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B.C. Reg. 307/2004
O.C. 647/2004
Deposited June 30, 2004
This consolidation is current to October 17, 2017.
Link to Point in Time

Insurance Corporation Act and Utilities Commission Act

Special Direction IC2 to the
British Columbia Utilities Commission

[includes amendments up to B.C. Reg. 165/2017, August 31, 2017]

Contents
1Definitions
1.1MCT
1.2MCT — 2016 rates
2Application
3Directions relating to the corporation generally
4Directions relating to the corporation's optional vehicle insurance business

Definitions

1  In this Special Direction:

"Act" means the Insurance Corporation Act;

"capital available" means capital available as that term is described in the MCT guideline;

"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;

"capital management target" means the MCT target, determined in the capital management plan, 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 the capital management plan;

"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;

"fiscal year" means the applicable fiscal year under section 22.1 of the Act;

"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;

"MCT" means MCT as that term is described in the MCT guideline;

"MCT guideline" means the Guideline for Minimum Capital Test (MCT) for Federally Regulated Property and Casualty Insurance Companies issued by the Office of the Superintendent of Financial Institutions Canada as that guideline is amended or replaced from time to time;

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

[am. B.C. Regs. 229/2009, s. (a); 108/2010, s. 1; 115/2013, s. 1; 215/2016, s. 1.]

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.

[en. B.C. Reg. 215/2016, s. 2.]

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 in section 1.1 (a).

[en. B.C. Reg. 215/2016, s. 2.]

Application

2  This Special Direction is issued to the commission under section 47 of the Act.

[am. B.C. Reg. 215/2016, s. 3.]

Directions relating to the corporation generally

3  (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;

(a.1) despite paragraph (a), require the corporation to apply by September 15, 2017, 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), (j), (k) and (l), 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 March 31, 2017" and executed in August, 2017;

(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, 2017, between the corporation and the government as represented by the Minister of Public Safety and Solicitor General entitled "Traffic and Road Safety Law Enforcement Funding Memorandum of Understanding", 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;

(k) despite paragraph (j), within 20 days of the corporation applying for approval of a high-value vehicle charge in accordance with a government directive, approve and set the rates for the charge;

(l) despite paragraph (j), within 20 days of the corporation applying in accordance with a government directive for approval of changes to rates in relation to multiple chargeable claim payments, approve and set changes to rates to ensure that rates set at the maximum discount on the claim-rated scale, and which currently would not increase on account of a second or third chargeable claim payment made within 3 years, will increase when 2 or more chargeable claim payments are made within 3 years, and a chargeable claim payment will result in moving no less than 6 levels on the claim-rated scale regardless of the original level.

(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,

(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, and

(c) for the 2016 policy year, the percentage number of a rate change fixed by a general rate change order must not exceed 4.9.

(2) The commission may approve universal compulsory vehicle insurance rates that provide discounts to or are otherwise preferential for

(a) persons who are at least 65 years of age, or

(b) persons with disabilities.

(3) In regulating and fixing rates for the corporation, the commission must treat any premiums levied under section 34 (1.1) (e) of the Insurance (Vehicle) Act as revenue for the corporation's universal compulsory vehicle insurance business.

(4) In this section, "government directive" means a directive in writing to the corporation

(a) given by the minister responsible for Part 1 of the Act, and

(b) approved by the Lieutenant Governor in Council.

[am. B.C. Regs. 313/2004, s. 1; 300/2005; 155/2007, s. 1; 229/2009, ss. (b) and (c); 108/2010, s. 2; 116/2012, ss. (a) and (b); 115/2013, s. 3; 20/2014; 192/2015, s. 3; 215/2016, s. 4; 288/2016; 319/2016; 81/2017; 119/2017; 165/2017, ss. 1 and 2.]

Directions relating to the corporation's optional vehicle insurance business

4  (1) With respect to the exercise of its powers and functions under the Act in relation to the corporation's optional vehicle insurance business, the commission must not fix rates applicable to optional insurance.

(2) In determining, under section 12 of the Utilities Commission Act, whether disclosure of information with respect to the corporation's optional vehicle insurance business is necessary for the administration of the Utilities Commission Act as it applies to the corporation, the commission must consider the effect of disclosure of the information on the corporation's ability to compete in the optional vehicle insurance market on a basis similar to its competitors and the harm to the corporation's competitive position that may result from the disclosure of the information.

[am. B.C. Regs. 313/2004, s. 2; 155/2007, s. 2; 108/2010, s. 3.]

[Provisions relevant to the enactment of this regulation: Insurance Corporation Act, R.S.B.C. 1996, c. 228, section 47; Utilities Commission Act, R.S.B.C. 1996, c. 473, section 3]