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Volume 59, No. 16

215/2016

The British Columbia Gazette,

Part II

September 6, 2016

B.C. Reg. 215/2016 , deposited August 25, 2016, under the INSURANCE CORPORATION ACT [section 47]. Order in Council 614/2016, approved and ordered August 24, 2016.

On the recommendation of the undersigned, the Administrator, by and with the advice

and consent of the Executive Council, orders that the Special Direction IC2 to the

British Columbia Utilities Commission, B.C. Reg. 307/2004, is amended as set out in

the attached Schedule.

— T. STONE, Minister of Transportation and Infrastructure ; M. STILWELL, Presiding Member of the Executive Council .

Schedule

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

B.C. Reg. 307/2004, is amended

(

a) by adding the following definition:

“capital management plan” means the corporation’s capital management plan in relation to the corporation’s universal compulsory vehicle insurance business that

(

a) was most recently approved by the commission, and

(

b) includes capital maintenance and build or release provisions; ,

(

b) in the

definitions of “capital management target” and “excess capital available” by striking out “ a capital management plan approved by the commission ” and substituting “ the capital management plan ”, and

(

c) by adding the following

definitions:

“fiscal year” means the applicable fiscal year under

section 22.1 of the Act;

“policy year” means the period from November 1 in one year to October 31 in the next year.

2 Sections 1.1 and 1.2 are repealed and the following substituted:

MCT

1.1 For each policy year for which the commission fixes universal compulsory vehicle

insurance rates, the MCT must be determined

(

a) using data available from the most recently completed quarter of the fiscal

year at the time the corporation files an application for a general rate change order,

and

(

b) based on that data, by projecting the MCT as at the end of that fiscal year.

MCT – 2016 rates

1.2 For rates effective November 1, 2016, despite any other provision of this Special

Direction, the capital available used in the determination of the MCT under

section 1.1

must be $99 million higher than the capital available set out in the data described

section 1.1 (a).

Section 2 is amended by striking out “ and

section 3 of the Utilities Commission Act ”.

Section 3 (1) is repealed and the following substituted:

(1) With respect to the exercise of its powers and functions under the Act in

relation to the corporation generally, the commission must do all the following:

(

a) require the corporation to apply by August 31 of each year for a general rate

change order for rates to be effective November 1 of that year;

(

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) subject to paragraphs (

g) and (j), for each policy year for which the commission

fixes universal compulsory vehicle insurance rates, fix those rates on the basis of

accepted actuarial practice so that those rates allow the corporation to collect sufficient

revenue

(

i) to pay the following:

(

A) the costs that are to be incurred by the corporation in that policy year for

road safety programs under

section 7 (

i) of the Act, including, without limitation,

payments by the corporation to any level of government with respect to road safety;

(

B) the costs that are to be incurred by the corporation in that policy year for

vehicle licensing, driver licensing and other services and activities of the corporation

under

section 7 (

g) and (

h) of the Act that are to be undertaken in that policy year

in accordance with the agreement entitled “Service Agreement between The Ministry

of Public Safety and Solicitor General and the Insurance Corporation of British Columbia”

and dated as of September 1, 2003, including amendments and extensions to that agreement

up to and including the amendment and extension entitled “Service Agreement Addendum

Changes in Costs and Services to December 31, 2015” and executed in May, 2016;

(

C) the payments that the corporation is to make in that policy year under the

agreement entitled “Memorandum of Understanding between B.C. Provincial Government

and ICBC” and executed in February, 2003;

(

D) the remuneration that the corporation is to pay in that policy year to persons

appointed as agents by the corporation under

section 9.2 of the Act for collecting

government fees, fines and other amounts payable by the corporation to the government

and for collecting premiums, fees, debts and other revenue on behalf of the corporation,

(ii) to make the payments that the corporation agreed to make under the agreement

dated for reference April 1, 2012, between the corporation and the government as represented

by the Minister of Justice and Attorney General entitled “Traffic and Road Safety

Law Enforcement Funding Memorandum of Understanding”, including the amendment and

extension to that agreement entitled “Traffic and Road Safety Law Enforcement Funding

Memorandum of Understanding Extension and Amendment” and dated for reference April

1, 2015, and

(iii) to achieve or maintain, as the case may be, the MCT requirement under paragraph

(b);

(

d) ensure that rates are set in accordance with the capital management plan;

(

e) despite paragraph (d), for the 2016 policy year and each following policy

year up to and including the 2020 policy year, ensure that rates are set in accordance

with the capital management plan in existence on May 27, 2016,

(

i) excluding the capital build or release provisions of that plan, and

(ii) using a calculation in relation to the capital maintenance provision that

neither increases nor decreases the percentage number of a rate change fixed by a

general rate change order for that policy year;

(

f) for the 2016 policy year, ensure that rates are set based on the equity of

the universal compulsory vehicle insurance business being $99 million higher than

the equity set out in the data described in

section 1.1 (a);

(

g) when regulating and fixing universal compulsory vehicle insurance rates, regulate

and fix those rates in a manner that recognizes and accepts actions taken by the corporation

in compliance with government directives issued to the corporation;

(

h) for each policy 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 the capital management plan, 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;

(

i) subject to subsection (2) of this section, ensure that universal compulsory

vehicle insurance rates are not based on age, gender or marital status;

(

j) ensure that increases or decreases in universal compulsory vehicle insurance

rates are phased in in such a way that those rates remain relatively stable and predictable.

(1.1) Despite subsection (1) (

c) and (e) (

i) of this section, for each policy

year for which the commission fixes universal compulsory vehicle insurance rates,

(

a) the commission may, in accordance with the capital management plan, exclude

some or all of that policy year’s loss costs forecast variance from the rate fixed

by a general rate change order, 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.

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