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Premium Rates for Insurable Crops and Livestock Regulations

made under Section 6 of the
Crop and Livestock Insurance Act
R.S.N.S. 1989, c. 113
O.I.C. 2005-86 (February 25, 2005, effective February 1, 2005), N.S. Reg. 26/2005

Citation
1 These regulations may be cited as the Premium Rates for Insurable Crops and Livestock Regulations.

Interpretation
2 In these regulations,

(a) "actuary" means a fellow of the Canadian Institute of Actuaries;

(b) "base premium rate" means the rate calculated for an insurable crop and livestock that is the premium rate that applies before any discount or surcharge is applied;

(c) "methodology" means a methodology for determining a base premium rate;

(d) "premium load" means an amount factored into the calculation of a base premium rate for a specific purpose as described in Section 7;

(e) "self-sustainability" means the ability of the crop and livestock insurance program to remain financially sustained over the long term.

Base premium rate calculation
3 The Commission must determine base premium rates based on methodologies that have been certified by an actuary.

Base premium rate review
4 The Commission must review and approve the base premium rate for each insurable crop and livestock annually.

Methodologies developed and certified by actuary
5 (1) A methodology must be signed by an actuary to certify that the methodology is actuarially sound.

(2) A methodology developed and certified under this Section must be re-certified by an actuary at least once every 5 years.

Methodologies must include
6 A methodology must include all of the following considerations:

(a) the previous loss history of an insurance plan;

(b) adjustments to data used in the methodology based on insurance program changes over time;

(c) technological factors that may, in the opinion of an actuary, influence the expected losses under an insurance plan in the future;

(d) premium loads in accordance with Section 7; and

(e) any other considerations that may, in the opinion of an actuary, influence the self- sustainability of the crop and livestock insurance program in the Province.

Premium loads
7 Amounts for all the following may be included as premium loads when calculating a base premium rate:

(a) amounts to cover the cost of uncertainty or agronomic concerns as determined using a method developed by an actuary;

(b) amounts to cover the cost of compensating for an increase or reduction in the revenue from premiums that is caused by a premium discount and surcharge system;

(c) an amount to ensure the self-sustainability of the crop and livestock insurance program in the Province based on a signed opinion of an actuary;

(d) any other amounts that, in the opinion of an actuary, are considered necessary for the calculation of actuarially sound base premium rates.

Premium discounts and surcharges for insurable crops
8 (1) A base premium rate for insurable crops may be adjusted by giving an insured person a discount when indemnity is less than total premiums paid under a plan or adding a surcharge when indemnity exceeds total premiums paid under a plan in accordance with this Section.

(2) Subject to subsections (3) and (4), adjustments for discounts and surcharges must be calculated using the following formula:

(LR - 1) x (n (20 + n))

in which

"LR" (loss ratio) = total indemnity divided by total premiums, and
"n" = the number of years an insured person is in the plan.

(3) The maximum discount is 50% of the base premium rate and the maximum surcharge is 100% of the base premium rate.

(4) The minimum annual premium payable by an insured person for each insured crop in a crop year is $50.00, except when a minimum annual premium is set out in a plan, then the amount prescribed in the plan applies.

Premium discounts and surcharges for dairy livestock
9 (1) A base premium rate for dairy livestock may be adjusted by giving an insured person a discount when indemnity is less than total premiums paid under the plan in accordance with this Section.

(2) Subject to subsections (3) and (4), adjustments for discounts and surcharges must be calculated using the following formula:

(LR - 1) x (n (3 + n))

in which

"LR" (loss ratio) = total indemnity divided by total premiums, and
"n" = the number of years an insured person is in the plan.

(3) The maximum discount is 70% of the base premium rate.

(4) The minimum annual premium payable by an insured person for dairy livestock in an insurance year is $25.00, except when a minimum annual premium is set out in the plan, then the amount prescribed in the plan applies.

Communication to insured persons
10 The Commission must send notice in writing of base premium rates for the year to every insured person each year to permit sufficient time for an insured person to consider their participation in a plan.