BRITISH COL UMBIA UTILITIES COM MISSION ORDER NUMBER G -85-05 SIXTH FLOOR, 900 HOWE STREET, BOX 250 TELEPHONE: (604) 660-4700 VANCOUVER, B.C. V6Z 2N3 CANADA BC TOLL FREE: 1-800-663-1385 web site: http://www.bcuc.com FACSIMILE: (604) 660-1102 IN THE MATTER OF the Insurance Corporation Act, RSBC 1996, Chapter 228, as amended and the Utilities Commission Act, RSBC 1996, Chapter 473, as amended and An application by the Insurance Corporation of British Columbia for approval of the 2006 Revenue Requirements for Universal Compulsory Automobile Insurance and A filing relating to the Insurance Corporation of British Columbia’s Universal Compulsory Automobile Insurance Capital Management Plan and An application for approval of refinements to certain performance measures and A filing of information on seven financial allocation functions and An application for approval of changes to certain allocation functions BEFORE: L. F. Kelsey, Commissioner and Panel Chair P.E. Vivian, Commissioner September 12, 2005 O R D E R WHEREAS: A. In a letter to the staff of the British Columbia Utilities Commission (“BCUC”, “Commission”) dated June 3, 2005 the Insurance Corporation of British Columbia (“ICBC”) proposed, among other matters, that a full revenue requirements review is not warranted; and B. In a letter dated June 8, 2005, the Commission expressed concern that the lack of a full revenue requirements filing is inconsistent with the determinations of the Commission in its last ICBC Decision dated January 19, 2005. The Commission, however, also expressed concern that it not initiate any unwarranted proceedings, which would be costly, time consuming or inappropriate. As a result, the Commission sought the views of Registered Intervenors in the last ICBC regulatory proceeding, with respect to ICBC’s proposals; and C. Between June 13 and 15, 2005, Registered Intervenors in the last ICBC regulatory proceeding provided written responses indicating they did not support ICBC’s position that a full revenue requirements review is not warranted; and …/2
BRITISH COLUMBIA UTILITIES COMMISSION ORDER NUMBER G-85-05 2 D. The Commission issued Letter No. L-40-05 dated June 15, 2005, wherein it determined that a comprehensive revenue requirements application for 2006 Universal Compulsory Automobile Insurance (“Basic Insurance”) premiums is to be filed with the Commission no later than August 22, 2005; and E. On August 22, 2005, ICBC submitted an application for approval of the 2006 Revenue Requirements for Basic Insurance, a filing relating to ICBC’s Basic Insurance Capital Management Plan, an application for approval of refinements to certain performance measures, a filing of information on seven financial allocation functions and an application for approval of changes to certain allocation functions (the “Application”). The Application is in response to the directive in Letter No. L-40-05 and directives issued by the Commission in its Decision dated January 19, 2005 and includes additional information and applications; and F. In the Application, ICBC advised that it is not applying for a change to Universal Compulsory Automobile Insurance rates. G. As per Order G-78-05, a Pre-hearing Conference was held on September 8, 2005 in Vancouver, B.C. to discuss the major issues to be examined, and the steps and timetable for the Oral Public Hearing process. Registered Intervenors and ICBC made their submissions for consideration by the Commission Panel. NOW THEREFORE the Commission orders as follows: 1. The Application and related materials will be examined in an Oral Public Hearing in accordance with the Regulatory Agenda and Timetable, attached as Appendix A. 2. The list of issues for the Oral Public Hearing is attached as Appendix B. DATED at the City of Vancouver, in the Province of British Columbia, this 12 th day of September 2005. BY ORDER Original signed by: L.F. Kelsey Commissioner and Panel Chair Attachments
APPENDIX A to Order No. G-85-05 Page 1 of 1 TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385 SIXTH FLOOR, 900 HOWE STREET, BOX 250 FACSIMILE: (604) 660-1102 VANCOUVER, B.C. V6Z 2N3 CANADA web site: http://www.bcuc.com REGULATORY AGENDA AND TIMETABLE An application by the Insurance Corporation of British Columbia for approval of the 2006 Revenue Requirements for Universal Compulsory Automobile Insurance and A filing relating to the Insurance Corporation of British Columbia’s Universal Compulsory Automobile Insurance Capital Management Plan and An application for approval of refinements to certain performance measures and A filing of information on seven financial allocation functions and An application for approval of changes to certain allocation functions DATE: ACTION: Wednesday, September 14, 2005 BCUC Information Request (“IR”) No. 1 to ICBC Thursday, October 6, 2005 IR No. 1 Responses to BCUC Friday, October 14, 2005 BCUC IR No. 2 and Intervenor IR No. 1 to ICBC Friday, November 4, 2005 BCUC IR No. 2 Responses and Intervenor IR No. 1 Responses to BCUC and Intervenors Monday, November 14, 2005 Intervenor Evidence Friday, November 18, 2005 ICBC IR’s to Intervenors Monday, November 28, 2005 Intervenor IR responses to ICBC Monday to Monday ORAL PUBLIC HEARING December 12 to 19, 2005 Friday, January 13, 2006 ICBC Final Submission Friday, January 20, 2006 Intervenor Final Submission Friday, January 27, 2006 ICBC Final Reply Friday, March 31, 2006 BCUC Decision
APPENDIX B to Order No. G-85-05 Page 1 of 2 TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385 SIXTH FLOOR, 900 HOWE STREET, BOX 250 FACSIMILE: (604) 660-1102 VANCOUVER, B.C. V6Z 2N3 CANADA web site: http://www.bcuc.com LIST OF HEARING ISSUES An application by the Insurance Corporation of British Columbia for approval of the 2006 Revenue Requirements for Universal Compulsory Automobile Insurance and A filing relating to the Insurance Corporation of British Columbia’s Universal Compulsory Automobile Insurance Capital Management Plan and An application for approval of refinements to certain performance measures and A filing of information on seven financial allocation functions and An application for approval of changes to certain allocation functions 1. The adequacy and prudence of all the elements comprising the 2006 Revenue Requirements, including for example, claims costs and actuarial assumptions, operating costs, investment income, etc. 2. Financial Allocation Methodology • application of the approved methodology to forecast 2006 amounts. • review of information on seven financial allocation functions • proposed changes to certain allocation functions 3. Capital Management Plan for Basic Insurance 4. Performance Measures • proposed refinements • actual results for 2004 • adequacy of targets for 2006 5. Road Safety & Loss Management programs • review of associated 2006 costs • definition of Road Safety and Loss Management programs • outstanding allocation issues
APPENDIX B to Order No. G-85-05 Page 2 of 2 6. Financial governance 7. Forecast vs. Actual/Outlook results • historical experience for the years 2004 and 2005 8. Alternatives to broker distribution 9. Any outstanding matters arising from the January 19, 2005 Commission Decision, Order G-46-05 (Negotiated Settlement Agreement, as issued on April 27, 2005) and Order No. G-49-04 (Negotiated Settlement Agreement with respect to Performance Measures for ICBC and the Sharing of Information with respect to Basic Insurance) 10. Consequence of a rate change for Basic Insurance, if applicable.
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