Executive Summary – Snippet
On August 30, 2013, the Insurance Corporation of British Columbia (ICBC) submitted an application to the British Columbia Utilities Commission (Commission) for approval of the Revenue Requirements for Universal Compulsory Automobile Insurance (Basic Insurance) for the policy year commencing November 1, 2013, and for approval of a new Basic Insurance Capital Management Plan (collectively, the Application).
By Order G-141-13 dated September 5, 2013, the Commission approved ICBC’s requested 4.9% Basic Insurance rate increase on an interim basis for implementation with an effective date on or after November 1, 2013 subject to a final decision on the Basic Insurance rate increase. This Decision relates to setting the Basic Insurance rate on a permanent basis for the policy year commencing on or after November 1, 2013, and establishing a new Basic Insurance Capital Management Plan.
As a result of the Pre-Hearing Conference and by Order G-193-13, the Commission Panel determined that a full oral hearing process was warranted for the review of the Application as described in the reasons attached to that Order. In addition to the oral hearing, two rounds of information requests were also issued by the Commission and Interveners and responded to by ICBC. One Intervener filed Intervener evidence. The Application was made pursuant to sections 59 to 61 of the Utilities Commission Act and the Insurance Corporation Act.
The Decision was also rendered in accordance with Special Direction IC2 (2013) and applicable Orders in Council. The Commission Panel accepts the actuarial analysis prepared by ICBC in support of its Application of the requested 11.5% rate increase to cover Basic costs. As required by Special Direction IC2, the Panel excludes the full 6.6% Loss Cost Forecast Variance from Policy Year 2012 to set Basic Insurance rates for Policy Year 2013.
Apart from the non-actuarial adjustments in other sections of the Decision, the Panel accepts the analysis that results in the 4.9% Basic Insurance rate increase for the Policy Year 2013. However, the Panel does take issue with other non-actuarial assumptions used to arrive at the requested rate increase. The three areas of concern are the investment risk-free rate assumption, the $4 million General Provision in Operating Expenses and the allocation of Pension and Post-Retirement Benefits expenses.
British Columbia Utilities Commission – May 14, 2014.
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