurance. This purpose is accomplished through a calculation of the impact of the Ontario Motorist Protection Plan on automobile loss Costs. The basic method is to estimate the impact of the law change on each component of the cover. The overall impact is then calculated as a weighted average of the percentage change by component using the current loss costs as weights. The advantage of this approach is that all assumptions are clearly documented and it is relatively easy to modify them and calculate the impact. The disadvantage is that underlying loss costs must be available for each component of the coverage.