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Volume 56, No. 5

115/2013

The British Columbia Gazette,

Part II

March 26, 2013

B.C. Reg. 115/2013 , deposited March 19, 2013, pursuant to the INSURANCE CORPORATION ACT [section 47]. Order in Council 152/2013, approved and ordered March 18, 2013.

On the recommendation of the undersigned, the Lieutenant Governor, by and with the advice and consent of the Executive Council, orders that Special Direction IC2 to the British Columbia Utilities Commission, B.C. Reg. 307/2004, is amended as set out in the attached Schedule.

— M. POLAK, Minister of Transportation and Infrastructure ; N. LETNICK, Presiding Member of the Executive Council .

Schedule

Section 1 of Special Direction IC2 to the British Columbia Utilities Commission is amended

(

a) by repealing the definition of “capital available” and substituting the following:

“capital available” means capital available as that term is described in the MCT guideline; , and

(

b) by adding the following

definitions:

“capital management target” means the MCT target, determined in a capital management plan approved by the commission, that is the total of the following:

(

a) the MCT required under

section 3 (1) (b);

(

b) the margin, expressed in percentage points of MCT, that reflects the corporation’s risk profile in relation to the corporation’s universal compulsory vehicle insurance business and its ability to respond to adverse events that arise from those risks;

(

c) any additional margin, expressed in percentage points of MCT, consistent with relatively stable and predictable universal compulsory vehicle insurance rates;

“customer renewal credit” means a one-time, non-refundable, non-transferable credit that is

(

a) available to an existing universal compulsory vehicle insurance policyholder,

(

b) applied to reduce the universal compulsory vehicle insurance premium paid by the policyholder at the time of the policyholder’s next renewal, and

(

c) redeemable only within 12 months of the effective date of the order of the commission that approves the customer renewal credit;

“excess capital available” means universal compulsory vehicle insurance capital available in excess of the capital reflected in the capital management target specified in a capital management plan approved by the commission;

“existing rates” means the universal compulsory vehicle insurance rates in effect on the date the corporation files an application for a general rate change order;

“general rate change order” means a commission order that

(

a) fixes rates, expressed as a percentage change from existing rates, for universal compulsory vehicle insurance to cover the overall revenue requirements of the corporation’s universal compulsory vehicle insurance business, and

(

b) does not include an order relating to rate design or customer renewal credit;

“loss costs” means the average amount of claims cost per universal compulsory vehicle insurance policy on an annualized basis, determined on the basis of accepted actuarial practice;

“loss costs forecast variance” means the difference, expressed in percentage points of a rate change fixed in a general rate change order, between

(

a) the loss costs provision reflected in existing rates, and

(

b) the loss costs that have emerged; .

2 The following

section is added:

MCT

1.1 For each year for which the commission fixes universal compulsory vehicle insurance rates, the MCT must be determined

(

a) using data available from the most recent quarter at the time the corporation files a general rate change order, and

(

b) as at the end of that year.

Section 3 is amended

(

a) in subsection (1) by adding the following paragraph:

(a.1) beginning in 2014, require the corporation to apply annually for a general rate change order by May 31 of the year of the application for rates effective August 1 of that year; ,

(

b) by repealing subsection (1) (

b) and substituting the following:

(

b) set rates for the corporation’s universal compulsory vehicle insurance business in a way that will allow the corporation to maintain, in relation to its universal compulsory vehicle insurance business, at least 100% of MCT ,

(

c) in subsection (1) (c) (ii.2) by striking out “ Understanding”, and ” and substituting “ Understanding”, ”,

(

d) by repealing subsection (1) (c) (iii) and substituting the following:

(iii) for 2005 and each following year for which rates are set, to achieve or maintain, as the case may be, the MCT requirement under paragraph (b), and

(iv) for 2013 and each following year, ensure that rates are set in accordance with a capital management plan approved by the commission that includes capital maintenance and build or release provisions; ,

(

e) in subsection (1) by adding the following paragraphs:

(c.2) despite paragraph (c),

(

i) for 2013, the loss costs forecast variance must not be reflected in the general rate change order, and

(ii) for 2014 and each following year for which rates are set,

(

A) the commission may exclude some or all of that year’s loss costs forecast variance from the rate fixed by a general rate change order in accordance with a capital management plan approved by the commission, and

(

B) the percentage number of a rate change fixed by a general rate change order must differ from the percentage number of a rate change fixed by the previous general rate change order by no more than 1.5, and must not decrease existing rates;

(c.3) for 2014 and each following year for which the commission fixes universal compulsory vehicle insurance rates, approve a customer renewal credit if

(

i) there is excess capital available,

(ii) the customer renewal credit will not result in the MCT falling below the capital management target specified in a capital management plan approved by the commission, and

(iii) the commission determines that rates fixed by general rate change orders will remain relatively stable and predictable despite the approval of the customer renewal credit; , and

(

f) in subsection (3) by striking out “ automobile ” and substituting “ vehicle ”.

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