Via Email February 25, 2015
regaffairs@icbc.com
Ms. June Elder
Manager, Corporate Regulatory Affairs
Insurance Corporation of British Columbia
151 West Esplanade
North Vancouver, BC V7M 3H9
Dear Ms. Elder:
Re: Insurance Corporation of British Columbia
ICBC's Filing of the 2014 Customer and Injury Services Operations Detailed Work Effort Study including an Independent Third Party Report
By Letter L-3-15 dated January 19, 2015, the British Columbia Utilities Commission (Commission) invited submissions from stakeholders on whether or not a review process is necessary for the Insurance Corporation of British Columbia (ICBC) 2014 Customer and Injury Services Operations Detail Work Effort Study which includes an independent third party report (2014 Detailed WES).
By January 30, 2015, the Commission received submissions from Mr. Landale, the British Columbia Old Age Pensioners’ Organization et al. (BCOAPO), Canadian Office and Professional Employees Union Local 378 (COPE 378), the Insurance Bureau of Canada (IBC), and on February 11, 2015, a reply submission from ICBC.
Stakeholder Submissions
BCOAPO, COPE 378, and IBC support to have the 2014 Detailed WES be incorporated into the 2015 Revenue Requirements (2015 RRA) proceeding in light of an efficient process. IBC cites the Commission’s May 14, 2014 Decision:
“… The Panel is aware that ICBC is going through some operating changes – especially in the claims department, that could impact the actual allocation of operating expenses. As a result, the Panel considers it would be useful to ICBC, Interveners and the Commission to evaluate those allocation methodologies, and the actual amounts allocated to each line of business as practicable, that are impacted by recent and planned changes, and include any proposed alterations to allocation methodologies with their RRAs starting with the 2015 year Application.”[1]
Mr. Landale submits that the Commission should establish a separate process from the 2015 RRA to review the 2014 Detailed WES. He also requested a copy of the informational compliance filing that was due by November 17, 2013 pursuant to Order G-63-13.
In its Reply Submission, ICBC submits that the 2014 Detailed WES should be accepted by the Commission as filed and that a review process is not required for this compliance filing. ICBC states:
“… the WES methodology and processes have already been significantly reviewed in Commission processes. As conceived during those prior processes, the whole purpose of retaining an ITP was to provide the type of oversight that would eliminate the need to hold a process of the nature contemplated by intervenors each time the allocation is performed. ICBC submits that holding yet another process on the allocation of these costs would represent a significant step backwards in terms of the efficient review of ICBC's costs.”[2]
“While ICBC believes that a review process for the 2014 Detailed WES filing is unnecessary should the Commission determine that one is required, ICBC suggests that a Letter of Comment process is sufficient and efficient. A Letter of Comment process is also commensurate with the relative minor impact this filing has for Basic insurance rate payers, this being, as noted in the Insurance Bureau of Canada's (IBC's) letter, just one component of a much larger allocation.”[3]
Regarding the 2015 RRA, ICBC believes that “it is important to incorporate the results of the 2014 Detailed WES into the 2015 RRA rate indication that is currently being prepared” and “[s]hould the 2014 Detailed WES results not be accepted by this time for use in the 2015 RRA, ICBC will continue to use the work effort percentages from the 2011 Detailed WES as accepted in the Commission's November 17, 2011 Letter (L-87-11).”
Commission Discussion
The Commission considered previous Orders related to work effort cost allocation, the Commission’s Decision dated May 14, 2014, and the submissions from stakeholders. In the sections below, the Commission will first address whether a review process is necessary for the 2014 Detailed WES, followed by a discussion on how the 2014 Detailed WES can be incorporated in the 2015 RRA.
Review Process
The Commission finds that the 2014 Detailed WES should be reviewed in the context of a revenue requirement application, as the work effort allocator is one component of a larger allocation. In Order G-63-13, the Commission found that ICBC’s reorganization in the Claims Division to a new service model is a significant business change. The evaluation of allocation methodology in the 2015 RRA should therefore include the 2014 Detailed WES. ICBC is to include the 2014 Detailed WES for review in the 2015 RRA.
2014 Detailed WES Allocation
The Commission recognizes ICBC’s preference to incorporate the 2014 Detailed WES findings as part of the 2015 RRA cost allocation. The Commission views that by including the 2014 Detailed WES for review in the 2015 RRA, it does not preclude ICBC from using the 2014 Detailed WES for the purposes of the 2015 RRA. ICBC is encouraged to incorporate the 2014 Detailed WES findings in its 2015 RRA.
Other
With respect to Mr. Landale’s submissions on ICBC’s compliance filing in November 2013, the Commission did not initiate a review process as that informational compliance filing described the claims transformation. The Commission had a concurrent 2013 Revenue Requirement process that covered much of the same topic. For information only, ICBC is requested to include the November 15, 2013 compliance filing in the 2015 RRA as it may help interveners understand 2014 Detailed WES and the overall cost allocation.
Yours truly,
Erica Hamilton
LC/cms
cc: 2014 Revenue Requirements Registered Interveners