building trust. driving confidence. - ICBC

~ January 21, 2019

British Columbia Utilities Commission Suite 410 900 Howe Street Vancouver, BC V6Z 2N3

building trust. driving confidence.

Attention: Mr. Patrick Wruck, Commission Secretary and Manager, Regulatory Services

Re: Blacked Out Redaction of Chapter 3, Technical Appendix E.0, Product Reform Costing Report (Ernst & Young LLP, November 2018) and Chapter 10 B,

2018/19 Annual Information Technology Capital Expenditure Plan in the 2019 Revenue Requirements Application

Dear Mr. Wruck:

Please find enclosed the blacked out redaction of Chapter 3, Actuarial Rate Level Indicated Analysis, Technical Appendix E.0, Product Reform Costing Report (Ernst & Young LLP, November 2018) and Chapter 10 B, 2018/19 Annual Information Technology Capital Expenditure Plan of the 2019 Revenue Requirements Application (2019 RRA). It was brought to ICBC's attention by British Columbia Utilities Commission (BCUC) staff that it is difficult to readily determine where redactions have been made for information that ICBC considers confidential. Accordingly, ICBC has redacted the confidential information in the enclosed documents by blacking out the information. The content is unchanged and the information redacted is the same confidential information that ICBC redacted in the 2019 RRA filed on December 14, 2018; only the redaction method has changed (from blanks to blacking out).

ICBC trusts that this blacked out redaction will allow BCUC and other parties in the regulatory process to more readily identify where information has been redacted and will facilitate the BCUC's determination of the redacted information as being confidential.

To be of further assistance, ICBC has set out below the pages in the Application where information is redacted:

Chapter 3, Technical Appendix E.0

Section 7 Pages 22, 27, 29, 30, 31

Section 8 Pages 33, 36, 37, 43, 47 to 50

Section 9 Pages 53 to 55

Appendix A.1 Pages 3 and 4

Appendix A.3 Pages 1 and 4

Appendix A.4 Pages 1, 4, 7, and 10



151 West Esplanade I North Vancouver I British Columbia I V7M 3H9 I 604-661-2800 I [email protected]

- 2 -


Appendix B. l Pages 1 and 2

Appendix B.3 Pages 1 to 3

Appendix C.1 Pages 1, 2, 5 to 7

Appendix C.2 Pages 1, 5, 8 to 10

Appendix D.1 Pages 4, 7, and 8

Appendix D.2 Page 2

Appendix E Pages 10 and 12

Chapter 10 B

[ Section C.2 I Pages l0B-8, lOB-9, lOB-11, and l0B-13

In addition, ICBC has made this version of the redacted sections available on www.icbc.com. ICBC apologizes for any inconvenience this may have caused.

Yours truly,

~~&kr June Elder Manager, Corporate Regulatory Affairs gl/jb

Cc: Bill Carpenter, Vice President, Insurance, ICBC ICBC 2017 Revenue Requirements Interveners

Enclosure

151 West Esplanade I North Vancouver I British Columbia I V7M 3H9 I 604-661-2800 I [email protected]

Insurance Corporation ofBritish ColumbiaProduct Reform Costing ReportNovember 1, 2018

Authored by: Mr. Liam M. McFarlane

Ernst & Young LLPInsurance and Actuarial Advisory ServicesErnst & Young Tower100 Adelaide Street West, P.O. Box 1Toronto, Ontario M5H 0B3

Liam M. McFarlane, FCIA, FCASTel: +1 416 941 7751Email: [email protected]/ca

Liam McFarlane is a limited partner of Ernst & Young L.P., whichprovides services to Ernst & Young LLP, a member firm of Ernst &Young Global Limited

Ms. Kelly Aimers, FCIA, ACASChief ActuaryICBC

1 November 2018

Product Reform Costing Report

Dear Kelly,

Enclosed is my Product Reform Costing Report.

I would be pleased to answer any questions you have regarding this report at your convenience.

Yours sincerely,

Liam McFarlane, FCIA, FCASPartner

Insurance Corporation of British ColumbiaProduct Reform Costing Report

i

Table of Contents

1. Introduction ....................................................................................................................... 11.1 Purpose of the Report ................................................................................................... 11.2 Scope of Report ............................................................................................................ 11.3 Use and Distribution ...................................................................................................... 21.4 Variability of Estimates .................................................................................................. 21.5 Insurance Regulations.................................................................................................... 2

2. Executive Summary............................................................................................................. 3

3. Report Structure ............................................................................................................... 11

4. Product Reform ................................................................................................................ 134.1 Product Reform Description ......................................................................................... 13

5. Product Reform Costing Methodology ................................................................................. 14

6. Minor Injury Mapping ......................................................................................................... 186.1 Minor Injury Definition ................................................................................................. 186.2 Minor Injury Mapping ................................................................................................... 18

7. Basic Bodily Injury Product Reform Allocation Model ............................................................ 207.1 Purpose...................................................................................................................... 207.2 Overview .................................................................................................................... 207.3 Claim Exposure Counts Allocation ................................................................................. 237.4 Total Incurred Claim Amount Allocation ......................................................................... 26

8. Basic Bodily Injury Product Reform Costing Model ................................................................ 328.1 Purpose...................................................................................................................... 328.2 Overview .................................................................................................................... 328.3 Data Description ......................................................................................................... 358.4 Pre Reform Claim Severity Estimation ........................................................................... 368.5 Post Reform Claim Severity Estimation .......................................................................... 388.6 Pre Reform Claim Exposure Count Estimation ................................................................ 438.7 Post Reform Claim Exposure Count Estimation ............................................................... 448.8 Post Reform Total Incurred Claim Amounts .................................................................... 47

9. Basic Bodily Injury Collateral Benefits Costing Models ........................................................... 519.1 Purpose...................................................................................................................... 519.2 Overview .................................................................................................................... 519.3 Collateral Benefits – Special Damages Savings Estimate .................................................. 539.4 Collateral Benefits – Past Wage Loss Savings Estimate .................................................... 55

10. Part 7 Benefits Product Reform Costing Models ................................................................... 5910.1 Purpose...................................................................................................................... 5910.2 Overview .................................................................................................................... 5910.3 Medical Rehabilitation .................................................................................................. 6110.4 Weekly Benefits........................................................................................................... 6810.5 Death Benefits ............................................................................................................ 75


ii

11. Projections to Fiscal Loss Year 2021 ................................................................................... 7911.1 Overview .................................................................................................................... 7911.2 Bodily Injury ............................................................................................................... 7911.3 Medical Rehabilitation .................................................................................................. 8211.4 Weekly Benefits........................................................................................................... 8311.5 Death Benefits ............................................................................................................ 84

12. Glossary ........................................................................................................................... 86

13. About the Author .............................................................................................................. 88

Appendices

Appendix A Basic Bodily Injury Product Reform Allocation ModelAppendix A.1 SummaryAppendix A.2 Exposure Counts – Minor Injury %Appendix A.3 Total Incurred Claim Amounts – Minor Injury %Appendix A.4 Total Incurred Claim Amounts – General Damages %Appendix A.5 Total Incurred Claim Amounts – Special Damages %Appendix A.6 Total Incurred Claim Amounts – Past Wage Loss %Appendix A.7 Total Incurred Claim Amounts – Legal Costs and Disbursements %Appendix A.8 Exposure Counts – Out of Province %Appendix A.9 Total Incurred Claim Amounts – Out of Province %

Appendix B Basic Bodily Injury Product Reform Costing ModelAppendix B.1 SummaryAppendix B.2 Exposure CountsAppendix B.3 Severity per Exposure Count

Appendix C Basic Bodily Injury Collateral Benefits Costing ModelAppendix C.1 Collateral Benefits – Special DamagesAppendix C.2 Collateral Benefits – Past Wage Loss

Appendix D Part 7 Benefits Product Reform Costing ModelsAppendix D.1 Medical RehabilitationAppendix D.2 Weekly BenefitsAppendix D.3 Death Benefits

Appendix E ICBC 2018 Closed Claim Study


Confidential | All Rights Reserved | EY 1

1. Introduction

1.1 Purpose of the Report

The Insurance Corporation of British Columbia (ICBC) engaged Ernst & Young LLP (EY) toestimate the impact of recently announced automobile insurance product reforms (ProductReform) on ICBC’s estimated incurred claim costs and future trends. This report documents themethods and assumptions used to calculate the impact of Product Reform on ICBC’s estimatedincurred claim costs and future trends to support ICBC’s upcoming Revenue RequirementsApplication which will be submitted to the British Columbia Utilities Commission (BCUC).

1.2 Scope of Report

This report provides an estimate of the impact of Product Reform on ICBC’s estimated incurredclaims costs for Basic Bodily Injury and Part 7 Benefits coverages for Fiscal Loss Years1 2020and 2021. It also provides estimates of the impacts of reforms with earlier effective dates forfiscal loss year 2019 including Collateral Benefits changes and the retrospective increase toMedical Rehabilitation benefit limits.

The report has been prepared according to Canadian Accepted Actuarial Practice. It complieswith the appropriate Standards of Practice of the Canadian Institute of Actuaries.

The analysis and supporting report was prepared by EY under the direction of Mr. LiamMcFarlane. Mr. McFarlane is a Fellow of the Canadian Institute of Actuaries and of the CasualtyActuarial Society. Mr. McFarlane is available to answer any questions regarding this report andcan be reached at the following address:

Ernst & Young LLPInsurance and Actuarial Advisory ServicesErnst & Young Tower100 Adelaide Street WestToronto, ON M5H 0B3Phone: (416) 941-7751e-mail: [email protected]

1 Fiscal Loss Years cover the period from April 1 to March 31, with Fiscal Loss Year YYYY ending March 31, YYYY.



1.3 Use and Distribution

This report was prepared for the use of ICBC and was based on confidential informationsupplied by ICBC. This analysis has been prepared to support ICBC’s 2019 RevenueRequirements Application (RRA) to the BCUC. It is not intended or necessarily suitable for anyother purpose.

No further distribution of this report apart from filing the report with the BCUC and providingcopies to participants in the process may be made without the prior permission of both Ernst &Young LLP and ICBC. ICBC and Mr. McFarlane should be notified immediately following anyrequests for disclosure of any part of this report. Should the report be disclosed, it must beprovided in its entirety.

1.4 Variability of Estimates

Future financial projections are based on estimates and as such complete assurance cannot begiven as to the ultimate accuracy of these projections. It is fundamental to the properinterpretation of the results to understand that actual results may differ significantly from theestimates in this report. This caveat is not in itself an indication of current or anticipatedissues. In our judgement, we have employed techniques and assumptions that are appropriateand the results presented herein are reasonable.

1.5 Insurance Regulations

The analysis underlying this report was completed during the summer of 2018 using data fromclaims closed during 2017. On May 7, 2018, the B.C. Legislature passed Bill 22, the CivilResolution Tribunal Amendment Act, 2018, and shortly thereafter, on May 10, 2018, the theB.C. Legislature also passed Bill 20, the Insurance (Vehicle) Amendment Act, 2018. Both billsreceived royal assent on May 17, 2018. Our analysis reflected our understanding of ProductReform at the time of these amendments. This analysis was performed prior to the amendmentof the Insurance (Vehicle) Regulation. Users of this report, therefore, must refer to theInsurance (Vehicle) Regulation as the authority on changes that were made to implementProduct Reform, and not this report.



2. Executive Summary

Principles

In considering how to estimate the impacts of Product Reform on ICBC’s Basic Bodily Injury andPart 7 Benefits claims costs, the following principles were adopted:

· Adherence to accepted actuarial practice;· Use of the most reliable data;· All material elements of Product Reform should be considered;· Consider information from external sources, such as other jurisdictions, only if it is

expected to be relevant to British Columbia.

The following elements of accepted actuarial practice have particular relevance for the estimatescalculated in this report:

· The estimates have been prepared based on assumptions that are not only reasonable ontheir own, but appropriate in aggregate;

· The assumptions have been disclosed in this report;· The estimates are an unbiased best estimate based on all of the information available to

EY at the time that this estimate was prepared.

The overall impact of Product Reform on estimated claims costs is as follows:

Table 2.1

Product Reform Impact ($000s)Fiscal LossYear 2019

Fiscal LossYear 2020

Fiscal LossYear 2021

Basic Bodily Injury -$74,856 -$1,465,883 -$1,697,676Part 7 Benefits – Medical Rehabilitation2 +$1,800 +$311,546 +$336,758Part 7 Benefits – Weekly Benefits N/A +$41,587 +$44,118Part 7 Benefits – Death Benefits N/A +$2,403 +$2,448Total -$73,056 -$1,110,347 -$1,314,351

The impacts of reform on future frequency and severity trends are:

2 Medical Rehabilitation, Weekly Benefits and Death Benefits together comprise Basic Part 7 Benefits.



Table 2.2

Future Frequency Trends Pre-Reform Post-ReformBasic Bodily Injury 4.40% 1.39%Part 7 Benefits – Medical Rehabilitation 2.70% 1.39%Part 7 Benefits – Weekly Benefits No Trend ImpactPart 7 Benefits – Death Benefits No Trend ImpactFuture Severity Trends Pre-Reform Post-ReformBasic Bodily Injury 4.06% 3.06%Part 7 Benefits – Medical Rehabilitation No Trend ImpactPart 7 Benefits – Weekly Benefits No Trend ImpactPart 7 Benefits – Death Benefits No Trend Impact

Basic Bodily Injury

The Basic Bodily Injury estimated claim costs before and after Product Reform are as follows:

Table 2.3

Fiscal Loss Year 2020 Basic Bodily InjuryClaim

Exposure3

Counts

Total IncurredClaim Costs

($000s)Claim

SeverityPre-Reform 75,378 $3,238,934 $42,969Post-Reform (incl. CRT Fees) 73,583 $1,773,052 $24,096Difference -1,794 -$1,465,883 -$18,874

Projecting the post-reform results for fiscal loss year 2020 to fiscal loss year 2021 yields thefollowing results:

Table 2.4

Fiscal Loss Year 2021 Basic Bodily InjuryClaim

ExposureCounts


($000s)Claim

SeverityPre-Reform 80,174 $3,585,078 $44,716Post-Reform (incl. CRT Fees) 76,012 $1,887,402 $24,830Difference -4,162 -$1,697,676 -$19,886

3 Claim exposures represent the part of a claim raised against one specific coverage component by a claimant, in this

case the Basic Bodily Injury component. A claim exposure is created for each claimant making a demand against acoverage group. A claim may contain multiple claim exposures and multiple claim exposures related to a singlecoverage group.



The data used to estimate the impact of Product Reform on Basic Bodily Injury claims costscalculated in this report was extracted from claims closed during calendar year 2017. Closedclaims were used as the basis for estimating costs since amounts paid to close claims containno reserves, hence the value of open claims do not need to be estimated.

Actuarial assumptions used to estimate the impact of Product Reform were based on ourunderstanding of Product Reform. A Closed Claim Study was also completed by senior ICBCclaims personnel under the guidance of EY in order to assess the reasonability of our estimatesand to confirm certain assumptions such as the minor injury mapping and claim count reductiondue to Product Reform. In this study a sample of claims closed during 2017 were reviewed indetail one-by-one by ICBC claims personnel to estimate how much would have been paid on aparticular claim and whether and how the claim would be pursued, had the Product Reformbeen in place at the time of that claim, given the characteristics of that particular claim.

Looking at the savings by reform element, the product changes individually contribute thefollowing savings to Basic Bodily Injury costs for fiscal loss year 2020:

It is clear from the foregoing that the Product Reform savings are driven primarily by areduction in Basic Bodily Injury claims costs due to the introduction of the cap on GeneralDamages (pain and suffering). The savings by reform element arise from the following:

· Claimants with injuries which meet the minor injury definition but are still impaired after12 months will be considered to have non-minor injuries. An adjustment is made to theclaim counts by category to shift the estimated number of such claims from minor tonon-minor resulting in an overall increase in costs of $5 million;

· As part of the product reform changes, effective May 17 2018, ICBC, as a liabilityinsurer, will no longer reimburse other insurance companies for their payments to

-$5M

$263M

$1,075M

$28M$105M

-$200M

$0M

$200M

$400M

$600M

$800M

$1,000M

$1,200M

Adjustment for 12Month Impairment

Condition

Product Change:Collateral Benefits

and Cost Movementto Part 7

Product Change:Cap General

Damages

Product Change:Reduction in

Exposure Counts

Product Change:Introduction of CRT

(incl. CRT Fees)

Fiscal Loss Year 2020 Savings by Reform Element



customers regardless as to whether those payments are considered insurance benefits,loans or advances. Where required, ICBC will continue to reimburse WorkSafeBC andthe Ministry of Health (Medical Services Plan Coverage) for their payments tocustomers. This will not impact the level of care customers will receive after a crash.As a result of these changes, $263 million in savings are estimated to result from costsshifting to Part 7 Benefits coverage;.

· The $5,500 cap on general damages for minor injuries is estimated to have the mostsignificant impact with an estimated $1,075 million in savings;

· In light of the cap on general damages, a reduction in the number of Bodily Injury claimsis anticipated resulting in an estimated $28 million in savings;

· The expansion of the Civil Resolution Tribunal’s (CRT) jurisdiction to begin handlingclaims for certain motor vehicle accidents and its rules regarding the number of expertreports which can be submitted are expected to result in lower average cost of claimsleading to an estimated $105 million in savings.

While the estimated savings are calculated by applying the elements of reform in step-wisefashion, the various elements act in tandem to arrive at the total savings. The savings for fiscalloss year 2021 would have similar relative magnitudes by reform element.

Part 7 Benefits

As part of Product Reform, Part 7 Benefits are being significantly increased. There are multipletypes of benefits which help cover claimants’ costs regardless of who is at-fault including:

· Medical Rehabilitation reimbursement towards the costs of medical care and treatment;· Weekly Benefits reimbursement towards claimants’ lost wages;· Death Benefits for reimbursement towards the costs of burial and funeral expenses, and

benefits to survivors.

For Part 7 Benefits, the estimates before and after Product Reform are as follows:

Medical Rehabilitation

Table 2.5

Fiscal Loss Year 2020 Part 7 Benefits – Medical Rehabilitation

Claim Counts4


($000s)Claim

SeverityPre-Reform 62,272 $229,734 $3,689Post-Reform 74,696 $541,280 $7,246Difference +12,424 +$311,546 +$3,557

4 Claim Counts are used for Part 7 costings since claim exposures are not available for Part 7.




Table 2.6

Fiscal Loss Year 2021 Part 7 Benefits – Medical Rehabilitation

Claim Counts


($000s)Claim

SeverityPre-Reform 65,159 $253,950 $3,897Post-Reform 77,162 $590,709 $7,655Difference +12,003 +$336,758 +$3,758

Weekly Benefits

Table 2.7

Fiscal Loss Year 2020 Part 7 Benefits – Weekly Benefits

Claim Counts


($000s)Claim

SeverityPre-Reform 3,397 $40,551 $11,938Post-Reform 4,043 $82,138 $20,314Difference +647 +$41,587 +$8,376


Table 2.8

Fiscal Loss Year 2021 Part 7 Benefits – Weekly Benefits

Claim Counts


($000s)Claim

SeverityPre-Reform 3,459 $43,019 $12,436Post-Reform 4,118 $87,136 $21,160Difference +659 +$44,118 +$8,725



Death Benefits

Table 2.9

Fiscal Loss Year 2020 Part 7 Benefits – Death Benefits

Claim Counts


($000s)Claim

SeverityPre-Reform 235 $2,853 $12,155Post-Reform 235 $5,256 $22,393Difference - +$2,403 +$10,238


Table 2.10

Fiscal Loss Year 2021 Part 7 Benefits – Death Benefits

Claim Counts


($000s)Claim

SeverityPre-Reform 239 $2,906 $12,154Post-Reform 239 $5,354 $22,392Difference - +$2,448 +$10,238

Source of Payments

As a result of the increase in Part 7 Benefits, certain indemnity payments that not-at-faultclaimants currently recover through their Bodily Injury coverage will be covered by the Part 7Benefits coverage after Product Reform. As such, some of the cost savings from the BodilyInjury coverage illustrated above will be transferred to the Part 7 Benefits coverage resulting ina reallocation of these costs. Additionally, at-fault claimants will be entitled to higher Part 7Benefits after Product Reform and given the significant increase in benefit levels an increasednumber of these claims is expected. Further, effective May 17, 2018, with the exception ofWorkSafeBC and Medical Services Plan, awards for Bodily Injury coverage will not include suchbenefits provided to claimants by other insurers. The following charts illustrate the shift inBodily Injury claim costs to Part 7 Benefits as well as the increase in Part 7 Benefits provided toat-fault drivers.



AB MR - At-Fault, $40M

AB MR - At-Fault,$188M

AB MR - Non-at-Fault, $172M

AB MR - Non-at-Fault, $329MBI Special Damages

& Future Care,$188M

BI SD & Future Care, $31M

$0M

$100M

$200M

$300M

$400M

$500M

$600M

Fiscal Loss Year 2020Pre-Reform

Fiscal Loss Year 2020Post-Reform

Sources of Payment for Medical Related Costs

AB WB - At-Fault, $8MAB WB - At-Fault, $26M

AB WB - Non-at-Fault, $33M


BI Past Wage Loss,$196M BI Past Wage Loss,

$87M

Collateral Benefits(no longer paid by

ICBC), $86M

$0M

$50M

$100M

$150M

$200M

$250M

$300M



Sources of Payment for Past Wage Loss



Post-Reform Trends

The results of the Bodily Injury and Part 7 Costing Models for fiscal loss year 2020 areprojected to fiscal loss year 2021 using selected trends. Where appropriate, trends from ICBC’sclaims costs analysis are used for consistency, however for certain coverages the elements ofreform are expected to impact the rate at which the number (frequency) and costs of claims(severity) change year to year post-reform.

Vehicle crashes can result in injuries to persons and/or damage to their property or vehicles.Generally there is a high degree of correlation between the number of claims for Bodily Injury,coverage involving injuries to persons, and the number of claims for Property Damage,coverage involving damage to persons’ property or vehicles. Since roughly 2007, there hasbeen an observable increase in the ratio of Bodily Injury claims to Property Damage claims. Thiscoincides with an obversable increase in representation rate, the proportion of claimantsobtaining legal counsel. Following reform, the ratio of Bodily Injury claims to Property Damageclaims is expected to stabilize and thus the future frequency trend for Bodily Injury wasselected to be equal to the long-term frequency trend for Property Damage from ICBC’s claimscost analysis. In addition to increases in the number of claims relative to Property Damageclaims since roughly 2007, there has been an obversable increase in the average cost of BodilyInjury claims. The selected future severity trend following reform was selected as the BodilyInjury trend from ICBC’s claims costs analysis adjusted to dampen the impact of the increase inrepresentation rate observed over the period.

For Part 7 Medical Rehabilitation, the future frequency trend was selected to be consistent withthe selected trend for Bodily Injury. Since Bodily Injury awards provide compensation for costsassociated with treatment of injuries, the number of claims for Part 7 and Bodily Injurycoverages are expected to increase at similar rates.

All other selected future frequency and severity trends are consistent with the selections fromICBC’s claims cost analysis.



3. Report Structure

Section Description4. Product Reform Provides a high-level description of the changes

occurring as a result of Product Reform.5. Product Reform CostingMethodology

Provides background information on the methodologyemployed to estimate the impacts of Product Reformon affected coverages.

6. Minor Injury Mapping Provides an explanation of how closed claims used inthe Product Reform analysis were identified as beingeither Minor or Non-Minor.

7. Basic Bodily Injury ProductReform Allocation Model

Describes in detail the steps followed to adjust BasicBodily Injury data from ICBC’s claims costs analysis tothe appropriate level of granularity to be used as inputto the Basic Bodily Injury costing model.

8. Basic Bodily Injury ProductReform Costing Model

Describes in detail the steps followed to estimate theimpact of Product Reform on Basic Bodily Injury claimexposure counts and costs, and presents the resultingestimates for fiscal loss year 2020.

9. Basic Bodily Injury CollateralBenefits Costing Models

Describes in detail the steps followed to estimate theimpacts of Product Reform changes on the interactionof claim payments between Basic Bodily Injury, Part 7Benefits, and payments to claimants from insurersother than ICBC. These changes were made effectiveMay 17 2018 thus this section focuses on fiscal lossyear 2019 impacts.

10. Part 7 Product Reform CostingModels

Describes in detail the steps followed to estimate theimpact of Product Reform on Part 7 Benefits andpresents the resulting estimates for fiscal loss year2020.

11. Projections to Fiscal Loss Year2021

Describes how the Bodily Injury and Part 7 Benefitcosting models results for fiscal loss year 2020 areprojected to fiscal loss year 2021 and presentssummaries of the results for both years.

12. Glossary Defines terms used frequently throughout report.13. About the Author Description of Liam McFarlane’s experience and

qualifications.

Sections 7 through 10 describing the Product Reform models employed contain material whichis technical in nature. Readers may find it helpful to have the accompanying appendicesreferenced throughout the sections in view while reading these sections. It should also be noted



that the costing model results for each coverage are intended to stand-alone. Readers canfocus their attention on Sections 8 for the details and results of the Bodily Injury costing,Section 9 for Collateral Benefits costings, and Section 10 for Part 7 costings. Appendix E is alsoa key appendix containing the Closed Claim Study report which supports certain assumptionsrelied upon in the costing models.



4. Product Reform

4.1 Product Reform Description

Reform of the British Columbia automobile insurance product focuses on three primary areasas follows:

1. Increased care benefits to those injured in automobile accidents by enhancing Part 7Benefits coverage regardless of fault. Medical Rehabilitation benefit limits have beenincreased significantly, more types of treatment will be provided, Weekly Benefits will beincreased, and Death Benefits are being simplified and also increased;

2. Reducing legal costs associated with automobile accidents, and introducing a limit (of upto $5,500) on General Damages (pain and suffering) payouts for minor injuries;

3. A new dispute resolution process which is designed to be easily understood andaccessible to laypersons.

For additional details relating to Product Reform refer to Chapter 2 of the RRA.



5. Product Reform Costing Methodology

In considering how to estimate the impacts of Product Reform on ICBC’s Basic Bodily Injury andPart 7 Benefits claims costs, the following principles were adopted:

· Adherence to accepted actuarial practice;· Use of the most reliable data;· All material elements of Product Reform should be considered;· Consider information from external sources, such as other jurisdictions, only if it is

expected to be relevant to British Columbia.

Consistent with the methodology used by ICBC in historical rating applications, afrequency/severity approach was selected to estimate the impact of Product Reform. Thisapproach involves estimating the number of claims5 and their average cost or severity for theprospective experience period. By multiplying the number of claims by their average cost,estimated total claims costs for the experience period are determined.

ICBC performs claims costs analyses in which the number of claim exposure counts andseverities are projected over future fiscal loss years. The methodology used by ICBC is inaccordance with accepted actuarial practice as certified by the Filing Actuary as well as theReviewing Actuary. These projections are used in this report to establish fiscal loss year 2020claim exposure counts and amounts prior to Product Reform. Adjustments to these projectionsare then made in this report to reflect the estimated impacts of Product Reform.

The rest of this section describes how the results from ICBC’s claims costs analyses are used asinputs and adjusted for the impacts of Product Reform. It is helpful to set the stage for thesedescriptions by first reviewing the estimated impacts of Product Reform on Basic Bodily Injuryand Part 7 Benefits.

5 Claim exposure counts are used in the analysis for Bodily Injury while claim counts are used for Part 7 analyses.

The separate use of these is based on the availability of data by coverage.



For Basic Bodily Injury, the cap on General Damages for minor injuries drives Product Reformsavings.

ICBC’s projected claim counts and severities are not sufficiently refined to allow for estimationof impacts at the required level of detail by Head of Damage6. The projected claim counts andseverities, therefore, must be segregated by Head of Damage and type of injury in order toestimate the impact of Product Reform. This process is described in detail in Section 7 BasicBodily Injury Product Reform Allocation Model.

Once the data has been allocated to the required level of granularity, adjustments for ProductReform can be made. Actuarial assumptions used to estimate the impact of Product Reformwere based on our understanding of Product Reform from public information available at thetime of conducting the analysis, including the minor injury definition from the Insurance VehicleAct passed on May 17, 2018. As described in Appendix E, a Closed Claim Study was completedby senior ICBC claims personnel7 under the guidance of EY in order to assess the reasonabilityof our estimates and to confirm certain assumptions such as the minor injury mapping and

6 Head of Damage refers to the type of claim payment such as Past Wage Loss, Future Wage Loss, General Damages

(pain and suffering), etc.

7 The Claims Review Advisors (CRA) candidates went through a selection process in order to join the Corporation’sCentralized Quality Assurance department. In order to be consider for the CRA position the individual must haveworked in the Claims Operations division for a number of years and be considered technically strong in adjusting andmanaging injury claims and also have proven leadership and coaching skills. Their technical skills would include ademonstrated understanding of ICBC policies and procedures in injury claim file handling, and a high level ofunderstanding of both legislation and legal precedent governing tort and contractual benefit claims. The teammembers who worked on the Closed Claim Study project all had complex injury claims handling experience, with themedian experience level being 25 years.

Part 7 BenefitsPart 7 Benefits

Bodily InjuryOther Heads of

Damage

Bodily InjuryOther Heads of

Damage

Bodily InjuryGeneral

Damages Bodily InjuryGeneral

Damages

$0M

$500M

$1,000M

$1,500M

$2,000M

$2,500M

$3,000M

$3,500M

$4,000M





claim count reduction due to Product Reform. Through the study, ICBC personnel reviewedover 1,000 claim exposures closed in 2017 to assess whether the claimants’ injuries met theminor injury definition and estimated how they believed Product Reform would have impactedpayments the claimants received, and whether they still would have pursued their claims, hadProduct Reform been in place at that time.

Actuarial assumptions relating to the expected impact on claim severity including the impact ofthe Civil Resolution Tribunal (CRT) were selected based on our understanding of ProductReform, along with the minor injury mapping and claim count reduction stemming from theClosed Claim Study. These assumptions were then applied individually to the entire populationof claim exposures closed in 2017 to estimate the total impact of Product Reform on 2017closed claims.

Projecting the 2017 results to the future experience period, adjusting for the impacts ofreform, and comparing them to the baseline costs from ICBC’s claims costs analysis producesthe estimated impact of Product Reform on Basic Bodily Injury claim costs.

Section 8 provides full details of how the allocated fiscal loss year 2020 Basic Bodily Injuryresults from ICBC’s claims costs analysis are used and adjusted to estimate the post-reformcosts.

For changes to Collateral Benefits discussed in Section 9, it is important to understand howcoverage from Basic Bodily Injury, Part 7 Benefits, and non-ICBC insurers interact with eachother and how that will change going forward. Currently, injured claimants receive benefitsfrom ICBC through Part 7 Benefits coverage regardless of fault. If they are not-at-fault andtheir costs exceed the Part 7 Benefits limits, they can seek to recover the additional coststhey’ve incurred through Bodily Injury coverage. This would involve bringing a claim against theat-fault party. Currently, awards from Bodily Injury coverage are not reduced by any amountsthe claimant has received for benefits similar to those provided by Part 7 Benefits from othernon-vehicle insurers such as disability insurance coverage through their employer. EffectiveMay 17 2018, with the exception of WorkSafeBC and Medical Services Plan, awards for BodilyInjury coverage will not include such benefits provided to claimants by other insurers. Thismeans that instead of a non-at-fault claimant possibly receiving benefits from Part 7 Benefits,Bodily Injury, and other non-vehicle insurers, they will receive the full amount of benefits underPart 7 up to the Part 7 benefit limits, but ICBC’s Bodily Injury payments will not includeamounts for benefits provided to claimants by other non-vehicle insurers. Section 9.3 containsfull details on how this affects ICBC’s Basic Bodily Injury Special Damages costs (medical relatedcosts recovered through Bodily Injury), and Section 9.4 contains full details on the impact onICBC’s Basic Bodily Injury Past Wage Loss (wage loss related costs recovered through BodilyInjury).

For Part 7 Benefits, the approach to estimating the impacts of Product Reform depends on thenature of the benefit.



For Medical Rehabilitation, historical payments from Part 7 Medical Rehabilitation Benefits andmedical related costs paid through Bodily Injury were reviewed. First, the combined totalmedical costs from both coverages was calculated. The proportion of total medical costsexpected to be provided by Part 7 Medical Rehabilitation following Product Reform was thenestimated by evaluating the impact of capping the combined total medical costs for eachclaimant at the new Medical Rehabilitation limit of $300,000. These results are tied together bymultiplying the forecasted number of claims adjusted for the expected impact of ProductReform by the average cost of the benefits after Product Reform to derive the estimated totalcosts post-reform. Section 10.3 contains full details on how Medical Rehabilitation benefitspost-reform are determined for fiscal loss year 2020.

For Weekly Benefits, information from Statistics Canada was used to calculate the averageweekly income for British Columbians and then the average benefit that would be paid at thenew increased benefit levels was compared to the prior level to estimate the impact of ProductReform on severity. The number of claim counts was also assumed to increased in light of theincreased benefit limits. Section 10.4 contains full details on how Weekly Benefits post-reformare determined for fiscal loss year 2020.

For Death Benefits, information from Statistics Canada was used to estimate the percentage ofDeath Benefit claims which would involve a surviving spouse, surviving dependents, and/or thedeath of a dependent child since the benefits payable vary under different circumstances. Theaverage benefit payable pre and post Product Reform was then determined and compared toestimate the impact. Section 10.5 contains full details on how Death Benefits post-reform aredetermined for fiscal loss year 2020.

The estimates for Bodily Injury and Part 7 Benefits are first produced for fiscal loss year 2020.The resulting total incurred claim amounts and claim counts are then projected to fiscal lossyear 2021 using post-reform trend assumptions. These trend assumptions consider expectedchanges in the behaviour of claimants based on observations from other jurisdictions whereapplicable, the selected trends from ICBC’s claims costs analysis, and judgment. The trendselections, process and results are discussed in more detail in Section 11.



6. Minor Injury Mapping

6.1 Minor Injury DefinitionAs we understand it, minor injuries are defined under Product Reform as a strain or sprain, acontusion, laceration or abrasion, a pain syndrome, temporomandibular joint dysfunction (TMJ),as well as a psychological or psychiatric condition that does not result in serious impairmentpersisting beyond 12 months. Please refer to Chapter 2 of the RRA for further detail relating tothe definition of minor injury.

6.2 Minor Injury MappingThe product costing model uses individual closed claims to estimate the impact of ProductReform. Key elements of Product Reform include a cap on General Damages for minor injuriesas defined under Product Reform, along with increases in Part 7 Benefits coverages. In order todetermine which closed claims the cap on General Damages would apply to, an assessment asto whether the closed claim would meet the definition of minor injury under Product Reform isrequired.

The Closed Claim study (Appendix E) was used to create a minor injury mapping in order toassign the closed claims into the minor or non-minor injury group8. Through the Closed ClaimStudy reviewers assessed whether individual claim exposures met the definition of a minorinjury under Product Reform based on the claim exposures’ injury details. Their assessmentswere used to identify which injury type descriptions and injury severities from the claimexposures’ coded injury information consistently met the minor injury definition as described inthe Insurance Vehicle Act passed on May 17 2018. The following combinations of injury typeand severity are identified as minor injuries through the mapping:

8 Certain types of claims were not considered in the Closed Claims Study such as Catastrophic claims, files where

multiple claims were still open, claims involving ICBC employees, out of province claims and claims settled by trial.The rationale for excluding these claims is explained fully in the Closed Claim Study report in Appendix E.



Table 6.1

Injury SeverityInjury Type Mild Moderate UnknownSoft Tissue Injury (“STI”) – Spine ✔ ✔N/A (used to identify STI’s by claim adjusters) ✔ ✔Headaches ✔Vertigo/Dizziness ✔Contusion ✔Abrasion ✔Laceration ✔Sprain ✔Strain ✔General Pain Complaints ✔Chronic Pain – GP ✔Psych – PTSD ✔Psych – Adjustment Disorder ✔Psych – Depression ✔Psych – Other ✔Joint Injury (Other than Spine) ✔Dental – TMJ ✔Other ✔Unknown ✔



7. Basic Bodily Injury Product Reform Allocation Model

7.1 PurposeThe purpose of the Basic Bodily Injury Product Reform Allocation Model is to allocate projectedBasic Bodily Injury claims costs for fiscal loss year 2020, prior to product reform, into theappropriate format in order to calculate the impact of product reform. The output from theBasic Bodily Injury Product Reform Allocation Model is used as input into the Basic Bodily InjuryProduct Reform Costing Model in order to project fiscal loss year 2020 Basic Bodily Injuryclaims costs after product reform.

7.2 OverviewICBC’s claims costs analysis forecasts future fiscal loss years total incurred claim amounts andclaim exposure counts. For Basic Bodily Injury, the forecasted amounts and counts are providedseparately by representation category, either represented9 or unrepresented.

To estimate the impacts of Product Reform, forecasted exposure counts and average cost ofclaim exposures (severity) are used to calculate forecasted total incurred claim amounts afterconsidering the different elements of Product Reform. These calculations have to be completedat a more granular level than that provided from ICBC’s claims costs analysis since ProductReform is expected to have different impacts by Head of Damage and type of injury.

An allocation model is required, therefore, to divide the fiscal loss year forecasts into the levelof granularity required to estimate the impact of product reform. Below is a depiction of theinputs and outputs of the allocation model:

9 Represented claim exposures are those in which the claimant is represented by legal counsel.



Table 7.1 – Allocation Model Description

For injury claim exposure counts, take as input fiscal loss year 2020 forecasts at theunrepresented and represented level (Table 7.2) and allocate by injury type withinrepresentation category (Table 7.3):

Unrepresented Represented

UnrepresentedMinor Injuries

UnrepresentedNon-Minor Injuries

RepresentedMinor Injuries

Represented Non-Minor Injuries

Output: Allocated to

Input: ICBC Claims CostsAnalysis

Projected Exposure Counts

Unrepresented Represented

General Damages

General Damages

General Damages

General Damages

Special Damages

Special Damages

Special Damages

Special Damages

Past Wage Loss

Past Wage Loss

Past Wage Loss

Past Wage Loss

Legal Costs andDisbursements




Other

Other

Other

Other

Represented Non-Minor

Represented Minor

Unrepresented Non-Minor

Unrepresented Minor

Output: Allocated to

Input: ICBC Claims Costs Analysis

Projected Total Incurred Claim Amounts



Table 7.2

Input – FLY 2020 Forecast Exposure Counts10

Unrepresented Represented Total29,828 44,324 74,152

Table 7.3

Output – FLY 2020 Forecast Exposure Counts Allocated by Injury TypeUnrepresented Unrepresented Represented RepresentedMinor Injuries Non-Minor Injuries Minor Injuries Non-Minor Injuries Total

27,463 2,365 30,833 13,491 74,152

For total incurred claim amounts, take as input fiscal loss year 2020 forecasts atunrepresented and represented level (Table 7.4) and allocate to Head of Damage withinrepresentation category and injury type (Table 7.5):

Table 7.4

Input – FLY 2020 Forecast Total Incurred Claim Amounts ($) 11 (rounded tonearest $M)

Unrepresented Represented Total$3,175M

Table 7.5

Output - Forecast Total Incurred Claim Amounts ($) Allocated by Injury Category and Head ofDamage (rounded to nearest $M)

RepresentationCategory

InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costsand

Disbursements Other12 TotalUnrepresented MinorUnrepresented Non-MinorRepresented MinorRepresented Non-MinorTotal $1,807M $103M $193M $343M $729M $3,175M

The allocation process uses historical closed claim exposure counts and total incurred claim

10 Excluding out of province claim exposure counts since these are not impacted by the reforms

11 Excluding incurred claim amounts from out of province exposure counts since these are not impacted by the

reforms12

“Other” category in Allocation model is a grouping of the remaining heads of damage for Bodily Injury whicharen’t covered by the first four groups. This includes Future Wage Loss, Future Care, and Other Costs (costs ofinvestigations, police reports etc.)



amounts by fiscal loss year and closed month range by representation category, injury type andHead of Damage to take the projected fiscal loss year exposure counts and amounts andallocate them to the categories required as input to the Basic Bodily Injury Product ReformCosting Model. This process is completed separately for exposure counts and total incurredclaim amounts as explained in the following.

7.3 Claim Exposure Counts AllocationThe allocation model reviews historical fiscal loss year minor injury closed claim exposures byclosure date to project the ultimate proportion of Basic Bodily Injury claim exposures which areminor injuries for each fiscal loss year. Since projections for fiscal loss year 2020 are required,the fiscal loss year results are reviewed to select a trend factor to project from the historicalperiod to fiscal loss year 2020. The result is the expected proportion of claim exposures infiscal loss year 2020 that will be minor injuries. This process is explained in step wise detailbelow.

Appendix A.2 - Exposure Counts Minor Injury % will be described in detail as an example of theallocation process. The goal is using historical data from closed claims, determine the historicalpercentage of exposure counts that were minor injuries, separately for represented andunrepresented segments, and project the percentage to fiscal loss year 2020.

Steps:

1) Claim exposure counts are summarized by fiscal loss year and closed month range – howlong after the beginning of the fiscal loss year a claim occurs in it closes. Claim exposuresclosing within 12 months of the beginning of the fiscal loss year they occur in are includedin the 0-12 month grouping, claim exposures closing within 24 months of the beginning ofthe fiscal loss year they occur in are included in the 0-24 month grouping, and so on.

Different types of claim exposures would be expected to take different amounts of timeuntil they close. For instance, simpler minor injury claims where the claimant does notobtain legal representation are likely to close shortly after their occurrence, whereas claimexposures involving more complex non-minor injuries are more likely to close further intothe future, whether they are represented or not.

2) The exposure counts are summarized in a triangular format with fiscal loss year down therows and closed month grouping across the columns. These triangles are first generatedincluding all injuries, and then a second set including only minor injuries (see Appendix A.2Tables 1a) and 1b) for unrepresented and Tables 2a) and 2b) for represented).

3) From these triangles, the cumulative percentage of exposure counts which are minorinjuries are calculated by fiscal loss year for each time to closure range. First for the 0-12month range, the number of minor injury exposure counts closing within 12 months of the



beginning of the fiscal loss year they occur in are divided by the total number of exposurecounts closing within 12 months of the beginning of the fiscal loss year they occur in.

For example, referring to Appendix A.2 Tables 1a) and 1b), of all the unrepresented claimcount exposures occurring in fiscal loss year 2016, 12,689 closed by the end of fiscal lossyear 2016. Of these, 12,092 were minor injuries for a minor injury percentage of 95.3%.

Then the same calculation is performed for claim exposures closing from 0-24 months asfollows. The number of unrepresented minor injury exposure counts closing within 24months of the beginning of the fiscal loss year they occur in are divided by the total numberof unrepresented exposure counts closing within 24 months of the beginning of the fiscalloss year they occur in.

Continuing the example with fiscal loss year 2016 from Appendix A.2 Tables 1a) and 1b), ofthe unrepresented claim count exposures occurring in fiscal loss year 2016, 23,265 closedwithin 24 months of the beginning of fiscal loss year 2016. Of these, 21,741 were minorinjuries for a minor injury percentage of 93.4%.

Similar calculations are performed for each fiscal loss year and all of the closure ranges upto 0-120 months. The same calculations are also performed separately for representedclaim exposures (see Appendix A.2 Tables 1c) and 2c) for unrepresented and representedrespectively).

4) By dividing the cumulative percentage of exposure counts which are minor injuries at oneclosure range by the cumulative percentage at the prior closure range, DevelopmentFactors13 are calculated. These represent the change in the cumulative percentage of claimexposure counts which are minor injuries from one closure range to the next.

From the earlier example, for unrepresented claim exposures the cumulative percentagefrom 0-24 months for fiscal loss year 2016 was 93.4% compared to 95.3% of the claimexposures closing from 0-12 months, a decrease in the percentage of exposure countswhich are minor injuries by a factor of 0.98.

Once these Development Factors are calculated for each fiscal year and consecutive closurerange, factors representing the average change in the cumulative minor injury percentageat each age are selected. The default selections are based on the average DevelopmentFactors from the four most recent fiscal loss years or all available fiscal loss years whenthere are fewer than four years (see Appendix A.2 Tables 1d) and 2d) for unrepresentedand represented respectively).

13 A Development Factor is the factor applied to develop the percentage of exposures from one closure period to the

next, e.g. 0-12 months to 0-24 months.



5) Using the selected Development Factors, the latest cumulative minor injury percentagefrom each fiscal loss year is developed to its ultimate level by multiplying it by the applicableDevelopment Factors. For instance for fiscal loss year 2016, the latest cumulative minorinjury percentage for unrepresented claim exposures is the 0-36m figure of 92.6%. Todevelop the percentage to ultimate, it is multiplied by the 36-48m Development Factor,then the 48-60m factor, then 60-72m, 72-84m, 84-96m, 96-108m, 108-120m, and finallythe 120m+ factor. The ultimate percentages are shown in column (1) of Table 1e) inAppendix A.2 for unrepresented claims and in column (1) of Table 2e) for representedclaims.

6) The ultimate percentages are then reviewed between the fiscal loss years and a trend isselected reflecting how the ultimate percentages have been changing from fiscal year tofiscal year. This selected trend, shown in row (4) of Table 1e) and 2e), is then used toproject the percentage of exposure counts which are minor injuries to fiscal loss year 2020.The selected percentages can be seen in row (3) of Table 1e) and 2e) for unrepresented andrepresented claims respectively.

Allocation Results – Claim Exposure Counts

Using the selected fiscal loss year 2020 allocation percentages for each segment, the allocatedclaim exposure counts are calculated in Appendix A.1.

For claim exposure counts, two distributions are used to perform the allocations:

i. Representation distribution – the percentage of claim exposure counts that arerepresented. This comes from ICBC’s claims costs analysis which forecasts claimexposure counts by unrepresented and represented segments. From their analysis, 40%of fiscal loss year 2020 claim exposure counts are unrepresented, meaning 60% arerepresented.

ii. Minor injury distribution – The percentage of claim exposure counts in eachrepresentation segment that are minor injuries. From Appendix A.2, Tables 1e) and 2e),the selected percentage of unrepresented claim exposure counts which are minorinjuries is 92%, while for represented claim exposure counts it is 70%.

By using these two distributions together, the allocation percentages are determined asfollows:

· Assuming 40% of claim exposure counts are unrepresented, and 92% of unrepresentedclaim exposure counts are for minor injuries, 40% x 92% = 37% of all claim exposurecounts are unrepresented minor injuries.



· Since 92% of unrepresented claim exposure counts are for minor injuries, 8% are fornon-minor injuries. 40% x 8% = 3% of all claim exposure counts are then unrepresentednon-minor injuries.

· For the 60% of claim exposure counts that are represented, 70% are minor injuries. 60%x 70% = 42% of all claim exposure counts are represented minor injuries.

· This leaves 18% which are represented non-minor injuries, which can also be arrived atby multiplying the 60% of claims which are represented by the 30% of representedclaims which are non-minor, 60% x 30% = 18% of total claim exposure counts.

The claims costs analysis forecasts there will be 75,378 Basic Bodily Injury claim exposurecounts in fiscal loss year 2020 in total. Some of these however are for out of province claimswhich are unaffected by Product Reform. From Appendix A.8 Table 1e), 2% of the total BasicBodily Injury claim exposure counts are assumed to be from out of province claims leaving74,152 Basic Bodily Injury claim exposure counts excluding out of province.

Applying the allocation percentages, results in the following:

Table 7.6

RepresentationCategory Injury Type

% of BasicBodily Injury

Claim ExposureCounts

Allocated FLY2020 Forecast

Claim ExposureCounts

Unrepresented Minor Injuries 37% 27,463Unrepresented Non-Minor Injuries 3% 2,365Represented Minor Injuries 42% 30,833Represented Non-Minor Injuries 18% 13,491Total 100% 74,152

Out of Province Claims – Estimate Claim Exposure Counts and Total Incurred Claim Amounts

A similar approach is followed to select the percentage of fiscal loss year 2020 claim exposurecounts and total incurred claim amounts that are out of province and not subject to ProductReform (Appendix A.8).

7.4 Total Incurred Claim Amount AllocationTotal Incurred Claim Amounts - Allocate by Injury Category (Minor vs Non-Minor)

Historical data from closed claims is used to estimate the percentage of incurred claim amountsthat were for minor injuries, separately for represented and unrepresented segments, andprojected to fiscal loss year 2020.



The approach followed is similar to the exposure count allocation approach from Appendix A.2described in detail above, except rather than using claim exposure counts by fiscal loss yearand closed month range, the incurred claim amounts from the exposure counts are used toarrive at the estimated percentage of incurred claim amounts from minor injuries forunrepresented and represented claim exposures. Refer to Appendix A.3 for further details.

Total Incurred Claim Amounts - Allocate by Head of Damage

Historical data from closed claims is used to compare the percentage of total incurred claimamounts that arise from the Heads of Damage, separately for unrepresented minor injury,unrepresented non-minor injury, represented minor injury, and represented non-minor injuryclaim exposures, and projected to fiscal loss year 2020. General Damages (Appendix A.4) willbe described in detail as an example of the allocation process.

Steps:

1) Total incurred claim amounts are summarized by fiscal loss year and closed month range inthe same fashion as claim exposure counts.

As noted above, different types of claim exposures are expected to take different amountsof time until they close. Generally speaking, more complex claims which take longer to closeare also likely to cost more.

2) Triangles summarizing the incurred claim amounts by fiscal loss year and closed monthrange are generated by representation and injury segments, first including all heads ofdamage, and then a second including only General Damages. See Appendix A.4 Tables 1a)and 1b) for unrepresented minor injuries, Tables 2a) and 2b) for unrepresented non-minorinjuries, 3a) and 3b) for represented minor injuries, and 4a) and 4b) for represented non-minor Injuries.

3) The cumulative percentage of incurred claim amounts from General Damages is calculatedfor each fiscal year and closed month range as was completed for claim exposure counts.

For example, referring to Appendix A.4 Tables 1a) and 1b), of all the incurred claimamounts for unrepresented minor injuries occurring in fiscal loss year 2016, arose from claim exposures that closed by the end of the fiscal loss year. Of this amount,

or 85.0% was for General Damages.

As of 24 months after the beginning of fiscal loss year 2016, incurred claim amounts forunrepresented minor injuries occurring in fiscal year 2016 totaled . Of thisamount, or 83.7% was for General Damages.

Similar calculations are performed for each fiscal year and all of the closure ranges up to 0-



120 months in Appendix A.4 Table 1c). For the other representation and injury segmentcombinations see Table 2c) for unrepresented non-minor injuries, Table 3c) for representedminor injuries, and Table 4c) for represented non-minor injuries.

4) Development Factors are then calculated by dividing the cumulative percentage of incurredclaim amounts arising from General Damages for the segment by the cumulative percentageat the prior closure range. These represent the change in the cumulative percentage ofincurred claim amounts which are General Damages from one closure range to the next.

From the earlier example, the cumulative percentage from 0-24 months for fiscal loss year2016 was 83.7% compared to 85.0% for the unrepresented minor injury claim exposuresclosing from 0-12 months, a decrease in the percentage of incurred claim amounts whichare General Damages for this segment by a factor of 0.98.

Once these Development Factors are calculated for each fiscal year and consecutive closurerange, factors representing the average change in the cumulative percentage of incurredclaim amounts which are General Damages for the segment are selected at each age. Thedefault selections are based on the average Development Factors from the four most recentfiscal loss years or all available fiscal loss years when there are fewer than four (seeAppendix A.4 Tables 1d), 2d), 3d) and 4d)). Using the four most recent fiscal loss years orall available loss years is consistent with the selection approach for ICBC’s claims costsanalysis. There was only one case where the default selections produced unreasonableresults and an alternative average was selected. This occurred for General DamagesRepresented Minor Injuries (Table 3d)) and an average of the two latest fiscal loss years wasselected instead.

5) Using the selected Development Factors, the latest cumulative General Damage percentagefrom each fiscal loss year is developed to its ultimate level by multiplying it by the applicableDevelopment Factors. For instance, for unrepresented minor injuries, the latest cumulativeminor injury percentage for fiscal loss year 2016 is the 0-36m figure of 83.0%. To developthe percentage to ultimate, it is multiplied by the 36-48m Development Factor, then the 48-60m factor, then 60-72m, 72-84m, 84-96m, 96-108m, 108-120m, and finally the 120m+factor. The ultimate percentages are shown in column (1) of Table 1e) in Appendix A.4 forunrepresented minor injury claims (see Tables 2e), 3e), and 4e) for the otherrepresentation and injury segments).

6) The ultimate percentages are then reviewed between the fiscal loss years and a trend isselected to reflect how they have been changing year to year. This selected trend, shown inrow (4) of Table 1e), is then used to project the percentage of unrepresented minor injuryincurred claim amounts which are General Damages forward to fiscal loss year 2020. Theselected percentages can be seen in row (3) of Table 1e). (see Appendix A.4 Tables 2e),3e), and 4e) for other representation and injury segments).



The same approach and calculations are performed to select forecasted percentages ofincurred claim amounts for the other heads of damage:

o Special Damages (Appendix A.5)o Past Wage Loss (Appendix A.6)o Legal Costs and Disbursements (Appendix A.7)

Allocation results – Total Incurred Claim Amounts

Using the selected fiscal loss year 2020 allocation percentages for each segment, the allocatedincurred claim amounts are calculated in Appendix A.1. This follows a similar approach toallocating claim exposure counts except there is an additional layer to allocate to the Head ofDamage groupings.

Three distributions are used to perform the allocations for total incurred claim amounts:

i. Representation distribution – the percentage of total incurred claim amounts fromexposure counts that are represented. This is derived from ICBC’s claims costs analysiswhich forecasts total incurred claim amounts by unrepresented and representedsegments. From their analysis, of fiscal loss year 2020 total incurred claim amountsare from unrepresented exposure counts, meaning are from represented.

ii. Minor injury distribution – For each representation segment, the percentage of totalincurred claim amounts from minor injuries. From Appendix A.3, Tables 1e) and 2e), theselected percentage of total incurred claim amounts from minor injuries forunrepresented exposure counts is 86%, while for represented exposure counts it is 66%.

iii. Head of Damage distributions – For each combination of representation and injury type,the percentage of total incurred claim amounts that come from which heads ofdamage/groupings. These are summarized in the following table:

Table 7.7


InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costs &Disbursements

OtherCosts Total

Unrepresented Minor 82% 7% 6% 0% 5% 100%Unrepresented Non-Minor 75% 8% 6% 1% 11% 100%Represented Minor 61% 3% 5% 10% 22% 100%Represented Non-Minor 44% 3% 9% 15% 29% 100%

For example, for unrepresented minor injuries, 82% of total incurred claim amounts arefrom General Damages, 7% from Special Damages, 6% from Past Wage Loss, 0% forLegal Costs and Disbursements, and 5% for Other Costs. These percentages are from



Tables 1e), 2e), 3e) and 4e) from Appendices A.4, A.5, A.6, and A.7 respectively. Thepercentages for other costs are calculated as 100% minus the percentages for the otherheads of damage.

By using these three distributions together, the allocation percentages are determined asfollows using represented minor injuries’ Past Wage Loss as an example:

· From ICBC’s claims costs analysis, of fiscal loss year 2020 forecast total incurredclaim amounts are from represented claim exposures. For represented claim exposures,66% of total incurred claim amounts are for minor injuries. And for represented minorinjuries, 5% of total incurred claim amounts losses are for Past Wage Loss. As apercentage of Basic Bodily Injury total incurred claim amounts, Past Wage Loss forrepresented minor injuries is then x 66% x 5% = .

The same steps are followed for the other segments and heads of damage producing thefollowing percentage allocations of total incurred claim amounts:

Table 7.8


InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costs &Disbursements

OtherCosts Total14

Unrepresented MinorUnrepresented Non-MinorRepresented MinorRepresented Non-Minor

ICBC’s claims costs analysis forecasts total Basic Bodily Injury total incurred claim amounts of$3.239 billion, however a portion of this is for out of province claims which are unaffected bythe Product Reform. From Appendix A.9 Table 2e), 2% of the total Basic Bodily Injury totalincurred claim amounts are assumed to be from out of province claims leaving $3.175 billionBasic Bodily Injury total incurred claim amounts losses excluding out of province.

Applying the allocation percentages, the following estimate of total incurred claim amounts byminor injury category, representation category and Head of Damage are obtained. These will beused as input into the Basic Bodily Injury Product Reform Costing Model:

14 Totals across head of damage by representation category may differ due to rounding.



Table 7.9


InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costs andDisbursements Other Total

Unrepresented Minor Unrepresented Non-MinorRepresented MinorRepresented Non-MinorTotal $1,807M $103M $193M $343M $729M $3,175M



8. Basic Bodily Injury Product Reform Costing Model

8.1 PurposeThe purpose of the Basic Bodily Injury Product Reform Costing Model (BI Costing Model) is tocalculate the projected future fiscal loss year 2020 Basic Bodily Injury claims costs afterconsidering the various elements of Product Reform.

8.2 OverviewThe output of the Basic Bodily Injury Product Reform Allocation Model (Allocation Model) andclaim exposure level detail from claim exposures closed in 2017 are used to estimate BasicBodily Injury claims costs after applying all of the elements of Product Reform.

From the Allocation Model output, the fiscal loss year 2020 forecast total incurred claimamounts allocated by injury type and Head of Damage are divided by the forecast exposurecounts to calculate severities for each segment. Severities from the claim exposures closed in2017 are also calculated for the same segments, and the ratio of the 2020 severities to the2017 severities produces Severity Adjustment Factors.

The Severity Adjustment Factors are used to adjust the payments on all of the individual claimexposures closed in 2017 to bring them to the 2020 level. A seriatim 15process is then usedwhere the claim exposures closed in 2017 with claim amounts adjusted to the 2020 level areone by one adjusted for the applicable elements of Product Reform based on the claimexposure’s criteria. Adjustments are also made to reflect anticipated changes in the number ofclaim exposures following Product Reform.

Tables 8.1 and 8.2 below include the counts and amounts input from the Allocation Model forBasic Bodily Injury prior to Product Reform.

Table 8.1

Input – FLY 2020 Forecast Exposure Counts Allocated by Injury Type*Unrepresented Unrepresented Represented RepresentedMinor Injuries Non-Minor Injuries Minor Injuries Non-Minor Injuries Total

27,463 2,365 30,833 13,491 74,152* Table 8.1 results are taken from Table 7.6 in Allocation Model

15 A seriatim process is a process that is applied to individual claims.



Table 8.2

Input – FLY 2020 Forecast Total Incurred Claim Amounts ($) Allocated by Injury Category andHead of Damage* (rounded to nearest $M)


InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costsand

Disbursements Other TotalUnrepresented MinorUnrepresented Non-MinorRepresented MinorRepresented Non-MinorTotal $1,807M $103M $193M $343M $729M $3,175M* Table 8.2 results are taken from Allocation Model - Table 7.9

The following charts summarize the impact of the various elements of Product Reform on fiscalloss year 2020 Basic Bodily Injury total incurred claim amounts.

As illustrated below the largest impact is due to the cap on General Damages for minor injuries.

$3,175M $3,180M $2,917M

$1,842M $1,814M $1,709M

$0M

$500M

$1,000M

$1,500M

$2,000M

$2,500M

$3,000M

$3,500M

FLY 2020Forecast

Adjustment for12 Month

ImpairmentCondition

ProductChange:

CollateralBenefits and

Cost Movementto Part 7

ProductChange: Cap

GeneralDamages

ProductChange:

Reduction inExposureCounts

ProductChange:

Introduction ofCRT (incl. CRT

Fees)

Output: FLY 2020 Basic Bodily Injury Incurred ClaimAmounts Adjusted for Reforms



The remainder of this section explains the Basic Bodily Injury Product Reform costing in detail.

-$5M

$263M

$1,075M

$28M $105M

-$200M

$0M

$200M

$400M

$600M

$800M

$1,000M

$1,200M


Condition




Damages


Exposure Counts

Product Change:Introduction of CRT

(incl. CRT Fees)

Output: FLY 2020 Basic Bodily Injury Savings by Elementof Reform



8.3 Data Description

Detailed exposure level information from claim exposures closed in 201716 is used throughoutthe Costing Model. For each claim exposure closed in 2017, the following detailed informationis captured:

Table 8.3

Criteria Value ExplanationMinor InjuryFlag

Yes or No Claim exposure is flagged as a minor or non-minor injury based ontheir coded injury details and the minor injury mapping criteriadescribed in Section 6 Minor Injury Mapping

RepresentationFlag

Yes or No Claim exposure is flagged as represented or unrepresented based onthe historical legal status

Basic Incurred Dollaramount

Basic portion17

of the total incurred claim amount under all BodilyInjury heads of damage for the claim exposure

Basic GeneralDamages

Dollaramount

Basic portion of the incurred claim amount under the GeneralDamages Head of Damage for the claim exposure

Basic SpecialDamages

Dollaramount

Basic portion of the incurred claim amount under the SpecialDamages Head of Damage for the claim exposure

Basic PastWage Loss

Dollaramount

Basic portion of the incurred claim amount under the Past Wage LossHead of Damage for the claim exposure

Basic FutureWage Loss

Dollaramount

Basic portion of the incurred claim amount under the Future WageLoss Head of Damage for the claim exposure

Basic FutureCare

Dollaramount

Basic portion of the incurred claim amount under the Future CareHead of Damage for the claim exposure

Basic ThirdParty Costs

Dollaramount

Basic portion of incurred claim amount for Third Party Costs for theclaim exposure

Basic ThirdPartyDisbursements

Dollaramount

Basic portion of the incurred claim amount for Third PartyDisbursements for the claim exposure

Basic ICBCLegal Costs

Dollaramount

Basic portion of the incurred claim amount for ICBC Legal Costs forthe claim exposure

Basic ICBCDisbursements

Dollaramount

Basic portion of the incurred claim amount for ICBC Disbursementsfor the claim exposure

Basic OtherCosts

Dollaramount

Basic portion of the incurred claim amount under any other BodilyInjury heads of damage not previously listed for the claim exposure

16 Excluding Special coverage claims, Rental vehicle claims, and Excess Underinsured Motorist Protection claims.

Reserving does separate analyses for these claims and do not include them in Bodily Injury. Out of province claimsare also excluded.17

The Basic proportion of total Bodily Injury incurred loss is based on ICBC’s Basic/Optional split algorithm.



Using the detailed information by claim exposure allows adjustments to be made to the incurredclaim amounts by Head of Damage depending on the element of Product Reform that applies tothe claim exposure.

8.4 Pre Reform Claim Severity EstimationFiscal Loss Year 2020 Estimated Claims Severity Prior to Reform

Severity, the average cost of a claim, is calculated by dividing the total incurred claim amountfrom a group of claim exposures by the number of claim exposures in the group. For thepurposes of the Costing Model, the claim exposures closed in 2017 are first identified asbelonging to one of the following four representation status/injury type categories:

1. Unrepresented Minor Injuries2. Unrepresented Non-Minor Injuries3. Represented Minor Injuries4. Represented Non-Minor Injuries

For each representation status/injury type category, severities are calculated by Head ofDamage by adding the incurred claim amounts under the Head(s) of Damage from all exposuresin the group and dividing by the number of exposures. This is completed for the following headsof damage/groupings:

1. General Damages2. Special Damages3. Past Wage Loss4. Legal Costs and Disbursements (includes Third Party Costs, Third Party

Disbursements, ICBC Legal Costs, and ICBC Disbursements)5. Other (includes Future Wage Loss, Future Care, and Other Costs18)

For example, there were 19,593 Represented Minor Injury claim exposures closed in 2017.Across these claim exposures, Past Wage Loss incurred totaled , for an averagecost or severity of . The severity per exposure count by Head of Damage groupingacross these four representation status/injury type categories can be seen in Appendix B.3Table 3a).

Next in Table 3b), the output from the Allocation Model is used to calculate forecasted fiscalloss year 2020 severity per exposure count by Head of Damage across the four representationstatus/injury type categories. This is completed by dividing the allocated fiscal loss year 2020forecast total incurred claim amounts by the allocated fiscal loss year 2020 forecast exposurecounts. For example, was allocated to Past Wage Loss for Represented Minor

18 Other Costs relate to costs of investigations, police reports etc.



Injuries (column (3)) across 30,833 exposure counts (column (6)) for a forecasted severity of (column (9)).

The forecast fiscal loss year 2020 severities by representation status/injury type category andHead of Damage are then compared to the severities from the claim exposures closed in 2017.The ratio of the severities will be used as Severity Adjustment Factors19. From our example, theforecasted severity for represented minor injuries’ Past Wage Loss is compared to theclosed year 2017 severity of producing an adjustment factor of =0.79. Refer to Appendix B.3 Table 3c) for the complete table of Severity Adjustment Factors.

As seen in Table 3c), some of the Severity Adjustment Factors are less than 1.00 implying thatthe severities for these heads of damage are expected to be lower in fiscal loss year 2020 thanthey were for the claim exposures closed in 2017 for those groupings while other SeverityAdjustment Factors are greater than 1.00 since the severities for these heads of damage areexpected to increase.

The Severity Adjustment Factors are then applied to the individual incurred claim amounts ofeach claim exposure closed in 2017 to bring these losses to the fiscal loss year 2020 level. Theadjustment factor for the ‘Other’ Heads of Damage grouping is applied to payments underFuture Wage Loss, Future Care, and Other Costs Heads of Damage. The following examples areincluded for illustrative purposes:

Table 8.4

Example Claim Exposures Closed in 2017

ClaimExposure


InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costsand

Disbursements Other1A Represented Minor $10,000 $1,000 $1,000 $1,000 $1,0001B Unrepresented Minor $10,000 $1,000 $1,000 $0 $1,000

Table 8.5

Severity Adjustment Factors

ClaimExposure


InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costsand

Disbursements Other1A Represented Minor 1.32 0.98 0.79 0.80 2.421B Unrepresented Minor 1.02 0.98 0.97 0.34 1.26

19 In this report a Severity Adjustment Factor is the factor required to adjust actual 2017 closed claim severities to

forecast fiscal year 2020 severities.



Table 8.6

Example Claim Exposures Closed in 2017’s Incurred Claim Amounts Adjusted to Fiscal Loss Year2020

ClaimExposure


InjuryType

GeneralDamages

SpecialDamages

PastWageLoss

Legal Costsand

Disbursements Other1A Represented Minor $13,200 $980 $790 $800 $2,4201B Unrepresented Minor $10,200 $980 $970 $0 $1,260

Appendix B.3 Table 3d) displays the resulting severities by representation category/injury typeand Head of Damage after the Severity Adjustment Factors have been applied individually to allclaims closed in 2017. These are the projected fiscal loss year 2020 severities byrepresentation category/injury type and Head of Damage prior to reform and they will serve asthe starting point severities for calculating the impacts of the reform.

8.5 Post Reform Claim Severity EstimationFiscal Loss Year 2020 Estimated Claims Severity After Reform

Using the entire set of claim exposures closed in 2017 with incurred claim amounts adjusted tofiscal loss year 2020 levels allows for the use of a seriatim process to estimate the impacts ofProduct Reform. This process involves applying adjustments for the reform elements one byone to the claim exposures affected by the particular reform based on the characteristics ofthat particular claim. The resulting severity for the groups of claim exposures can then becalculated, and by multiplying the severities by the forecast number of exposure counts in eachgroup, an estimate of total incurred claim amounts after Product Reform is obtained. This canbe repeated to include each successive Product Reform element until all are considered. Bycomparing the total incurred claim amounts at each step, the estimated savings from eachProduct Reform element are determined.

Product Reform Element – Collateral Benefits and Cost Movement to Part 7 Benefits

The first reform adjustment involves Collateral Benefits savings stemming from changes in thepriority of payer for certain benefits, and the movement of costs from Bodily Injury to Part 7Benefits in light of the increased Part 7 Benefit limits following the reforms. The followingreductions are expected:

· Special Damages incurred amounts are expected to reduce by 63% due to movement ofcosts to Part 7 Benefits as detailed in Section 10.3 Medical Rehabilitation;

· Future Care incurred amounts are expected to reduce by 63% due to movement of coststo Part 7 Benefits as detailed in Section 10.3 Medical Rehabilitation;



· Past Wage Loss incurred amounts are expected to reduce by 56% due to changes tocollateral benefits and the movement of costs to Part 7 Benefits as detailed in Section10.4 Weekly Benefits.

These reductions apply to all claim exposures regardless of their representation category orinjury type. The following is provided as an illustrative example of the severity calculationbefore and after the reform impacts, focusing on one grouping – represented minor injuries:

Table 8.7

Incurred Claim Amounts by Head of Damage at Fiscal Loss Year 2020 LevelClaim

Exposure Representation Injury TypeSpecial

DamagesPast Wage

Loss Future Care2A Represented Minor $5,000 $3,000 $2,0002B Represented Minor $10,000 $5,000 $3,0002C Represented Minor $7,500 $4,000 $1,000

Total for Represented Minor Injuries $22,500 $12,000 $6,000Severity for Represented Minor Injuries $7,500 $4,000 $2,000

Table 8.8

Incurred Claim Amounts by Head of Damage at Fiscal Loss Year 2020 Level – Adjusted forCollateral Benefits and Cost Movement to Part 7 Benefits

ClaimExposure Representation Injury Type

SpecialDamages

Past WageLoss Future Care

2A Represented Minor $1,850 $1,320 $7402B Represented Minor $3,700 $2,200 $1,1102C Represented Minor $2,775 $1,760 $370

Total for Represented Minor Injuries $8,325 $5,280 $2,220Severity for Represented Minor Injuries $2,775 $1,760 $740

Appendix B.3 Table 3e) contains the estimated severities for each Head of Damage andgrouping following these reductions applied across all closed claims individually.

Product Reform Element – Cap on General Damages for Minor Injuries

The next element of Product Reform considered is the cap on General Damages for minorinjuries. For this step, the minor injury claim exposures closed in 2017 have their fiscal lossyear 2020 level incurred claim amounts for General Damages capped at $5,500. Minor injuryclaim exposures with fiscal loss year 2020 level General Damages greater than $4,500 wereassumed to have their General Damages increased to the cap amount of $5,500. The reasoningfor this was that these claim exposures are forecasted to receive General Damages amountsclose to the cap in the current environment, so it was assumed they will receive payouts equalto the cap after Product Reform given this would be administratively easier.



The following is provided as an illustrative example of the severity calculation before and afterthe application of the cap on General Damages for minor injury claim exposures:

Table 8.9

General DamagesClaim

Exposure Representation Injury TypeFLY 2020

LevelAfter

Capping3A Unrepresented Minor $2,500 $2,5003B Unrepresented Minor $5,000 $5,5003C Unrepresented Minor $20,000 $5,500

Total for Unrepresented Minor Injuries $27,500 $13,500Severity for Unrepresented Minor Injuries $9,167 $4,500

Table 8.10

General DamagesClaim

Exposure Representation Injury TypeFLY 2020

LevelAfter

Capping3D Represented Non-Minor $2,500 $2,5003E Represented Non-Minor $5,000 $5,0003F Represented Non-Minor $20,000 $20,000

Total for Represented Minor Injuries $27,500 $27,500Severity for Represented Minor Injuries $9,167 $9,167

Since claim exposures 3D, 3E and 3F are non-minor injuries, the cap on General Damages doesnot apply to them.

Appendix B.3 Table 3f) contains the actual severities for each Head of Damage and groupingfollowing the application of the cap on General Damages for minor injuries applied across allclosed claims individually.

Product Reform Element – Introduction of the Civil Resolution Tribunal (CRT)

The last element of product reform that will affect Basic Bodily Injury claims costs is theintroduction of the CRT to resolve certain disputes concerning certain motor vehicle injuryclaims. At the time of our analysis it was assumed the CRT will handle claims with settlements20

below $50,000. It is assumed that the cost of expert reports allowed to be submitted throughthe tribunal process is expected to be restricted to $5,000 for each party.

20 Settlement equals incurred loss amount from General Damages, Special Damages, Past Wage Loss, Future Wage

Loss and Future Care.



To determine the severities of claim exposures for each injury type and available settlementchannel following Product Reform, it was assumed that there would be no changes to claimexposures in the unrepresented category. This assumption was made based on the premise thatthese are claim exposures which settled in the current environment without the claimantobtaining representation, based on their nature they may be expected to settle without utilizingthe CRT process in the future.

For the represented category, the details of the individual claim exposures closed in 2017 withincurred claim amounts adjusted to fiscal loss year 2020 were considered one by one afteraccounting for the reform impacts mentioned above to see whether they met the CRT criteriadescribed. For each claim exposure, if its settlement after Product Reform was less than$50,000 at the fiscal loss year 2020 level, and its third party disbursements and ICBCdisbursements were each below $5,000 at the fiscal loss year 2020 level, it was counted asmeeting the CRT criteria.

For those claims which met the CRT criteria, their incurred claim amounts by Head of Damagewere added up and the totals were divided by the number of claim exposures meeting the CRTcriteria. This was completed separately for minor and non-minor injuries. To determine theseverities of claim exposures over the CRT’s jurisdiction, the incurred losses by Head ofDamage were added up for claim exposures with settlements greater than $50,000, and thetotals were divided by the number of such claim exposures. This was completed separately forminor and non-minor injuries.

The following examples are included for illustrative purposes. Past Wage Loss is used as anexample for the calculations, the same steps to calculate the severities are performed for eachHead of Damage:

Table 8.11

ClaimExposure

RepCategory /

InjuryCategory

FLY 2020Past WageLoss After

OtherProductChanges

FLY 2020Total

SettlementAfter Other

ProductChanges

FLY 2020Third Party

Disbursements

FLY 2020ICBC

Disbursements

FutureLegalStatus

ExposureFits In

4A Rep. Minor $4,000 $40,000 $3,000 $4,000 CRT4B Rep. Minor $7,000 $70,000 $4,000 $3,000 Over CRT4C Rep. Minor $2,000 $20,000 $6,000 $4,000 Excluded4D Rep. Minor $2,000 $30,000 $2,500 $2,500 CRT4E Rep. Minor $6,000 $60,000 $4,500 $2,000 Over CRT

Claim exposures 4A and 4D meet the CRT criteria – their settlements at fiscal loss year 2020level after Product Reform are below $50,000, their third party disbursements are below$5,000, and their ICBC disbursements are below $5,000. Their incurred losses would be



included in the calculation of severity for represented minor injuries going through the CRT. ForPast Wage Loss, this would be:

# of claim exposures meeting criteria 2Total Past Wage Loss from those exposures $6,000Severity $3,000

Claim exposures 4B and 4E are over the CRT’s jurisdiction since their settlements at fiscal lossyear 2020 level are greater than $50,000. Their incurred claim amounts would be included inthe calculation of severity for represented minor injuries over the CRT’s jurisdiction. For PastWage Loss, this would be:

# of claim exposures meeting criteria 2Total Past Wage Loss from those exposures $13,000Severity $6,500

Claim exposure 4C’s settlement is below $50,000, but its third party disbursements are abovethe CRT threshold of $5,000. This claim exposure is not representative of claim exposures inthe future state following product change since if a claim exposure’s settlement is below$50,000, i.e. within the CRT’s jurisdiction, its third party disbursements and ICBCdisbursements would be limited to $5,000 each. Since this claim exposure does not fit into anyof the possible future state categories following reform, it is excluded from the severitycalculations at this step.

This exercise of comparing the details of each claim exposure against the CRT criteria isperformed for each of the claim exposures closed in 2017 with their incurred claim amountsadjusted to fiscal loss year 2020 level and adjusted to account for the effects of ProductReform, then the incurred claim amounts by Head of Damage are totaled and divided by thenumber of claim exposures used in the total. This is completed separately for minor injuriesmeeting the CRT criteria, minor injuries over the CRT’s jurisdiction, non-minor injuries meetingthe CRT criteria, and non-minor injuries over the CRT’s jurisdiction. The resulting severities byrepresentation category/injury type and Head of Damage can be seen in Appendix B.3 Table3g).

Product Reform – Resulting Severities

Across all Heads of Damage, the total severities per exposure count are as follows (AppendixB.3 Table 3g) column (11)):



Table 8.12

Future Legal Status Injury CategoryTotal Severity perExposure Count

Unrepresented Minor InjuriesCRT Minor Injuries

Over CRT Jurisdiction Minor InjuriesUnrepresented Non-Minor Injuries

CRT Non-Minor InjuriesOver CRT Jurisdiction Non-Minor Injuries

The total severities are the result of adding all of the incurred claim amounts by category afterthe various elements of Product Reform applied at the individual claim level. Onecounterintuitive result in the table above is that the severity for minor injuries over the CRTjurisdiction is greater than the severity for non-minor injuries over the CRT jurisdiction. Thereason this occurs is that since the cap on General Damages only applies to minor injuries andthus minor injuries have their General Damages capped at $5,500, the incurred claim amountsunder other heads of damage need to be very significant for the settlement to be over$50,000. There are not many claim exposures for which this is the case, however this results ina very high severity for minor injuries over the CRT’s jurisdiction. For non-minor injuries, thereare many cases where the General Damages alone are near or above $50,000, and the incurredclaim amounts under the other heads of damage are not as significant, which reduces theseverity of the non-minor injuries over the CRT’s jurisdiction.

With the estimated severities per exposure count determined, next the number of claimexposure counts are estimated.

8.6 Pre Reform Claim Exposure Count EstimationFiscal Loss Year 2020 Estimated Claim Exposure Counts Prior to Reform

From the output of the Allocation Model, the allocated fiscal loss year 2020 forecast exposurecounts are as follows:



Table 8.13

RepresentationStatus

Injury Type ExposureCounts*

Unrepresented Minor Injuries 27,463Unrepresented Non-Minor Injuries 2,365Represented Minor Injuries 30,833Represented Non-Minor Injuries 13,491Total 74,152* Table 8.13 Exposure Counts are taken from Table 8.1

8.7 Post Reform Claim Exposure Count EstimationFiscal Loss Year 2020 Estimated Claim Exposure Counts After Reform

There are three elements of Product Reform for which the forecasted fiscal loss year 2020claim exposure counts need to be adjusted for:

1) Adjustment for claim exposures still impaired after 12 months;2) Adjustment for expected reduction in number of claim exposure counts;3) Adjustment for the introduction of the CRT for settling claim disputes.

Product Reform Element – Adjustment for Claim Exposures Still Impaired After 12 Months

Under the minor injury definition as of May 17 2018, minor injuries do not include those whichresult in serious impairment. Two criteria define serious impairment:

i. The impairment is not resolved within 12 months or another prescribed period, ifany, after the date of an accident, and

ii. The impairment meets prescribed criteria.

As such, an adjustment is required to account for claim exposure counts currently in the minorinjury groupings of the fiscal loss year 2020 forecast which are expected to still be impairedafter 12 months and thus will be considered non-minor injuries after Product Reform.

From the extrapolated results of the Closed Claim Study (Appendix E), the number of claimexposure counts meeting this condition is equal to 0.82% of all claim exposure counts. Asshown in Appendix B.2 Table 2b), this means 0.82% x 74,152 = 608 claim exposure countsneed to shift from minor to non-minor injuries. It is assumed these are split betweenunrepresented and represented claims in the same proportion as prior to the adjustment. Thus286 unrepresented minor injury exposure counts shift to unrepresented non-minor injuryclaims and 322 represented minor injury exposure counts shift to represented non-minor injuryclaims, resulting in the following adjusted forecast:



Table 8.14

Representation Injury Type Exposure CountsUnrepresented Minor Injuries 27,176Unrepresented Non-Minor Injuries 2,652Represented Minor Injuries 30,512Represented Non-Minor Injuries 13,813Total 74,152

Product Reform Element – Adjustment for Expected Reduction in Number of Claim ExposureCounts

In other Canadian jurisdictions which have undergone product reform, a reduction in thenumber of injury claim exposure counts has been observed following the introduction of capson General Damages for minor injuries. While automobile insurance and consumer behaviourvaries from province to province, it is anticipated that there will be a reduction in Basic BodilyInjury exposure counts in British Columbia following Product Reform. The reductions observedin the first year following reform for New Brunswick, Nova Scotia, and Alberta ranged fromroughly 1% to over 27%.

Relying again on the results of the Closed Claim Study, the estimated percentage reduction inBritish Columbia is 2.42% of total claim exposures21, with the reduction coming exclusivelyfrom minor injuries. As shown in Appendix B.2 Table 2c), this results in 2.42% x 74,152 =1,794 fewer claim exposure counts. Again it is assumed that these are split betweenunrepresented and represented in the same proportion as prior to the adjustment. Theunrepresented minor injury exposure counts are thus reduced by 845 and the representedminor injury exposure counts are reduced by 949, resulting in the following forecast:

Table 8.15

Representation Injury Type Exposure CountsUnrepresented Minor Injuries 26,331Unrepresented Non-Minor Injuries 2,652Represented Minor Injuries 29,562Represented Non-Minor Injuries 13,813Total 72,358

Product Reform Element – Adjustment for the Introduction of the CRT

A final adjustment is made to account for the introduction of the CRT. As described above, the

21 This result from the Closed Claim Study was reviewed and discussed with the team of reviewers. From their

experience handling claims in British Columbia, they felt strongly that the environment in BC was different fromother provinces given BC has a public insurer, and claimant behaviour would be less impacted resulting in moreclaimants proceeding with claims after reform compared to the other jurisdictions reviewed.



CRT will resolve certain disputes concerning certain motor vehicle injury claims. The claimexposures the CRT will handle are assumed to have a settlement value below $50,000.

To determine the number of claim exposures going through the available settlement channelsfollowing Product Reform, it was first assumed that there would be no change to the number ofclaim exposures in the unrepresented groupings consistent with the assumptions regardingclaim severities.

For the represented groupings, the claim exposure detail from claims closed in 2017 wasutilized to determine the percentage of claim exposures meeting the CRT criteria describedabove, after adjusting their incurred claim amounts to the fiscal loss year 2020 level andaccounting for the impacts of Product Reform on the adjusted incurred claim amounts.

For each represented claim exposure, if its settlement after product change was less than$50,000, it was counted as meeting the CRT criteria.

For represented minor injuries, 93% of the claim exposures met the CRT criteria, while forrepresented non-minor injuries, 69% did. These percentages were then used to estimate thenumber of claim exposures going through each channel as follows:

· All of the unrepresented claim exposure counts remain in their current groupings;· Of the 29,562 represented minor injury claim exposure counts, 93% or 27,628 are

assumed to go through the CRT with the remaining 1,934 being over the CRT’sjurisdiction;

· Of the 13,813 represented non-minor injury claim exposure counts, 69% or 9,484 areassumed to go through the CRT with the remaining 4,329 being over the CRT’sjurisdiction.

This results in the following forecasted exposure counts:

Table 8.16

Future Legal Status Injury Category Exposure CountsUnrepresented Minor Injuries 26,331CRT Minor Injuries 27,628Over CRT Jurisdiction Minor Injuries 1,934Unrepresented Non-Minor Injuries 2,652CRT Non-Minor Injuries 9,484Over CRT Jurisdiction Non-Minor Injuries 4,329Total 72,358

It should be noted that claimants utilizing the CRT can do so with or without representation.Some of the claim exposures forecasted to go through the CRT may not be represented, but it



is our assumption that being represented or unrepresented through the CRT will not have amaterial impact on claim severity thus we have not forecasted these separately.

8.8 Post Reform Total Incurred Claim Amounts

The forecasted fiscal year 2020 claim severities after Product Reform multiplied by theforecasted fiscal year 2020 number of claim exposures after Product Reform provides us withthe forecasted fiscal year 2020 total incurred claim amounts after Product Reform. To evaluatethe estimated impact of each of the reform elements, these calculations are performed onereform element at a time.

From the Allocation model, the forecasted number of claim exposures and their associated totalBasic Bodily injury incurred claim amounts prior to reform are as follows:

Table 8.17

Representation Injury CategoryExposureCounts*

Total Severityper Exposure

Count**

Total IncurredClaim

Amounts***($000s)

Unrepresented Minor Injuries 27,463Unrepresented Non-Minor Injuries 2,365Represented Minor Injuries 30,833Represented Non-Minor Injuries 13,491Total 74,152 $3,175,101* Exposure Counts in Table 8.17 are taken from Table 8.1

** Severity per Exposure Count calculated by dividing Totat Incurred Claim Amounts by Exposure Counts

***Total Incurred Claim Amounts in Table 8.17 are taken from Table 8.2

These are the baseline total incurred claim amounts which the amounts after Product Reformwill be compared against.

The first element of Product Reform considered is the shift in claim exposure counts betweenminor and non-minor injuries for the 12 month impairment condition. Multiplying the resultingexposure counts by the forecasted fiscal loss year 2020 severities produces the followingestimate of total incurred claim amounts:



Table 8.18



Count

Total IncurredClaim Amounts

($000s)Unrepresented Minor Injuries 27,176Unrepresented Non-Minor Injuries 2,652Represented Minor Injuries 30,512Represented Non-Minor Injuries 13,813Total 74,152 $3,180,297* Exposure Counts in Table 8.18 are taken from Table 8.14

The shift of claim exposures from minor to non-minor results in an increase in total incurredclaim amounts of $5,197,000 across all groupings.

The next Product Reform elements considered are the collateral benefits changes and costmovement to Part 7 Benefits affecting the severities of all exposures. The resulting severitiesare shown in Appendix B.3 Table 3e) and produce the following total incurred claim amounts:

Table 8.19

Representation Injury CategoryExposureCounts


Count


($000s)Unrepresented Minor Injuries 27,176Unrepresented Non-Minor Injuries 2,652Represented Minor Injuries 30,512Represented Non-Minor Injuries 13,813Total 74,152 $2,917,397

The result is an estimated decrease in Basic Bodily Injury total incurred claim amounts from thereductions to Special Damages, Past Wage Loss, and Future Care of $262,901,000. Part ofthese savings to Bodily Injury claim amounts will be shifted to Part 7 Benefits as follows:

Table 8.20

Decrease in Bodily Injury Total Incurred Claim Amounts $262,901,000Special Damages, Past Wage Loss and Future Care Costs shifting to Part7 (see Section 10.3)

$179,654,000

Bodily Injury Savings net of shifts to Part 7 $83,246,000

The most significant savings are projected to come from the capping of General Damages forminor injuries. The resulting severities after applying the cap on top of the earlier reductions toSpecial Damages, Past Wage Loss, and Future Care are shown in Appendix B.3 Table 3f) andproduce the following total incurred claim amounts:



Table 8.21

Representation Injury CategoryExposureCounts


Count


($000s)Unrepresented Minor Injuries 27,176Unrepresented Non-Minor Injuries 2,652Represented Minor Injuries 30,512Represented Non-Minor Injuries 13,813Total 74,152 $1,842,081

This represents estimated Basic Bodily Injury savings of $1,075,316,000.

The lower General Damage awards for minor injuries is expected to result in a reduction in thenumber of claim exposures. The reduced exposure counts and total incurred claim amountsare:

Table 8.22



Count


($000s)Unrepresented Minor Injuries 26,331Unrepresented Non-Minor Injuries 2,652Represented Minor Injuries 29,562Represented Non-Minor Injuries 13,813Total 72,358 $1,813,973* Exposure Counts in Table 8.22 are taken from Table 8.15

This reduction in the number of minor injury claim exposures produces estimated Basic BodilyInjury savings of $28,108,000.

The last source of Product Reform savings is the introduction of the CRT. As mentioned it wasassumed unrepresented claim exposures would be unaffected by the CRT’s introduction and sothe number of unrepresented exposure counts and their average cost is unchanged. Forrepresented claim exposures, the majority are expected to go through the CRT while theremaining portion are expected to be above the CRT’s jurisdiction. Using the severities forexposures within and above the CRT’s jurisdiction from earlier, the resulting estimated totalincurred claim amounts are as follows:



Table 8.23

Future Legal Status Injury CategoryExposureCounts*


Count**


($000s)Unrepresented Minor Injuries 26,331CRT Minor Injuries 27,628Over CRT’s Jurisdiction Minor Injuries 1,934Unrepresented Non-Minor Injuries 2,652CRT Non-Minor Injuries 9,484Over CRT’s Jurisdiction Non-Minor Injuries 4,329Total 72,358 $1,700,868* Exposure Counts in Table 8.22 are taken from Table 8.16

** Total Severities per Exposure Count in Table 8.23 are taken from Table 8.12

The estimated savings from the introduction of the CRT are a decrease in total Basic BodilyInjury incurred claim amounts of $113,105,000. There will however be a fee paid by ICBC forevery claim exposure count utilizing the CRT. This fee is expected to be $225, so with anestimated 37,112 claim exposure counts going through the CRT, the total fees would be$8,350,000.

Combining the reductions from each of these steps, in total it is estimated Basic Bodily Injurytotal incurred claim amounts will decrease by $1,474,233,000. After factoring in CRT fees, theestimated decrease is $1,465,883,000. Summaries of the forecasted exposure counts,severities, incurred claim amounts and savings can be seen in Appendix B.1 Tables 1a), 1b), 1c)and 1d) respectively.



9. Basic Bodily Injury Collateral Benefits Costing Models

9.1 PurposeThe purpose of the Basic Bodily Injury Collateral Benefits Costing Model is to identify the impactto fiscal loss year 2019 incurred claim amounts from changes to the priority of payer ofbenefits made effective May 17, 2018. The impact of these changes for fiscal loss year 2020and beyond are captured in the Part 7 costing models discussed in Section 10.

9.2 OverviewCurrently, in the event of an automobile insurance claim, claimants can recover damages froma number of sources as follows:

· Part 7 coverage which provides for Medical Rehabilitation reimbursement towards thecosts of medical care and treatment, Weekly Benefits reimbursement towards claimants’lost wages, disability benefits, and Death Benefits for reimbursement towards the costsof burial and funeral expenses. These benefits are provided on a “First Party” basiswhich means that the injured party applies directly to ICBC for reimbursement of thesecosts from their own automobile insurance policy. An injured party is eligible for thesebenefits regardless of fault;

· Basic Bodily Injury which provides for reimbursement of Medical Rehabilitation22 andWage Loss in excess of that covered by Part 7 in addition to General Damages (for painand suffering) as well as legal costs and disbursements associated with the claim. Thesebenefits are provided on a “Third Party” basis which means that the injured party mustmake a claim against the at-fault driver. The at-fault drivers policy with ICBC will providecoverage of these costs up to the limits of coverage within the policy. Only not-at-faultdrivers will recover through this coverage;

· Non-automobile insurance plans such as employer sponsored benefit plans (or provincialHealth or Workers Compensation plans) may provide for loss of income or other medicalrehabilitation costs similar to those provided by ICBC. These types of plans will providebenefits regardless of fault. These types of benefits are referred to as CollateralBenefits in this report;

· Previously claimants could recover automobile insurance benefits from ICBC in additionto Collateral Benefits from non-automobile insurance plans. Effective May 17, 2018,with the exception of WorkSafeBC and Medical Services Plan, awards for Bodily Injurycoverage will not include such benefits provided to claimants by other insurers.

The foregoing will change as a result of Product Reform as follows:

22 Medical Rehabilitation costs that are reimbursed under the Special Damages and Future Care Heads of Damage

within Basic Bodily Injury.



1. Increased Part 7 Benefits after Product Reform means that for not at-fault claims, somecosts will transfer from Basic Bodily Injury to Part 7 and for at-fault claims Part 7Benefits will increase;

2. Part 7 Benefits will be reduced by Collateral Benefits in certain cases. For the followinghealth care services which have fee limits set out in the insurance regulations, ICBC willbe the first payer: acupuncture, chiropractic, counselling, kinesiology, massage therapy,physiotherapy, and psychology. For other Part 7 Benefits including wage loss,medication costs, and dental services, ICBC will pay only eligible costs in excess of thoseprovided by other insurers;

The impact of these changes is illustrated graphically in the charts below.

In contrast to the other product change savings described throughout this report, these savingsstem from changes affecting fiscal loss year 2019, hence the calculations utilize figuresprojected to fiscal loss year 2019 instead of 2020 as in the other sections. The impact of thesechanges for fiscal year 2020 and beyond are captured in the affected Part 7 Benefits CostingModels covered in Section 10.

Other Costs,$21M

Other Costs,$21M

Portion Related toMedical Costs,

$61MPortion Related to

Medical Costs,$51M

Collateral Benefits No LongerIncluded in BI awards, $10M

$0M

$10M

$20M

$30M

$40M

$50M

$60M

$70M

$80M

$90M

May 17 2018 - March 31 2019Pre-Reform

May 17 2018 - March 31 2019Post-Reform

Basic Special Damages Total Incurred Claim Costs



Due to the interplay of claim payments between Basic Bodily Injury and Part 7 Benefits forcertain Medical Rehabilitation and Wage Loss payments the costing models must consider thetotality of these benefits across Basic Bodily Injury and Part 7 Benefits to estimate the impactof these reforms.

9.3 Collateral Benefits – Special Damages Savings EstimateTo estimate the savings for Special Damages, the projected fiscal loss year 2019 percentage ofTotal Bodily Injury (Basic + Optional) total incurred claim amounts from Special Damages wasestimated following an approach similar to that used in the Allocation Model (refer to AppendixC.1 Tables 2a) through 2e) for calculations). The same approach is then utilized to estimate theforecasted fiscal loss year 2019 percentage of Total Bodily Injury (Basic + Optional) SpecialDamages total incurred claim amounts from Basic only (refer to Appendix C.1 Tables 3a)through 3e) for calculations).

These calculations indicate that Special Damages account for 3% of Total Bodily Injury incurredclaim amounts of which come from Basic Bodily Injury. Since ICBC Part 7 Benefits willbecome firstpayer for certain Medical Rehabilitation benefits as of April 1 2019, the savingsfrom these changes only impact the portion of fiscal loss year 2019 total incurred claimamounts from May 17, 2018 to March 31, 2019. This portion is equal to 318/365 = 87% of thefiscal loss year’s total incurred claim amounts, under the assumption that the losses occur

Basic Past WageLoss, $131M

Basic Past WageLoss, $66M

Collateral BenefitsNo Longer

Included in BIAwards, $65M

$0M

$20M

$40M

$60M

$80M

$100M

$120M

$140M

May 17 2018 - March 31 2019Pre-Reform

May 17 2018 - March 31 2019Post-Reform

Basic Past Wage Loss Total Incurred Claim Costs



uniformly throughout the year.

Using the information derived thus far, the projected Basic Bodily Injury Special Damages totalincurred claim amounts for the period of May 17, 2018 to March 31, 2019 prior to any savingscan be determined:

Table 9.1

(1) Forecast FLY 2019 Total BI Total Incurred Claim Amounts fromICBC’s Claims Costs Analysis

(2) Special Damages Portion 3%(3) Basic portion of Special Damages(4) Portion of Year Affected 87%(5) Basic BI Special Damages Total Incurred Claim Amounts for Period $81,976,000(5) = (1) x (2) x (3) x (4)

To estimate resulting savings, assumptions are made regarding the following:

· The percentage of Special Damages total incurred claim amounts related to medicalcosts;

· The percentage of BC’s population having extended health insurance coverage;· The percentage of treatments covered by extended health insurance coverage.

Based on ICBC historical internal data23 from Guidewire, 75% of Special Damages total incurredclaim amounts are related to medical costs. This is the portion affected by the changes. Next,based on information from the Canadian Life and Health Insurance Association, in 2016 threemillion people in BC were covered by extended health insurance24. This represents 63% of BC’spopulation as of 201625. Reliable data on the total number of treatments claimants receive onaverage and the number covered by extended health insurance coverage is not readilyavailable. Based on ICBC internal analysis, on average claimants receive a total of 40treatments. ICBC’s own employee extended health plan, which covers 10 treatments, was usedas a proxy to determine the number of treatments covered by plans.

Tying these assumptions together, the expected savings for Basic Special Damages totalincurred claim amounts are:

23 Claim exposures which occurred over the period of January 1 2014 to December 31 2017 and have been closed

in Guidewire24

Canadian Life and Health Association, Canadian Life and Health Insurance Facts 2017,http://clhia.uberflip.com/i/878834-canadian-life-and-health-insurance-facts-2017-appendices/3?25

Government of British Columbia, BC Annual Population Estimates,https://www2.gov.bc.ca/gov/content/data/statistics/people-population-community/population/population-estimates



Table 9.2

(1) Basic BI Special Damages Total Incurred Claim Amounts for Period $81,976,000(2) Portion related to Medical Costs (75%) $61,482,000(3) Percentage of Population with Extended Health Insurance Coverage 63%(4) Percentage of Treatments Covered by Extended Health Coverage 25%(5) Expected Savings $9,692,000(5) = (2) x (3) x (4)

9.4 Collateral Benefits – Past Wage Loss Savings EstimateTo estimate the savings for Past Wage Loss, the projected fiscal loss year 2019 percentage ofTotal Bodily Injury (Basic + Optional) incurred claim amounts from Past Wage Loss wasestimated following an approach similar to that used for Special Damages in Section 9.3 (referto Appendix C.2 Tables 2a) through 2e) and 3a) through 3e) for calculations).

The savings estimated in this section pertain only to the portion of fiscal year 2019 from May17, 2018, the date the changes were made effective, to the end date of the fiscal loss yearMarch 31, 2019. The estimate of Basic Bodily Injury Past Wage loss total incurred claimamounts for the affected period prior to any savings is:

Table 9.3

(1) Forecast FLY 2019 Total BI Total Incurred Claim Amounts fromICBC’s Claims Costs Analysis

(2) Past Wage Loss Portion 6%(3) Basic portion of Past Wage Loss(4) Portion of Year Affected 87%(5) Basic BI Past Wage Loss Total Incurred Claim Amounts for Period $131,463,000(5) = (1) x (2) x (3) x (4)

The next steps involve the use of employment income details for B.C. from Statistics Canada26.As seen in Appendix C.2 Table 1c), the gross of tax and net after tax average weekly earningsare calculated based on the percentage of B.C. workers in each of the income levels shown.

To determine the midpoint income level of the $100,000 and over range, information fromeach of the prior income levels in the table were used together with the statistic that the 2016average annual income in B.C. was $42,000. Knowing that the average annual income from theprior income level ranges is $30,353 based on the percent of workers at each income level andusing the midpoint in each range as proxies for the average income at each income level, inorder for the overall annual average income to equal $42,000, the 8% of British Columbians inthe $100,000 and over range must earn $140,331 on average.

26 Statistics Canada. Table 206-0053 - Distribution of employment income of individuals by sex and work activity,

Canada, provinces and selected census metropolitan areas, annual



To explain the calculations, an example using the $30,000 - $39,999 income level is illustratedin detail. The midpoint of this range is $35,000 which equates to average gross weeklyearnings of $35,000/52 = $673. Using EY’s 2016 personal income tax calculator27, a BritishColumbian earning $35,000 in 2016 would have paid $4,792 in taxes or roughly $92/week,resulting in average net weekly earnings of $581.

Next in Table 1d), the amount paid under disability benefits from group plans, Part 7 WeeklyBenefits, and Bodily Injury Past Wage Loss for claimants with and without a disability plan iscalculated for each income level based on the current product prior to Product Reform.Currently, the Part 7 Weekly Benefit is 75% of gross weekly earnings up to $300/week. Theremaining difference between this amount and net weekly earnings could then be recoveredthrough the Bodily Injury Past Wage Loss Head of Damage.

For a non-at-fault claimant with annual income of $35,000 and no group plan, under thecurrent product income loss would be covered as follows:

Table 9.4

AverageGross Weekly

Earnings

Average NetWeekly

Earnings

WeeklyDisability

Benefits fromGroup Plan

WeeklyBenefits fromICBC Part 7

Benefits

Weekly PastWage Lossfrom Bodily

Injury

ICBC TotalWeekly PastWage Loss

(1) (2) (3) (4) (5) (6)$673 $581 $0 $300 $281 $581

(4) = minimum of 75% x $673 and $300 = min($505, $300) = $300(5) = (2) – (4)(6) = (4) + (5)

For claimants with a group plan, a report prepared by Deloitte for ICBC28 found that in Canada,disability benefits from group plans cover 67% of gross weekly earnings on average. Part 7Weekly Benefits currently pay 75% of gross weekly earnings less amounts paid by a claimant’sgroup plan, up to $300/week. For a claimant with a group plan and annual income of $35,000,under the current product income loss would be covered as follows:

27https://www.ey.com/ca/en/services/tax/tax-calculators-2016-personal-tax

28 ICBC Deloitte Jurisdictional Scan – Research and Analysis.pdf



Table 9.5

AverageGross Weekly

Earnings

Average NetWeekly

Earnings

WeeklyDisability



Benefits


Injury


(1) (2) (3) (4) (5) (6)$673 $581 $451 $54 $527 $581

(3) = (1) x 67%(4) = minimum of 75% x $673 - $451 and $300 = min($505-$451, $300) = $54(5) = (2) – (4)(6) = (4) + (5)

Across all income levels, the average weekly amount from Bodily Injury Past Wage Loss is $417for claimants without group plans and $585 for claimants with a group plan as shown inAppendix C.2 Table 1d). It should be noted that prior to May 17th 2018, claimants could receiveup to their net weekly earnings from ICBC between Weekly Benefits and Past Wage Loss inaddition to the amounts they receive through their group plans.

As of April 1 2019, the limit on the Part 7 Benefits Weekly Benefits will increase to $740/weekwhich will result in a shift of costs between Bodily Injury and Part 7 Benefits. The resultingimpacts from this change for fiscal loss year 2020 are discussed in Section 10.4 WeeklyBenefits.

For the savings specific to the collateral benefits changes being discussed here, only the periodof May 17, 2018 to March 31, 2019 during which time the Weekly Benefit limit remains at$300 per week is considered. As such, the collateral benefit changes will have no impact on thePart 7 Benefit Weekly Benefits amounts for claimants with and without group plans. Forclaimants without group plans, the average weekly amount from Bodily injury Past Wage Lossdoes not change either, it remains at $417 on average. However, claimants’ amountsrecoverable through Bodily Injury Past Wage Loss will now factor in their recovery from thegroup disability plan. This means the payouts from Bodily Injury Past Wage Loss are calculatedas average net weekly earnings minus payments from group plan disability benefits and ICBCPart 7 Weekly Benefits, where positive. For example, the claimant with a group plan and annualincome of $35,000 would recover the following after considering the collateral benefitschanges:



Table 9.6

AverageGross Weekly

Earnings

Average NetWeekly

Earnings

WeeklyDisability



Benefits


Injury


(1) (2) (3) (4) (5) (6)$673 $581 $451 $54 $76 $130

(3) = (1) x 67%(4) = minimum of 75% x $673 - $451 and $300 = min($505-$451, $300) = $54(5) = (2) – (3) - (4) if greater than 0(6) = (4) + (5)

Across all income levels, the average weekly amount from Bodily Injury Past Wage Loss is $417for claimants without group plans and $52 for claimants with a group plan as shown inAppendix C.2 Table 1e).

From Statistics Canada, there were 2.83 million people in B.C. with employment income in201629. Based on information from the Canadian Life and Health Insurance Association, therewere 1.3 million people in BC who had disability benefits coverage through a group plan30,which is equal to 46% of the people with employment income. As seen in Appendix C.2 Table1b), using this fact and the average weekly amounts for Bodily Injury Past Wage Loss theoverall percentage savings are:

Table 9.7

Weekly Bodily Injury Past Wage Loss Without A Group Plan With A Group PlanWeightedAverage

% of claimants 54% 46%Current Product $417 $585 $494Period of May 17 2018 – April 1 2019 $417 $52 $249Percentage Savings 50%

Applying this saving percentage to the Basic Past Wage Loss incurred for the affected period of$131,463,000 determined above, the savings to Basic Bodily Injury are $65,164,000.

29 Statistics Canada. Table 206-0053 - Distribution of employment income of individuals by sex and work activity,

Canada, provinces and selected census metropolitan areas, annual30

Canadian Life and Health Association, Canadian Life and Health Insurance Facts 2017,http://clhia.uberflip.com/i/878834-canadian-life-and-health-insurance-facts-2017-appendices/3?



10. Part 7 Benefits Product Reform Costing Models

10.1 PurposeThe purpose of the Part 7 Benefits Product Reform Costing Models are to calculate theprojected future fiscal loss year 2020 Part 7 Benefits claims costs after considering theProduct Reforms affecting them, and to identify the resulting shifts in costs between BasicBodily Injury and Part 7 Benefits. Given the Medical Rehabilitation benefit limit wasretrospectively increased January 1 2018, the impact of this change on fiscal loss year 2019 isalso estimated.

10.2 OverviewAs part of the product changes, Part 7 Benefits are being significantly increased. There aremultiple types of benefits which help cover claimants’ costs regardless of who is at-faultincluding:

· Medical Rehabilitation reimbursement towards the costs of medical care and treatment;· Weekly Benefits reimbursement towards claimants’ lost wages;· Death Benefits for reimbursement towards the costs of burial and funeral expenses.

For treatments such as physiotherapy, ICBC currently pays 1991 rates31 and claimants pay theremaining cost of the treatments out of pocket. In consultation with medical service theamounts ICBC will reimburse for these treatments have been updated and are now significantlyhigher than the prior levels.

For claimants who are not-at-fault, they also have access to Bodily Injury coverage throughwhich they can seek to recover the portion of their medical costs and lost wages not covered byPart 7 Benefits. Given Bodily Injury and Part 7 Benefits coverage cover separate parts ofclaimants’ losses, the costing models generally consider the combined costs paid for eachbenefit under the current product and then estimate first, how much of the total benefits will bepaid under the increased Part 7 Benefits, and second the portion covered by Basic BodilyInjury.

It should be noted that ICBC’s claims costs analysis for Part 7 Benefits coverages are performedon claim counts as opposed to claim exposure counts for Bodily Injury. As such, claim countsare used throughout the Part 7 Benefits costing models.

The following charts illustrate how Medical Rehabilitation benefits are paid before and afterProduct Reform.

31https://www.icbc.com/about-icbc/changing-auto-insurance-BC/Documents/Changes-to-auto-insurance-in-BC-

factsheet.pdf



AB MR - At-Fault, $40M

AB MR - At-Fault,$188M

AB MR - Non-at-Fault, $172M

AB MR - Non-at-Fault, $329MBI Special Damages

& Future Care,$188M

BI SD & Future Care, $31M

$0M

$100M

$200M

$300M

$400M

$500M

$600M



Sources of Payment for Medical Related Costs

AB WB - At-Fault, $8MAB WB - At-Fault, $26M



BI Past Wage Loss,$196M BI Past Wage Loss,

$87M

Collateral Benefits(no longer paid by

ICBC), $86M

$0M

$50M

$100M

$150M

$200M

$250M

$300M



Sources of Payment for Past Wage Loss



10.3 Medical RehabilitationThe overall limit for Medical Rehabilitation was doubled from $150,000 to $300,000 effectiveJanuary 1, 2018, however the retroactive change to the limit does not include increasedpayments for treatment fees which will be increased as of April 1, 2019. Medical Rehabilitationbenefits are available to anyone injured in a crash, regardless of fault, for reasonable andnecessary medical and rehabilitation services for each insured person injured.

Impact on Fiscal Loss Year 2019 Claims Costs

Since the Medical Rehabilitaton benefit limit was increased as of January 1, 2018 this impactscurrent claims costs in fiscal loss year 2019. Whereas non-at-fault claimants who reach theMedical Rehabilitation limit can seek to recover the additional costs of their care and treatmentthrough Bodily Injury, at-fault claimants do not have this avenue available to them thus totalbenefit payments to them from ICBC are capped at the limit. The number of at-fault claimsreaching the previous limit of $150,000 over the 10 most recent fiscal years was reviewed andon average there were 12 such claimants per year. It was thus assumed there would be 12claimants for fiscal loss year 2019 who would have reached the $150,000 limit. It wasjudgmentally assumed these claimants’ would also reach the new $300,000 limit resulting inthe following estimate of increased costs for the year:

$3M

$5M

$0M

$1M

$2M

$3M

$4M

$5M

$6M



Death Benefits - Incurred Claim Amounts



Number of at-fault claims above previous limit in FLY 2019 12Additional cost per claimant $150,000Total additional costs $1,800,000

Impact on Fiscal Loss Year 2020 Claims Costs

Previously, non-at-fault injured persons who had treatment costs capped under the prior feeschedule and those who had their total Medical Rehabilitation costs reach the $150,000 limitmay have made Bodily Injury claims to recover the uncovered portion of their treatment costs.These excess Medical Rehabilitation costs would have been paid under the heads of damage ofSpecial Damages or Future Care costs. As a result of the updated treatment fee schedule andthe increased Medical Rehabilitation limit, fewer claimants are expected to have uncoveredtreatment and care costs and the uncovered portion of costs in such cases are expected to bemuch less. This means the costs for treatments that were previously paid through Bodily InjurySpecial Damages or Future Care will shift to the Part 7 Medical Rehabilitation coverage.

Since Medical Rehabilitation costs are partly covered by Part 7 Benefits (costs up to the newfee schedule and limit) and Bodily Injury (costs above the limit) for non-at-fault injured persons,to determine the impact of the change to the limit, the total incurred claim amounts acrossboth coverages was first estimated. Then, the proportion expected to be provided by eachcoverage was estimated.

The first step in this process was to review the Part 7 Medical Rehabilitation claims closed inthe ten most recent fiscal years and identify what portion were non-at-fault claims. Since at-fault claimants have no access to Bodily Injury coverage, claims which have Part 7 Benefit andBodily Injury components are non-at-fault claimants, while Part 7 Benefit only claims are for at-fault claimants.

While Medical Rehabilitation claims can take a long time to close, the data source thisinformation was pulled from only keeps information for claims closed in the last ten years. Asseen in Appendix D.1 Table 2a), since there are no apparent trends in the percentages byclosed year, ten years was deemed to be sufficient for these purposes. The percentage ofclaims which are non-at-fault was selected to be 78%. This percentage is used in Appendix D.1Table 1e) to split the estimate of the number of Medical Rehabilitation claims from ICBC’sclaims costs analysis into non-at-fault and at-fault claims as follows:

FLY 2020 Forecasted Claim Counts: 62,272Selected Percentage Non-at-Fault: 78%



Table 10.1

FLY 2020 Non-at-Fault Claim Counts

FLY 2020 At FaultClaim Counts

FLY 2020 Total ClaimCounts

48,671 13,602 62,272

The same exercise was then performed for total incurred claim amounts in Appendix D.1 Table2b) with 82% of total incurred claim amounts selected as the percentage from non-at-faultclaims. The total incurred claim amounts in Table 2b) include loss payments as well as expensepayments such as those for adjusting the losses. Since the loss adjusting expenses32 should notbe included when determining the combined Part 7 Benefits and Bodily Injury medical relatedincurred claim amounts, in Table 2c) the percentage of total incurred claim amounts which arestrictly loss payments are reviewed and selections are made for non-at-fault and at-fault claimsrespectively. For non-at-fault, the percentage of total incurred claim amounts which are losspayments is selected to be 92%, while for at-fault the selected percentage is 95%.

These selected percentages from Tables 2b) and 2c) are used in Table 1e) to separate theestimates of total incurred claim amounts for fiscal loss year 2020 from ICBC’s claims costsanalysis into non-at-fault and at-fault portions excluding expenses.

FLY 2020 Forecasted Total Incurred Claim Amounts: $229,734,000Selected Percentage Non-At-Fault: 82%Loss Payments as Percentage of Total Incurred Claim Amountsfor Non-At-Fault:

92%

Loss Payments as Percentage of Total Incurred Claim Amountsfor At-Fault:

95%

Table 10.2

Non-At-Fault At-Fault TotalTotal Incurred Claim Amounts $187,918,000 $41,816,000 $229,734,000Payments for Losses $172,022,000 $39,921,000 $211,943,000Payments for Expenses $15,896,000 $1,895,000 $17,791,000

This covers the portion of Medical Rehabilitation from Part 7 Benefits, next the portion coveredthrough Bodily Injury is estimated.

From the Costing Model output discussed in Section 8, the fiscal loss year 2020 total severityper exposure count for Special Damages and Future Care is determined (see Appendix D.1

32 Adjusting expenses are not included in the benefit limit and hence these were not considered in these

calculations.



Table 1f) for calculation). Multiplying the combined severity by the number of claim exposurecounts gives an estimate of the total incurred claim amounts from the Heads of Damage asfollows:

Table 10.3

(1) (2) (3) (4) (5)

SpecialDamagesSeverity

Future CareSeverity

CombinedSeverity

Total ClaimExposure

Counts33

Combined TotalIncurred Claim

Amounts$1,387 $1,936 $3,324 75,378 $250,527,000

(3) = (1) + (2)(5) = (3) x (4)

From Section 9.3 where Collateral Benefits changes relating to Special Damages werediscussed, it was estimated that 75% of Special Damage incurred claim amounts are related toMedical Rehabilitation costs. The same assumption is made for Future Care incurred claimamounts. As such, the Special Damages and Future Care combined total incurred claimamounts relating to Medical Rehabilitation calculated in Table 1f) are:

Total Future Care and Special Damages Incurred ClaimAmounts:

$250,527,000

Portion Related to Medical Rehabilitation: 75%Medical Rehabilitation Related Total Incurred Claim Amounts: $187,895,000

The results are then brought together in Appendix D.1 Table 1a), where this amount of$187,895,000 for medical related costs from BI is added to the claim amounts from Part 7Benefits for non-at-fault claimants to obtain an estimate for the total combined MedicalRehabilitation payments:

Medical Costs Related Portion of Special Damages and Future Care: $187,895,000Medical Rehabilitation Paid Loss Amounts (excluding Expenses): $172,022,000Total $359,917,000

Given the increase in the Part 7 Medical Rehabilitation limit to $300,000, the next steps are toidentify what portion of the total Medical Rehabilitation related incurred claim amounts will becovered by Medical Rehabilitation benefits and what portion will be covered through BodilyInjury after Product Reform.

In Appendix D.1 Table 3a), the Medical Rehabilitation, Bodily Injury Special Damages, and

33 This includes Out of Province claims since these claimants would receive the higher of ICBC’s coverage or

coverage from their own province.



Bodily Injury Future Care paid loss amounts (excluding expenses) are added together for allMedical Rehabilitation claims closed in the ten most recent fiscal years whose Bodily Injurycomponents are also closed. The sum of the paid loss amounts (excluding expenses) is referredto as Total Medical Unlimited since this captures the portion of non-at-fault claimants’ medicalrelated costs below the limit and above the limit. The sum is then recalculated after cappingindividual claimants’ Total Medical payments at the new limit of $300,000.

Unlimited and limited severities are calculated by dividing the respective total paid lossamounts (excluding expenses) by the number of claims, and ratios of the limited severities tounlimited severities are calculated in column (6) of the table for each closed year. This ratio isan estimate of the portion which will be covered by Part 7 Medical Rehabilitation since itreflects the portion of Total Medical payments below the $300,000 limit. Given the observableincrease in the ratio over the three latest fiscal years and the fact the ratio will be applied tofiscal loss year 2020 estimates, to be more responsive to recent results a ratio of 0.94 wasselected based on the average of the three latest fiscal years.

In addition to the change in the average cost of Medical Rehabilitation claims, the entirepackage of reforms is expected to impact the number of claims. For non-at-fault claimants, itwas assumed that there will be a reduction in the number of Medical Rehabilitation claims in thefirst year following reform consistent with the percentage reduction for Bodily Injury claimexposures of 2.42%. For at-fault claims, it was judgmentally assumed the number of claimswould double as a result of higher utilization by injured at-fault drivers of significantly enhancedbenefits, since previously some of these drivers may not have been able to afford the necessarymedical care or leave from work without access to the additional benefits from Bodily Injurycoverage.

Bringing together the changes to the cost of Medical Rehabilitation claims and the number ofthem, the estimates after Product Reform as seen in Appendix D.1 Table 1g) are as follows:

Table 10.4

FLY 2020 CWA Claim Counts Non-at- Fault At-Fault TotalPrior to Product Reform* 48,671 13,602 62,272% change in first year -2.42% 100%Resulting claim counts 47,493 27,203 74,696* Table 10.4 Claim Counts prior to Product Reform are taken Table 10.1



Table 10.5

FLY 2020 SeverityPrior to Product ChangeNon-at-Fault Unlimited Total Medical paid loss amounts(excluding expenses)

$359,917,000

Non-at-Fault Claim Counts 48,671Non-at-Fault Unlimited Severity (excluding expenses) $7,395Adjusted for Product ChangeSeverity Adjustment Factor 0.94Resulting Non-at-Fault Limited Severity (excluding expenses) $6,920

These estimates of the number of claims and their severity are used to obtain the total incurredclaim amounts after Product Reform in Appendix D.1 Table 1b). Here are the key results fromthe table:

Table 10.6

(1) (2) (3) (4)

After ProductChange Claim Counts

Severity(excl. expenses)

Total Paid LossAmounts ($000s)(excl. expenses)


($000s)(incl. expenses)

Non-at-fault 47,493 $6,920 $328,643 $344,155At-fault 27,203 $6,920 $188,241 $197,125Total 74,696 $516,884 $541,280(2) – At-fault severity assumed to be the same as non-at-fault following product change since benefits availableregardless of fault(3) = (1) x (2)(4) – Expenses are added to the amounts in (3) based on the average expenses per claim underlying the currentproduct from Table 1a)

For comparison, the key results from Appendix D.1 Table 1a) for the current product are:



Table 10.7

Current Product Claim Counts

Medical RehabilitationTotal Paid Loss Amounts

($000s)(excl. expenses)

Medical RehabilitationTotal Incurred Claim

Amounts ($000s)(incl. expenses)

Non-at fault 48,671 $172,022 $187,918At-fault 13,602 $39,921 $41,816Total 62,272 $211,943 $229,734

From these results, one can observe that the total incurred claim amounts for MedicalRehabilitation are estimated to increase from $229,734,000 under the current product to$541,280,000 after reform, an increase of $311,546,000.

Another observable impact is the shift in the sources of the medical related paid loss amounts(excluding expenses) as seen in Appendix D.1 Table 1d). Prior to reform, the Total MedicalUnlimited paid loss amounts (excluding expenses) are $399,838,000 distributed as follows:

Table 10.8

At-fault MedicalRehabilitation

Non-at-fault MedicalRehabilitation

Bodily Injury (SpecialDamages and Future

Care) Total$39,921,000 $172,022,000 $187,895,000 $399,838,000

Following Product Reform, the portion of Total Medical Unlimited claim amounts for non-at-fault claimants above the $300,000 limit, i.e., which will remain in Bodily Injury, is equal to:

Table 10.9

Prior to Product ReformNon-at-Fault Unlimited TotalMedical Paid Loss Amounts

(excluding expenses)

After Product ReformNon-at-Fault Medical RehabilitationTotal Paid Loss Amounts (excluding

expenses)

Remainder NotCovered By Medical

Rehabilitation$359,917,000 $328,643,000 $31,274,000

This results in the following distribution post reform:



Table 10.10

At-fault MedicalRehabilitation

Non-at-fault MedicalRehabilitation Bodily Injury Total

$188,241,000 $328,643,000 $31,274,000 $548,157,000

Finally, returning to the combined total incurred claim amounts from Special Damages andFuture Care, as shown in Appendix D.1 1f) in total these are estimated to be $250,527,000. Ofthis amount, it was estimated that under the current product, 75% or $187,895,000 of thisamount was related to medical costs. Following Product Reform, these Heads of Damage areonly expected to cover $31,274,000 of medical related costs, representing a shift in costsfrom Bodily Injury to Part 7 Benefits of:

(1) Current Product Covered by BI: $187,895,000 From Table 10.8(2) Post Reform Covered by BI: $31,274,000 From Table 10.9

(3) = (1) – (2) Shift from BI to Part 7 $156,621,000

This shift of $156,621,000 represents 63% of the total incurred claim amounts for SpecialDamages and Future Care.

10.4 Weekly Benefits

Wage loss Part 7 Benefits, referred to as Weekly Benefits (WB), are increasing from a maximumof $300 per week to a maximum of $740 per week effective April 1 2019. Claimants’ benefitsare calculated as 75% of their gross weekly earnings less any disability benefits provided by agroup disability plan, up to the weekly limit. The current maximum benefit of $300 per week iswell below the weekly earnings of many injured customers leading those not-at-faultto pursuethe shortfall through the Bodily Injury Past Wage Loss Head of Damage. With the increase inthe maximum weekly benefit to $740, costs are expected to shift from the Bodily Injurycoverage to the Weekly Benefits coverage.

Similar to Part 7 Benefits – Medical Rehabilitation (MR), since part of the costs are currentlypaid through Bodily Injury and part through Part 7 Benefits, the combined cost between the twocoverages currently must be reviewed before estimating what proportion will shift. Only non-at-fault claimants have access to Bodily Injury coverage so these claims are the focus whenconsidering the total costs between the coverages.

With that in mind, Part 7 Weekly Benefits claims from the ten most recent fiscal loss years arefirst reviewed to identify what portion were non-at-fault claims. This review included open andCompleted With Amount (CWA) claims34. As seen in Appendix D.2 Table 3a), the selected

34 Due to the expected increase in Part 7 Benefits frequency we include open and CWA claims in this analysis to

improve the accuracy of the forecasts in this element.



percentage of Weekly Benefit claims from non-at-fault claimants is shown to be 81%. Theselection of 81% is based on the observed percentage in fiscal loss year 2017 for the followingreasons:

i. Employment Insurance (EI) reduced the waiting period from 2 weeks to 1 weekeffective January 1 2017. The Weekly Benefits frequency dropped by half in fiscalloss years 2017 and 2018 after the EI waiting period was dropped. Due to thissignificant shift in Weekly Benefits frequency, it may no longer be appropriate toassume past loss year patterns when allocating future fiscal loss year claim countsinto non-at-fault and at-fault claimants.

ii. There are only two periods for review after the EI waiting period change, fiscal lossyears 2017 and 2018. Fiscal loss year 2018 was immature at the time of analysistherefore we have relied upon fiscal loss year 2017.

This percentage is used in Appendix D.2 Table 1c) to split the estimated number of WeeklyBenefit claims for fiscal loss year 2020 from ICBC’s claims costs analysis into non-at-fault andat-fault as follows:

FLY 2020 Forecasted CWA Counts: 3,397Selected Percentage Non-at-Fault: 81%

Table 10.11


FLY 2020 At-FaultClaim Counts


2,750 647 3,397

It was assumed non-at-fault claimants and at-fault claimants have similar income levels, so theirclaims for Weekly Benefits would have the same average cost or severity. The estimate of fiscalloss year 2020 total incurred claim amounts from ICBC’s claims costs analysis is $40,551,000implying a severity of $11,938 across the 3,397 claim counts. Knowing the severity of claims,the estimated total incurred claim amounts from non-at-fault and at-fault claims are:

Table 10.12

Non-at-Fault At-Fault

Severity Claim CountsTotal IncurredClaim Amounts Claim Counts


$11,938 2,750 $32,830,000 647 $7,721,000

When reviewing the combined costs of wage loss across Part 7 Benefits and Bodily Injury, onlythe amounts paid out as claimant benefits should be considered and not any adjusting expensesassociated with the claims so in Appendix D.2 Table 3b), the percentage of Weekly Benefitstotal incurred claim amounts for paid losses, i.e. excluding expenses and recoveries isreviewed. The selected percentage is slightly above 100% (100% when rounded) implying there



are typically some recoveries on Weekly Benefits claims which act to slightly decrease the totalamount ICBC ultimately pays. Applying the percentage to the non-at-fault and at-fault totalincurred claim amounts above, the paid loss amounts are summarized in rows (9) and (10) ofAppendix D.2 Table 1c) as follows:

Table 10.13

Non-at-Fault PaidLoss Amounts

At-Fault Paid LossAmounts

$32,907,000 $7,739,000

These amounts cover the portion of total wage loss paid through Part 7 Benefits, the portionfrom Bodily Injury is considered next.

From the Costing Model output discussed in Section 8, the fiscal loss year 2020 total severityper exposure count for Past Wage Loss is determined (see Appendix D.2 Table 1d) forcalculation). Multiplying the severity by the number of Bodily Injury claim exposure counts givesthe following estimate of wage loss paid loss amounts from Bodily Injury:

Table 10.14

Past Wage Loss Severity BI Claim Exposure Counts Total Paid Loss Amounts$2,599 75,378 $195,886,000

In Table 1a) of Appendix D.2, the paid loss amounts from Weekly Benefits and Past Wage Lossare added producing a total of $228,793,000 estimated to be paid to non-at-fault claimants infiscal loss year 2020 for wage loss under the current product. To estimate the impact ofProduct Reform, the employment income details for BC used in Section 9.4 Collateral Benefits –Past Wage Loss are again utilized to compare the paid loss amounts under the prior $300 perweek limit to the new $740 per week limit. To illustrate the calculations, an example using the$30,000 - $39,999 income level is provided.

The midpoint of this income level range is $35,000 which is used as a proxy for the averagesalary in the range. As in the Collateral Benefits section, a claimant with this level of incomewould have gross weekly earnings of $673 and net weekly earnings of $581 as determined inAppendix D.2 Table 2b). Next in Table 2c), the weekly wage loss payouts under the currentproduct are calculated. For claimants without a group disability plan, income loss would becovered as follows for a claimant in the $30,000 - $39,999 income range :



Table 10.15

AverageGross Weekly

Earnings

Average NetWeekly

Earnings

WeeklyDisability



Benefits


Injury


(1) (2) (3) (4) (5) (6)$673 $581 $0 $300 $281 $581


Group plans are assumed to cover 67% of gross weekly earnings based on the Deloitte reportprepared for ICBC as mentioned in Section 9.4., meaning a claimant with a group plan andannual income of $35,000 would receive the following amounts under the current product:

Table 10.16

AverageGross Weekly

Earnings

Average NetWeekly

Earnings

DisabilityBenefits from

Group Plan


Benefits

Weekly PastWage Lossfrom ICBC

Bodily Injury


(1) (2) (3) (4) (5) (6)$673 $581 $451 $54 $527 $581

(3) = (1) x 67%(4) = minimum of 75% x $673 - $451 and $300 = min($505-$451, $300) = $54(5) = (2) – (4)(6) = (4) + (5)

It should be noted that currently claimants receive up to their net weekly earnings from ICBCbetween Weekly Benefits and Past Wage Loss in addition to the amounts they receive throughtheir group plans.

As shown in Appendix D.2 Table 2c), across all income levels, the following amounts arerecovered on average under the current product:

Table 10.17

Without a Group Plan With a Group PlanPart 7 Weekly Benefits $233 $65BI Past Wage Loss $417 $585Total Wage Loss $650 $650

With the weekly limit increased to $740 for Weekly Benefits, claimants without group plans willreceive the same amount in total but much more of it will come from Weekly Benefits than



under the current product. Appendix D.2 Table 2d) shows the calculations for all income levelsafter considering Product Reform. For our example, the claimant with annual income of$35,000 would receive:

Table 10.18

AverageGross Weekly

Earnings

Average NetWeekly

Earnings

WeeklyDisability



Benefits


Injury


(1) (2) (3) (4) (5) (6)$673 $581 $0 $505 $76 $581


Whereas their Weekly Benefits were previously capped by the $300 limit, they now receive$505 per week through Part 7 Weekly Benefits and only $76 per week would be pursuablethrough Bodily Injury.

For claimants with group plans, their amounts recoverable through BI Past Wage Loss will nowfactor in their recovery from the group disability plan. This results in the following for theclaimant with annual income of $35,000:

Table 10.19

AverageGross Weekly

Earnings

Average NetWeekly

Earnings

WeeklyDisability



Benefits


Injury


(1) (2) (3) (4) (5) (6)$673 $581 $451 $54 $76 $130

(3) = (1) x 67%(4) = minimum of 75% x $673 - $451 and $740 = min($505-$451, $740) = $54(5) = (2) – (3) - (4) if greater than 0(6) = (4) + (5)

As shown in Appendix D.2 Table 2d), across all income levels, the following amounts arerecovered on average after Product Reform:



Table 10.20

Without a Group Plan With a Group PlanPart 7 Weekly Benefits $434 $65BI Past Wage Loss $215 $52Total Wage Loss $650 $117

From Section 9.4, it was estimated that 46% of British Columbians have coverage from groupdisability plans. Using this fact, Appendix D.2 Table 2a) compares the change in the overallaverage weekly payouts before and after Product Reform for Part 7 Weekly Benefits. Theresults are:

Table 10.21

Part 7 Weekly Benefits Average PayoutWithout a Group Plan With a Group Plan Weighted Average

% of Claimants 46% 54%Current Product* $233 $65 $156After Product Change** $434 $65 $265* Table 10.21 Current Product Weekly Benefits Average Payouts taken from Table 10.17

** Table 10.21 After Product Change Weekly Benefits Average Payouts taken from Table 10.20

After Product Reform the weighted average Weekly Benefits payouts are estimated to increaseby a factor of 1.70. While this tells us a greater portion will come from Weekly Benefits underthe new product, comparing ICBC’s total wage payouts before and after product change, intotal the costs to ICBC are expected to decrease by a factor of 0.62 since ICBC will only pay BIPast Wage Loss in excess of the claimants’ group plans.

Table 10.22

Total Wage Loss Average Payout (Part 7 WB + BI PWL)Without a Group Plan With a Group Plan Weighted Average

% of Claimants 46% 54%Current Product* $650 $650 $650After Product Change** $650 $117 $405* Table 10.22 Current Product Total Wage Loss Average Payouts taken from Table 10.17

** Table 10.22 After Product Change Total Wage Loss Average Payouts taken from Table 10.20

The entire package of reforms is expected to impact the number of claims in addition to theircosts. It was assumed there would be no change to the number of non-at-fault claims. For at-fault claims, it was judgmentally assumed these would double given the significance of theincrease to $740 per week. With these assumptions, Appendix D.2 Table 1e) calculates thenumber of Weekly Benefits claims as:



Table 10.23


FLY 2020 At-FaultClaim Counts


2,750 1,293 4,043

Under the current product, the estimates of Weekly Benefits paid loss amounts from earlierwere $32,907,000 for non-at-fault claimants and $7,739,000 for at-fault claimants. As shownin Appendix D.2 Table 1e), applying the factor of 1.70 determined above, and accounting forthe doubling in the number of at-fault claim counts, the total paid loss amounts following theincrease in limit are expected to increase to:

Table 10.24

Non-at-Fault PaidLoss Amounts

At-Fault Paid LossAmounts Total

$55,940,000 $26,310,000 $82,250,000

Also from earlier, the combined paid loss amounts from Weekly Benefits and Past Wage Lossfor non-at-fault claimants under the current product totaled $228,793,000. After ProductReform, this amount is expected to decrease by the factor of 0.62 calculated above, resultingin combined paid loss amounts of $142,550,000 after Product Reform. As shown in AppendixD.2 Table 1b), from this total and the estimated portion for Weekly Benefits of $55,940,000,the estimate of BI Past Wage paid loss amounts can be backed out as follows:

Table 10.25

Combined Wage LossNon-at-Fault

Paid Loss Amounts

Part 7 BenefitsNon-at-Fault

Weekly Benefits

Bodily InjuryNon-at-Fault

Past Wage Loss$142,550,000 $55,940,000 $86,611,000

Finally, as seen in Appendix D.2 Tables 1a) and 1b), the resulting estimates of total incurredclaim amounts breakdown as follows:



Table 10.26

Current Product ($000s)

CWA ClaimCounts

WBTotal IncurredClaim Amounts

WBPaid LossAmounts

BI Past WageLoss

Paid LossAmounts

Total WageLoss Paid

LossAmounts

Non-at fault 2,750 $32,830 $32,907 $195,886 $228,793At-fault 647 $7,721 $7,739 $0 $7,739Total 3,397 $40,551 $40,645 $195,886 $236,532

Table 10.27

After Product Change ($000s)

CWA ClaimCounts

WBTotal IncurredClaim Amounts

WBPaid LossAmounts

BI Past WageLoss

Paid LossAmounts

Total WageLoss Paid

LossAmounts

Non-at fault 2,750 $55,863 $55,940 $86,611 $142,550At-fault 1,293 $26,274 $26,310 $0 $26,310Total 4,043 $82,138 $82,250 $86,611 $168,861

From this, it can be seen the Weekly Benefits total incurred claim amounts are expected toincrease by just more than double from $40,551,000 to $82,138,000. As a result of thechanges to the weekly limit and to Collateral Benefits, BI Past Wage Loss paid claim amountsfor wage loss are expected to decrease by $109,276,000, a reduction of 56%.

10.5 Death Benefits

If an insured person is killed in a motor vehicle crash, the victim’s surviving spouse and/ordependents may receive certain benefits. These include reimbursement towards the costs ofburial and funeral expenses, known as Funeral Benefits, Death of a Dependent Child Benefits ifthe victim is a dependent child, or Survivor Benefits if the deceased is survived by other familymembers. ICBC’s total incurred loss amounts for these benefits are expected to increase withthe simplification and update of the benefit levels effective April 1 2019.

The Funeral Benefit which is currently $2,500 will be increased to $7,500. All Death Benefitclaims will receive the new higher benefit, so the impact of this change is a $5,000 increase inbenefits for every future Death Benefit claim.

Currently, benefits for the death of a dependent child vary based on the child’s age. This will be



simplified to pay $3,000 for the death of a dependent child under the age of 19, an increasefrom the current levels of $500 for children aged 0-4 years, $1,000 for those aged 5-9 years,and $1,500 for children aged 10-18 years. In order to calculate the overall impact of thesechanges, an estimate of the probability that a claim for death benefits would involve adependent child is required. In Appendix D.3 Table 1c), Statistics Canada population data forBritish Columbia35 is used to determine the number of children in each age group as apercentage of the province’s total population as follows:

Table 10.28

Age Group Population Percentage of Total0-4 years 220,625 5%5-9 years 236,900 5%10-18 years 441,044 9%BC Total for All Age Groups 4,648,055 100%

Making the simplifying assumption that the province’s population is equally likely to be thevictim of a motor vehicle crash regardless of age, the impact of the changes to the death of adependent child benefit are the following:

Table 10.29

Age Group

CurrentBenefitLevel

NewBenefitLevel

Increaseto

BenefitBenefit

Probability

OverallExpected

ImpactDependent aged 0-4 years $500 $3,000 $2,500 5% $119Dependent aged 5-9 years $1,000 $3,000 $2,000 5% $102Dependent aged 10-18 years $1,500 $3,000 $1,500 9% $142Total $363

A similar approach is followed to determine the probability that a claim for Death Benefitswould involve Survivor Benefits in Appendix D.3 Table 1d). These benefits are also beingsimplified from currently paying $20,080 if the survivor is the lower wage earner in thehousehold or $17,580 if they are the higher wage earner, to $30,000 regardless of their statusin the household. Survivor Benefits for dependent children are also increasing from an averageof $4,64036 for each dependent child to $6,000 for each. As with the death of a dependentchild, the probability that a death claim involves a survivor from these categories must be

35 Statistics Canada. Table 051-0001 - Estimates of population, by age group and sex for July 1, Canada, provinces

and territories, annual36

https://www.icbc.com/autoplan/Documents/autoplan-insurance-brochure.pdf



estimated.

Using data from the 2016 Census37, the marital status of BC’s population is 49% married orliving common law (referred to simply as married in future references). Again making thesimplifying assumption that the overall population is representative of the probability of beinginvolved in a fatal motor vehicle crash, there is a 49% probability the victim in the death benefitclaim would have a surviving spouse. Next, the assumption was made that it was equally likelythe survivor is the lower or higher wage earner in the household, so half of the marriedpopulation, or 49% x 50% = 25% (rounding applied) of the overall population is the lower earnerof their household, and 25% the higher earner of their household.

Finally, the probability the claim involves surviving dependents is estimated. From the 2016Census data, there were 4,560,240 persons in private households in the province in 2016. Thisis broken down by size of household as follows:

Table 10.30

Private household size Number of Households Total Number of Persons1 person 541,910 541,9102 persons 663,770 1,327,5403 persons 277,690 833,0704 persons 243,125 972,5005 or more persons 155,470 885,220Total 1,881,965 4,560,240

Knowing that the total number of persons in private households in the province was 4,560,240,the total number of persons in private households of size 5 or more was deduced from thenumber of persons in households with 4 or fewer persons. The households with 1 person wereassumed to have no dependents. For households with more than 1 person, the average numberof persons per household was calculated from the total number of persons in households withmore than 1 person (1,327,540 + 833,070 + 972,500 + 885,200) divided by the number ofhouseholds with more than 1 person (663,770 + 277,690 + 243,125 + 155,470). Thisproduced an average of 3 persons per household for households with more than 1 person.Knowing this, it was then assumed that for households with 3 or more persons, 1 person is theincome source and the rest are dependents. This implies on average 2 dependents in thesehouseholds. With an average of 2 dependents per household for households with more than 3or more persons, and 676,285 households with 3 or more persons, it is estimated there are1,351,644 dependents from these households, equivalent to 30% of the population in privatehouseholds in the province.

37 Statistics Canada. 2017. British Columbia [Province] and Canada [Country] (table). Census Profile. 2016 Census.

Statistics Canada Catalogue no. 98-316-X2016001. Ottawa. Released November 29, 2017.https://www12.statcan.gc.ca/census-recensement/2016/dp-pd/prof/index.cfm?Lang=E



As with the Death of a Dependent Child impacts calculated above, making the simplifyingassumption that the province’s population is equally likely to be the victim of a motor vehiclecrash regardless of age, the impact of the changes to the Survivor Benefits are the following:

Table 10.31

Type of Survivor

CurrentBenefitLevel

NewBenefitLevel

Increaseto

BenefitBenefit

Probability

OverallExpected

ImpactLower wage earner of household $20,080 $30,000 $9,920 25% $2,452Higher wage earner of household $17,580 $30,000 $12,420 25% $3,069Each dependent $4,640 $6,000 $1,360 30% $403Total $5,924

In Appendix D.3 Table 1a), the changes across the Death Benefits are brought together tocalculate the overall impact. Across the changes to the Funeral Benefit, Death of DependentChild Benefit, and Survivor Benefit, benefit levels for Death Benefit claims are expected to be$5,000 + $363 + $5,924 = $11,287 higher following the changes. Using the benefitprobabilities from the calculation steps, the level of current overall Death Benefits is:

Table 10.32

CurrentBenefitLevel

BenefitProbability

Funeral Benefit $2,500 100%Death of Dependent Child Aged 0-4 years $500 5%Death of Dependent Child Aged 5-9 years $1,000 5%Death of Dependent Child Aged 10-18 years $1,500 9%Survivor Benefit – Lower earner $20,080 25%Survivor Benefit – Higher earner $17,580 25%Survivor Benefit – Each dependent $4,650 30%Weighted Average $13,399

The additional $11,287 for death benefit claims following the changes represents an 84%increase from current levels. From ICBC’s claims costs analysis, fiscal loss year 2020 projectedtotal incurred claim amounts for Part 7 Death Benefits are forecasted to be $2,853,000. An84% increase would imply the impact of product change is an increase in fiscal loss year 2020total incurred claim amounts of $2,403,000 bring the total for Death Benefits to $5,256,000.



11. Projections to Fiscal Loss Year 2021

11.1 Overview In this section the results of the Bodily Injury and Part 7 Costing Models for fiscal loss year2020 determined in the preceding sections are projected to fiscal loss year 2021. This iscompleted using selected trends as described in this section. Where appropriate, trends fromICBC’s claims costs analysis are used for consistency.

11.2 Bodily InjuryClaim Exposure Counts

For claim exposure counts, two trends are applied:

· An exposure growth trend is applied to account for the anticipated increase in thenumber of insured vehicles year over year.

· A frequency trend is applied to account for expected year over year change in thenumber of claims. Factors such as changes to vehicle safety, roadways, driverbehaviour, etc. can affect the number of claims occurring in a year prior to consideringexposure growth.

Selected Exposure Growth Trend = 1.88%

Basis for Selection: Selection is equal to the trend from ICBC’s exposure forecast analysis as offiscal year 2019 Q2. This trend will be the same for all coverages.

Selected Future Frequency Trend = 1.39%

Basis for Selection: Vehicle crashes can result in injuries to persons and/or damage to theirproperty or vehicle. When a not-at-fault person’s medical costs from their injuries exceed Part 7Benefit limits, they can seek to recover these additional costs from the at-fault party throughBodily Injury (BI) coverage. For the damage to their property or vehicle, not-at-fault personscan seek to recover these costs through Property Damage (PD) coverage. Generally there willbe a stable relationship between persons’ injuries and the damage to their property or vehicleresulting from a crash, and thus the ratio of BI-to-PD claims will be stable. This was the case forICBC up until 2007. A steady increase in representation rate for BI claims began shortly afterthis time however, and an increase in the BI-to-PD ratio was observed in the years following2007. Following Product Reform, the BI-to-PD ratio is expected to stabilize as observed in otherjurisdictions thus the future frequency trend for BI was selected to be equal to the long-termfrequency trend for PD from ICBC’s claims costs analysis. This implies that the number ofclaims for BI relative to the number of claims for PD is assumed to be flat in the future.



Claim Exposure Counts Trended Results:Table 11.1

(1) FLY 2020 Basic BI 72,358 From Table 8.23(2) FLY 2020 Basic BI Out of Province 1,226 From ICBC’s claims costs analysis(3) FLY 2020 Basic BI Total 73,583 = (1) + (2)

(4) Selected Exposure Growth Trend 1.88%(5) Selected Future Frequency Trend 1.39%(6) Pre-reform Future Frequency Trend 4.40% For comparison purposes

(7) Projected FLY 2021 Basic BI Total 76,012 = (3) x [1+(4)] x [1+(5)]

Total Incurred Claim Amounts

In addition to the exposure growth and frequency trends, the FLY 2020 total incurred claimamounts must also be adjusted for future severity trend to project them to FLY 2021. Futureseverity trend accounts for anticipated year over year changes in the cost of claims. Factorssuch as the cost of medical treatments, wage inflation, etc. can affect the cost of claims infuture years.

Selected Future Severity Trend = 3.06%

Basis for Selection: There is an observable increase in the BI severity trend coinciding with theincrease in representation rate for Bodily Injury claims beginning around 2007. FollowingProduct Reform, the severity trend is expected to return closer to the levels observed prior tothe increases in representation rate. The trend is thus selected as the BI trend from ICBC’sclaims costs analysis adjusted to dampen the impact of the increase in representation rate.

Total Incurred Claim Amounts Trended Results ($000s):

Table 11.2

(1) FLY 2020 Basic BI $1,700,868 From Table 8.23(2) FLY 2020 Basic BI Out of Province $63,834 From ICBC’s claims costs analysis(3) FLY 2020 Basic BI Total $1,764,701 = (1) + (2)

(4) Selected Exposure Growth Trend 1.88%(5) Selected Future Frequency Trend 1.39%(6) Selected Future Severity Trend 3.06%(7) Pre-reform Future Frequency Trend 4.40% For comparison purposes(8) Pre-reform Future Severity Trend 4.06% For comparison purposes

(9) Projected FLY 2021 Basic BI Total $1,878,777 = (3) x [1+(4)] x [1+(5)] x [1+(6)]



CRT Fees

There will be a fee charged to ICBC for each claim exposure utilizing the CRT. Cases currentlyhandled by the CRT have the following costs38: a $150 fee to apply for CRT resolution of adispute, a $50 fee for resolution by tribunal where a tribunal member makes a binding decision,and a $25 fee to respond to a dispute brought against you for a total of $225. No cost detailsspecific to ICBC disputes were available hence these same costs were assumed in ourestimates. The expected costs to ICBC are calculated based on the projected number of claimexposures in FLY 2020 and 2021 as follows.

Table 11.3

(1) FLY 2020 Basic BI Claim ExposureCounts - Total

73,583 From Table 11.1

(2) FLY 2020 Basic BI Claim ExposureCounts – CRT

37,112 From Table 8.23. Total exposurecounts with Future Legal Status ofCRT

(3) CRT Fee per Claim Exposure $225(4) FLY 2020 CRT Fees ($000s) $8,350 = (2) x (3)

(5) Projected FLY 2021 Basic BI ClaimExposure Counts – Total

76,012 From Table 11.1

(6) Projected FLY 2021 Basic BI ClaimExposure Counts – CRT

38,337 = (2) / (1) x (5). Same proportiongoing through CRT as estimated forFLY 2020.

(7) CRT Fee per Claim Exposure $225 Same as (3)(8) FLY 2021 CRT Fees ($000s) $8,626 = (6) x (7)

Summary of Results

Table 11.4

Basic Bodily Injury Exposure Counts

Total Incurred Claim Amounts(incl. CRT Fees)

($000s)Fiscal Loss Year 2020 73,583 $1,773,052Fiscal Loss Year 2021 76,012 $1,887,402

38https://civilresolutionbc.ca/resources/crt-fees/. Fee examples used are for Small Claims Disputes where the

amount claimed is between $3,000 and $5,000 and Strata Property Disputes. Fees for Small Claim Disputes below$3,000 are slightly less, and discounts are available for all categories of disputes if applying online.



11.3 Medical RehabilitationClaim Counts

Consistent with the projection of Bodily Injury claim exposure counts, Part 7 Benefits require anexposure growth trend and frequency trend to project their claim counts to fiscal loss year2021.


Basis for Selection: Equal to the trend from ICBC’s exposure forecast analysis as of fiscal year2019 Q2.

Selected Future Frequency Trend = 1.39%

Basis for Selection: Consistent with the selected BI future frequency trend since Bodily Injuryawards provide compensation for costs associated with treatment of injuries.

Claim Counts Trended Results:Table 11.5

(1) FLY 2020 74,696 From Table 10.6

(2) Selected Exposure Growth Trend 1.88%(3) Selected Future Frequency Trend 1.39%(4) Pre-reform Future Frequency Trend 2.70% For comparison purposes

(5) Projected FLY 2021 77,162 = (1) x [1+(2)] x [1+(3)]



Basis for Selection: The selection is equal to the selected future severity trend from ICBC’sclaims costs analysis. That trend is based on the current product, however once ProductReform is implemented, the trend in costs year over year is not expected to be different since itis based on factors such as the cost of medical treatments which increase at fairly consistentrates.




Table 11.6

(1) FLY 2020 $541,280 From Table 10.6

(2) Selected Exposure Growth Trend 1.39%(3) Selected Future Frequency Trend 1.88%(4) Selected Future Severity Trend 5.64% Equal to ICBC’s pre-reform trend(5) Pre-reform Future Frequency Trend 2.70% For comparison purposes

(6) Projected FLY 2021 $590,709 = (1) x [1+(2)] x [1+(3)] x [1+(4)]

Summary of ResultsTable 11.7

Medical Rehabilitation Claim CountsTotal Incurred Claim Amounts

($000s)Fiscal Loss Year 2020 74,696 $541,280Fiscal Loss Year 2021 77,162 $590,709

11.4 Weekly BenefitsClaim Counts


Basis for Selection: Equal to the trend from ICBC’s exposure forecast analysis as of fiscal year2019 Q2.

Selected Future Frequency Trend = -0.04%

Basis for Selection: Equal to the future frequency trend from ICBC’s claims costs analysis.

Claim Counts Trended Results:

Table 11.8

(1) FLY 2020 4,043 From Table 10.27

(2) Selected Exposure Growth Trend 1.88%(3) Selected Future Frequency Trend -0.04% Equal to ICBC’s pre-reform trend

(4) Projected FLY 2021 4,118 = (1) x [1+(2)] x [1+(3)]





Basis for Selection: The selection is equal to the selected future severity trend from ICBC’sclaims costs analysis. That trend is based on the current product, however once ProductReform is implemented, the trend in costs year to year is not expected to be different since it isbased on factors such as wage levels which increase at fairly consistent rates.


Table 11.9

(1) FLY 2020 $82,138 From Table 10.27

(2) Selected Exposure Growth Trend 1.88%(3) Selected Future Frequency Trend -0.04% Equal to ICBC’s pre-reform trend(4) Selected Future Severity Trend 4.17% Equal to ICBC’s pre-reform trend

(5) Projected FLY 2021 $87,136 = (1) x [1+(2)] x [1+(3)] x [1+(4)]

Summary of ResultsTable 11.10

Weekly Benefits Claim CountsTotal Incurred Claim Amounts

($000s)Fiscal Loss Year 2020 4,043 $82,138Fiscal Loss Year 2021 4,118 $87,136

The selected future frequency and severity trends are equal to ICBC’s pre-reform trends hencethere is no impact to fiscal loss year 2021 resutls from the selected post-reform trends.

11.5 Death BenefitsClaim Counts

Product Reform is not expected to have any impact on the number of Death Benefit claims ortrend assumptions.

Claim Counts Results:

Table 11.11

(1) FLY 2020 235 From ICBC’s claims costs analysis(2) FLY 2021 239 From ICBC’s claims costs analysis


The estimated costs for fiscal loss year 2020 are 84% higher than the pre-reform estimatesfrom ICBC’s claims costs analysis. The same 84% increase is applied to the claims costs analysis



forecast for fiscal loss year 2021.


Table 11.12

(1) FLY 2020 before product change $2,853 From ICBC’s Claims Costs Analysis(2) Increase in costs following product

change84% From Section 10.5

(3) FLY 2020 after product change $5,256 = (1) x [1+(2)]

(4) FLY 2021 before product change $2,906 From ICBC’s Claims Costs Analysis(5) Increase in costs following product

change84% Same as (2)

(6) FLY 2021 after product change $5,354 = (4) x [1+(5)]

Summary of Results

Table 11.13

Death Benefits Claim CountsTotal Incurred Claim Amounts

($000s)Fiscal Loss Year 2020 235 $5,286Fiscal Loss Year 2021 239 $5,354



12. Glossary

Accepted Actuarial Practice: These are the Standards of Practice that apply to actuarial workin Canada. Responsibility for these Standards of Practice vests in the Actuarial Standards Board(Canada) and approval of standards and changes to standards are made through a process thatincludes consultation with the actuarial profession and other interested parties. They areintended for the benefit of the public. The work in Canada of a member of a professionalactuarial organization is expected to conform to these Standards of Practice.

Claim (Loss): The use of the term claim (loss) without modification includes losses and lossadjustment expenses (LAE) which provide for both external (allocated) and internal(unallocated) adjustment expenses.

Claim Exposures: Claim exposures represent the part of a claim raised against one specificcoverage component by a claimant. A claim exposure is created for each claimant making ademand against a coverage group. A claim may contain multiple claim exposures and multipleclaim exposures related to a single coverage group.

Completed with Amount (CWA): Claims closed or completed with paid loss + paid expensegreater than zero.

Fiscal Loss Year (FLY): Fiscal Loss Years are periods of time from April 1 to March 31 of thefollowing year. FLY YYYY ends March 31 YYYY, for instance FLY 2016 is the period from April1 2015 to March 31 2016.

Frequency: The number of claims divided by the number of insured vehicles.

Head of Damage: Refers to the type of claim payment such as Past Wage Loss, Future WageLoss, General Damages, etc.

ICBC’s Claims Costs Analysis: Separate analysis performed regularly by dedicated ICBC team.Reference to ICBC’s Claims Costs Analysis refers to the most recent analysis performed as ofFiscal Loss Year 2019 Q2.

ICBC’s Exposure Forecast Analysis: Separate analysis performed regularly by dedicated ICBCteam. Reference to ICBC’s Exposure Forecast Analysis refers to the most recent analysisperformed as of Fiscal Loss Year 2019 Q2.

Materiality: Point at which the impact of any change or the difference between two estimatesshould be considered significant to readers of the report.

Policy Year: Year over which policies are issued. Since claims can occur from the first day of



the first policy issued to the expiry date of the last policy issued, policy years span twoconsecutive fiscal loss years. As an example, Policy Year 2019 comprises policies issued fromApril 1 2019 to March 31 2020. Since claims can occur from the first day of this period, April 12019 to the expiry date of the last policy issue date, March 31 2021, Policy Year 2019 spansFiscal Loss Years 2020 and 2021.

Settlement Patterns: The length of time that it normally takes for reported claims to besettled.

Severity: Average cost of a claim, calculated as incurred claim amounts divided by the numberof incurred claims.



13. About the Author

Liam McFarlanePartnerInsurance and ActuarialAdvisory Services

Contact informationErnst & Young LLP100 Adelaide Street WestP.O. Box 1Toronto, ON M5H 0B3

Mobile: 289-242-8050Office: 416-941-7751Email:[email protected]

Industry linesCanadian Property & CasualtyInsurance and Reinsurance

EducationUniversity of Waterloo,Bachelor of Mathematics(Honours)

CertificationsFellow, Canadian Institute ofActuariesFellow, Casualty ActuarialSociety

Professional experience summaryLiam McFarlane is a limited partner of Ernst & Young L.P., which providesservices to Ernst & Young LLP. Liam is the leader of EY’s Canadian actuarialpractice.

Liam has over 30 years of experience in the Canadian property and casualtyinsurance industry. Prior to joining EY, Liam gained extensive experience as asenior insurance executive as well as a consulting actuary working withinsurers, reinsurers, captives, professional associations and financialinstitutions across most of the major lines of insurance in Canada.

Liam has serviced a wide variety of clients in the areas of automobileinsurance, property insurance, professional liability insurance, insurancecompanies, reinsurance companies and financial institutions. Over his careerhe has acted as Appointed or Valuation Actuary to over twentyinsurers/reinsurers in Canada and provided strategic advice to many of theseentities in the areas of pricing, capital and risk management, and reinsurance.Currently he acts as Appointed Actuary to a number of insurers and reinsurers.He has deep expertise in the valuation of policy liabilities as well as theassessment of financial condition through Dynamic Capital Adequacy Testing.

Liam is also actuary to key entities in the Canadian automobile insurancemarketplace such as the General Insurance Statistical Agency and the FacilityAssociation.

Liam is the lead Canadian actuary advising clients with respect to the newinsurance contracts standard, IFRS 17. He works closely with EY’s insurancepartners on advising property and casualty companies on how to interpret thisstandard.

Liam is also the actuarial partner on EY Canada’s large Canadian property andcasualty insurance audits including Intact Insurance, TD Insurance andEconomical Insurance.

Liam’s professional experience also includes being involved in many insuranceindustry committees as well as committees of the actuarial profession. Thesehave included the Facility Association Actuarial Committee and industryactuarial advisory committees on Ontario automobile insurance. In addition,he has served on Casualty Actuarial Society examination committees as wellas various committees of the Canadian Institute of Actuaries. Currently Liamis a chair of the Committee on Professionalism of the Canadian Institute ofActuaries.

In his spare time Liam enjoys speding time at his cottage or on the golf course.


Appendix A.1Basic Bodily Injury Product Reform Allocation Model

Summary


Insurance Corporation of British Columbia Appendix A.1Basic BI Allocation Model

Summary

Basic Bodily InjuryFLY 2020 Forecast Exposure Counts

1a) Representation Distribution - Exposure Counts

(1) (2)Unrepresented Represented40% 60%

(1) From ICBC Claims Costs analysis as of FLY 2019 Q2: FLY 2020 forecast % of exposure counts which are unrepresented.(2) = 1 - (1). FLY 2020 forecast % of exposure counts which are represented

1b) Minor Injury Distribution - Exposure Counts

(3) (4) (5)Minor Injuries Non-Minor Injuries Total

Unrepresented 92% 8% 100%Represented 70% 30% 100%

(3) FLY 2020 forecast % of exposure counts for representation segments which are minor injuries.Unrepresented: From Appendix A.2 1e) row (3)Represented: From Appendix A.2 2e) row (3)

(4) = 1 - (3). FLY 2020 forecast % of exposure counts from representation segment which are non-minor injuries.(5) = (3) + (4)

1c) Overall Exposure Count Distribution(6)

% of TotalExposure Counts

Unrepresented - Minor Injuries 37%Unrepresented - Non-Minor Injuries 3%Represented - Minor Injuries 42%Represented - Non-Minor Injuries 18%Total 100%Minor Injury % 79%

(6) Product of applicable Representation % from 1a) and Injury % from 1b)Example: Minor Injuries - Represented = 42%

= 60% x 70% = % of exposure counts which are represented x % of represented exposure counts which are minor injuries



Summary

Basic Bodily InjuryAllocation of ICBC Claims Costs Analysis Results - FLY 2020 Exposure Counts

1d) FLY 2020 Forecast - Exposure Counts

(1) Total Basic BI Exposure Counts 75,378 From ICBC Claims Costs analysis as of FLY 2019 Q2, FLY 2020 forecast total exposure counts(2) Out of Province Claims Percentage 2% From Appendix A.8 1e) row (3)(3) Basic BI Exposure Counts Excluding Out of Province 74,152 = (1) x [1-(2)]

1e) Allocated FLY 2020 Forecast Exposure Counts(4) (5)

% of TotalExposure Counts

Allocated ExposureCounts

Unrepresented - Minor Injuries 37% 27,463Unrepresented - Non-Minor Injuries 3% 2,365Represented - Minor Injuries 42% 30,833Represented - Non-Minor Injuries 18% 13,491Total 100% 74,152Minor Injuries 79% 58,296

(4) From Table 1c), FLY 2020 % of total exposure counts(5) = (3) x (4), FLY 2020 allocated exposure counts



Summary

Basic Bodily InjuryFLY 2020 Forecast Total Incurred Claim Amounts ($)

2a) Representation Distribution - Total Incurred Claim Amounts

(1) (2)Unrepresented Represented

(1) From ICBC Claims Costs analysis as of FLY 2019 Q2. FLY 2020 forecast total incurred claim amounts for unrepresented claims as a percentage of forecast for all claims.(2) = 1 - (1). FLY 2020 forecast % of total incurred claim amounts for represented claims

2b) Minor Injury Distribution - Total Incurred Claim Amounts

(3) (4) (5)Minor Injuries Non-Minor Injuries Total

Unrepresented 86% 14% 100%Represented 66% 34% 100%

(3) FLY 2020 forecast % of incurred ($) for representation segments coming from minor injuriesUnrepresented: From Appendix A.3 1e) row (3)Represented: From Appendix A.3 2e) row (3)

(4) = 1 - (3). FLY 2020 forecast % of incurred ($) for representation segments coming from non-minor injuries.(5) = (3) + (4)

2c) Head of Damage Distribution - Total Incurred Claim Amounts(6) (7) (8) (9) (10) (11)

General Damages Special Damages Past Wage LossLegal Costs &

Disbursements Other Costs TotalUnrepresented - Minor Injuries 82% 7% 6% 0% 5% 100%Unrepresented - Non-Minor Injuries 75% 8% 6% 1% 11% 100%Represented - Minor Injuries 61% 3% 5% 10% 22% 100%Represented - Non-Minor Injuries 44% 3% 9% 15% 29% 100%

(6) From Appendix A.4, row (3) of 1e), 2e), 3e) and 4e) respectively(8) From Appendix A.5, row (3) of 1e), 2e), 3e) and 4e) respectively(7) From Appendix A.6, row (3) of 1e), 2e), 3e) and 4e) respectively(9) From Appendix A.7, row (3) of 1e), 2e), 3e) and 4e) respectively

(10) = 1 - (5) - (6) - (7) - (8)(11) = (5) + (6) + (7) + (8) + (9)



Summary

Basic Bodily InjuryAllocation of ICBC Claims Costs Analysis Results - FLY 2020 Total Incurred Claim Amounts

2d) FLY 2020 Forecast - Total Incurred Claim Amounts

(1) Total Basic BI Total Incurred Claim Amounts ($000s) $3,238,934 From ICBC Claims Costs analysis as of FLY 2019 Q2, FLY 2020 forecast total incurred claim amounts(2) Out of Province Claims Percentage 2% From Appendix A.9 2e) row (3)(3) Basic BI Incurred Excluding Out of Province ($000s) $3,175,101 = (1) x [1-(2)]

2e) Allocation - Percentages of Total Incurred Claim Amounts(4) (5) (6) (7) (8) (9)


Disbursements Other Costs TotalUnrepresented - Minor InjuriesUnrepresented - Non-Minor InjuriesRepresented - Minor InjuriesRepresented - Non-Minor Injuries

57% 3% 6% 11% 23% 100%

(4) to (8) Product of applicable Representation % from 2a), Injury % from 2b), and Head of Damage % for 2c)Example: Minor Injuries - Represented: Past Wage Loss = 3%

= = % of incurred ($) from claims that are represented x % of represented claims' incurred ($) from minor injuries

x % of represented minor injuries' incurred ($) from past wage loss(9) = (4) + (5) + (6) + (7) + (8)

2f) Allocated FLY 2020 Forecast Total Incurred Claim Amounts ($000)(10) (12) (11) (13) (14) (15)


Disbursements Other Costs TotalUnrepresented - Minor InjuriesUnrepresented - Non-Minor InjuriesRepresented - Minor InjuriesRepresented - Non-Minor Injuries

$1,806,843 $102,858 $192,701 $343,344 $729,355 $3,175,101

(10) to (14) Total Incurred Excluding Out of Province from (3) above times Allocation Percentages from 2e)(15) = (10) + (11) + (12) + (13) + (14)




Exposure Counts – Minor Injury %



Exposure Counts - Minor Injury %'s1a) Basic Bodily Injury

Unrepresented Claims - All Injury TypesExposure Counts by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m

2009 11,677 19,645 21,694 21,955 22,081 22,158 22,211 22,236 22,255 22,2792010 10,921 18,898 20,628 20,856 20,975 21,043 21,068 21,095 21,1182011 13,583 20,878 22,815 23,042 23,161 23,240 23,289 23,3212012 11,333 18,930 21,470 21,722 21,849 21,912 21,9522013 9,539 18,944 21,045 21,256 21,366 21,4502014 10,769 19,429 21,670 21,889 22,0142015 12,039 21,164 23,741 23,9372016 12,689 23,265 25,8342017 14,723 25,1042018 15,372

1b) Basic Bodily InjuryUnrepresented Claims - Minor InjuriesExposure Counts by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 9,093 15,107 16,519 16,673 16,753 16,800 16,833 16,844 16,858 16,8682010 8,517 14,453 15,651 15,799 15,874 15,913 15,933 15,951 15,9672011 10,607 16,010 17,380 17,520 17,586 17,637 17,671 17,6892012 8,828 14,524 16,313 16,478 16,556 16,591 16,6142013 7,407 14,680 16,173 16,304 16,378 16,4292014 8,796 15,507 17,117 17,280 17,3572015 11,264 19,602 21,799 21,9542016 12,092 21,741 23,9192017 14,000 23,3742018 14,721

* FLY = Fiscal Loss Year, April 1 - March 31. Example FLY 2016 = April 1 2015 - March 31 2016.** Claims occuring in Fiscal Loss Year closing in period of 0 to XX months (e.x. 0-12m claim exposures close within 12 months of beginning of given FLY; 0-24m close within 24months of beginning of FLY, etc.)



Exposure Counts - Minor Injury %'s1c) Basic Bodily Injury

Unrepresented ClaimsMinor Injuries' Cumulative Percentage of Exposure Counts*

Closed MonthFLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 77.9% 76.9% 76.1% 75.9% 75.9% 75.8% 75.8% 75.8% 75.7% 75.7%2010 78.0% 76.5% 75.9% 75.8% 75.7% 75.6% 75.6% 75.6% 75.6%2011 78.1% 76.7% 76.2% 76.0% 75.9% 75.9% 75.9% 75.9%2012 77.9% 76.7% 76.0% 75.9% 75.8% 75.7% 75.7%2013 77.6% 77.5% 76.8% 76.7% 76.7% 76.6%2014 81.7% 79.8% 79.0% 78.9% 78.8%2015 93.6% 92.6% 91.8% 91.7%2016 95.3% 93.4% 92.6%2017 95.1% 93.1%2018 95.8%

1d) Basic Bodily InjuryUnrepresented ClaimsDevelopment Factors - Minor Injuries' Cumulative Percentage of Exposure Counts**

Closed MonthFLY 12-24m 24-36m 36-48m 48-60m 60-72m 72-84m 84-96m 96-108m 108-120m 120m+2009 0.99 0.99 1.00 1.00 1.00 1.00 1.00 1.00 1.002010 0.98 0.99 1.00 1.00 1.00 1.00 1.00 1.002011 0.98 0.99 1.00 1.00 1.00 1.00 1.002012 0.98 0.99 1.00 1.00 1.00 1.002013 1.00 0.99 1.00 1.00 1.002014 0.98 0.99 1.00 1.002015 0.99 0.99 1.002016 0.98 0.992017 0.98

Selected Development Factors(1) Selected 0.98 0.99 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00(2) Basis Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg All Avg All Avg All N/A***

** Development factors for XX-YYm calculated from 1c) by dividing Cumulative Percentage of Exposure Counts from 0-YYm by Cumulative Percentage of Exposure Counts from 0-XXm*** No further development assumed beyond 120 months

* Cumulative Percentage of Exposure Counts for 0-XXm equals Minor Injury Exposure Counts by Closed Month over 0-XXm from 1b) divided by All Injury Types' Exposure Counts byClosed Month over 0-XXm from 1a).



Exposure Counts - Minor Injury %'s1e) Basic Bodily Injury

Unrepresented ClaimsMinor Injuries' Percentage of Exposure Counts (1) (2)

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 77.9% 76.9% 76.1% 75.9% 75.9% 75.8% 75.8% 75.8% 75.7% 75.7% 75.7%2010 78.0% 76.5% 75.9% 75.8% 75.7% 75.6% 75.6% 75.6% 75.6% 75.6% 75.6%2011 78.1% 76.7% 76.2% 76.0% 75.9% 75.9% 75.9% 75.9% 75.8% 75.8% 75.8%2012 77.9% 76.7% 76.0% 75.9% 75.8% 75.7% 75.7% 75.7% 75.7% 75.6% 75.6%2013 77.6% 77.5% 76.8% 76.7% 76.7% 76.6% 76.6% 76.5% 76.5% 76.5% 76.5%2014 81.7% 79.8% 79.0% 78.9% 78.8% 78.8% 78.8% 78.7% 78.7% 78.7% 78.7%2015 93.6% 92.6% 91.8% 91.7% 91.6% 91.5% 91.5% 91.5% 91.5% 91.4% 91.4% 92%2016 95.3% 93.4% 92.6% 92.5% 92.4% 92.3% 92.3% 92.2% 92.2% 92.2% 92.2% 92%2017 95.1% 93.1% 92.3% 92.1% 92.0% 92.0% 91.9% 91.9% 91.9% 91.9% 91.9% 92%2018 95.8% 94.0% 93.2% 93.0% 92.9% 92.9% 92.8% 92.8% 92.8% 92.8% 92.8% 92%2019 92%2020 (3) 92%

Selected Trend(4) 0.0%

Projected percentages, equal to percentage in prior period multiplied by appropriate selected development factor from Appendix A.2 1d) row (1)

(1) Ultimate Percentages of Unrepresented Claims' Exposure Counts(2) Trended Ultimate Percentages of Unrepresented Claims' Exposure Counts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Claims Exposure Counts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 Avg)



Exposure Counts - Minor Injury %'s2a) Basic Bodily Injury

Represented Claims - All Injury TypesExposure Counts by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 904 4,786 9,390 13,237 15,605 16,826 17,402 17,705 17,904 18,0482010 927 5,133 9,732 13,606 16,368 17,784 18,461 18,827 19,0392011 1,087 5,045 9,701 14,002 17,208 18,848 19,746 20,1902012 900 5,550 11,284 15,630 18,731 20,599 21,5132013 1,157 6,741 12,557 16,651 19,981 22,0352014 1,307 6,824 12,355 17,174 20,8952015 1,339 6,719 13,971 19,2142016 1,432 8,722 16,5602017 1,808 9,7502018 2,084

2b) Basic Bodily InjuryRepresented Claims - Minor InjuriesExposure Counts by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 578 3,002 5,584 7,644 8,776 9,336 9,552 9,687 9,760 9,8002010 589 3,198 5,886 8,007 9,399 10,030 10,315 10,449 10,5152011 729 3,205 6,008 8,401 10,108 10,860 11,232 11,3962012 566 3,545 7,033 9,460 11,068 11,945 12,3572013 749 4,257 7,764 10,043 11,779 12,7982014 846 4,363 7,666 10,358 12,2142015 978 5,092 10,270 13,5852016 1,111 6,694 12,2292017 1,382 7,3432018 1,594




Exposure Counts - Minor Injury %'s2c) Basic Bodily Injury

Represented ClaimsMinor Injuries' Cumulative Percentage of Exposure Counts*


2d) Basic Bodily InjuryRepresented ClaimsDevelopment Factors - Minor Injuries' Cumulative Percentage of Exposure Counts**

Closed MonthFLY 12-24m 24-36m 36-48m 48-60m 60-72m 72-84m 84-96m 96-108m 108-120m 120m+2009 0.98 0.95 0.97 0.97 0.99 0.99 1.00 1.00 1.002010 0.98 0.97 0.97 0.98 0.98 0.99 0.99 1.002011 0.95 0.97 0.97 0.98 0.98 0.99 0.992012 1.02 0.98 0.97 0.98 0.98 0.992013 0.98 0.98 0.98 0.98 0.992014 0.99 0.97 0.97 0.972015 1.04 0.97 0.962016 0.99 0.962017 0.99



* Cumulative Percentage of Exposure Counts for 0-XXm equals Minor Injury Exposure Counts by Closed Month over 0-XXm from 2b) divided by All Injury Types' Exposure Counts byClosed Month over 0-XXm from 2a).



Exposure Counts - Minor Injury %'s2e) Basic Bodily Injury

Represented ClaimsMinor Injuries' Percentage of Exposure Counts (1) (2)

0-12mFLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 63.9% 62.7% 59.5% 57.7% 56.2% 55.5% 54.9% 54.7% 54.5% 54.3% 56.2%2010 63.5% 62.3% 60.5% 58.8% 57.4% 56.4% 55.9% 55.5% 55.2% 55.0% 57.4%2011 67.1% 63.5% 61.9% 60.0% 58.7% 57.6% 56.9% 56.4% 56.2% 56.0% 58.7%2012 62.9% 63.9% 62.3% 60.5% 59.1% 58.0% 57.4% 57.1% 56.9% 56.6% 59.1%2013 64.7% 63.2% 61.8% 60.3% 59.0% 58.1% 57.5% 57.1% 56.9% 56.7% 59.0%2014 64.7% 63.9% 62.0% 60.3% 58.5% 57.4% 56.8% 56.5% 56.2% 56.0% 58.5%2015 73.0% 75.8% 73.5% 70.7% 69.0% 67.8% 67.0% 66.6% 66.4% 66.1% 69.0% 70%2016 77.6% 76.7% 73.8% 71.6% 69.9% 68.7% 67.9% 67.5% 67.2% 67.0% 69.9% 70%2017 76.4% 75.3% 73.1% 70.9% 69.2% 67.9% 67.2% 66.8% 66.5% 66.3% 69.2% 70%2018 76.5% 76.5% 74.2% 72.0% 70.2% 69.0% 68.3% 67.9% 67.6% 67.3% 70.2% 70%2019 70%2020 (3) 70%



(1) Ultimate Percentages of Represented Claims' Exposure Counts(2) Trended Ultimate Percentages of Represented Claims' Exposure Counts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Claims Exposure Counts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 Avg)




Total Incurred Claim Amounts - Minor Injury %



Total Incurred Claim Amounts - Minor Injury %'s1a) Basic Bodily Injury

Unrepresented Claims - All Injury TypesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


2009201020112012201320142015201620172018

1b) Basic Bodily InjuryUnrepresented Claims - Minor InjuriesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009201020112012201320142015201620172018




Total Incurred Claim Amounts - Minor Injury %'s1c) Basic Bodily Injury

Unrepresented ClaimsMinor Injuries' Cumulative Percentage of Total Incurred Claim Amounts*


1d) Basic Bodily InjuryUnrepresented ClaimsDevelopment Factors - Minor Injuries' Cumulative Percentage of Total Incurred Claim Amounts**

Closed MonthFLY 12-24M 24-36M 36-48M 48-60M 60-72M 72-84M 84-96M 96-108M 108-120M 120M+2009 0.95 0.96 0.98 0.98 1.00 1.00 1.00 1.00 1.002010 0.94 0.98 0.99 1.00 0.99 1.00 1.00 1.002011 0.96 0.99 0.99 1.00 1.00 1.00 1.002012 0.96 0.98 0.99 1.00 1.00 1.002013 0.99 0.97 0.99 1.00 1.002014 0.95 0.97 1.00 0.992015 0.98 0.98 1.002016 0.97 0.982017 0.96


** Development factors for XX-YYm calculated from 1c) by dividing Cumulative Percentage of Incurred from 0-YYm by Cumulative Percentage of Incurred from 0-XXm*** No further development assumed beyond 120 months

* Cumulative Percentage of Total Incurred Claim Amounts for 0-XXm equals Minor Injuries' Total Incurred Claim Amounts by Closed Month over 0-XXm from 1b) divided by All InjuryTypes' Total Incurred Claim Amounts by Closed Month over 0-XXm from 1a).



Total Incurred Claim Amounts - Minor Injury %'s1e) Basic Bodily Injury

Unrepresented ClaimsMinor Injuries' Percentage of Total Incurred Claim Amounts (1) (2)

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 73.1% 69.8% 67.2% 65.7% 64.7% 64.4% 64.3% 64.3% 64.2% 64.1% 64.1%2010 74.4% 70.2% 68.5% 68.1% 68.1% 67.7% 67.7% 67.5% 67.4% 67.3% 67.3%2011 73.3% 70.5% 69.5% 68.9% 68.7% 68.4% 68.4% 68.3% 68.2% 68.1% 68.1%2012 74.6% 71.3% 69.7% 69.3% 69.0% 68.8% 68.6% 68.5% 68.4% 68.3% 68.3%2013 73.3% 72.9% 70.8% 70.3% 70.1% 69.9% 69.9% 69.7% 69.6% 69.5% 69.5%2014 79.3% 75.1% 72.8% 72.7% 72.2% 71.9% 71.8% 71.7% 71.6% 71.5% 71.5%2015 90.9% 89.1% 87.4% 87.2% 86.8% 86.4% 86.4% 86.3% 86.1% 86.0% 86.0% 86%2016 93.2% 90.1% 88.2% 87.8% 87.4% 87.1% 87.0% 86.9% 86.8% 86.6% 86.6% 86%2017 92.8% 89.2% 87.0% 86.6% 86.2% 85.9% 85.8% 85.7% 85.6% 85.4% 85.4% 86%2018 93.2% 89.8% 87.6% 87.2% 86.8% 86.5% 86.4% 86.3% 86.2% 86.0% 86.0% 86%2019 86%2020 (3) 86%



(1) Ultimate Percentages of Unrepresented Claims' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Claims' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Claims Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 Avg)



Total Incurred Claim Amounts - Minor Injury %'s2a) Basic Bodily Injury

Represented Claims - All Injury TypesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


2b) Basic Bodily InjuryRepresented Claims - Minor InjuriesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018





Total Incurred Claim Amounts - Minor Injury %'s2c) Basic Bodily Injury

Represented ClaimsMinor Injuries' Cumulative Percentage of Total Incurred Claim Amounts*


2d) Basic Bodily InjuryRepresented ClaimsDevelopment Factors - Minor Injuries' Cumulative Percentage of Total Incurred Claim Amounts**




* Cumulative Percentage of Total Incurred Claim Amounts for 0-XXm equals Minor Injuries' Total Incurred Claim Amounts by Closed Month over 0-XXm from 2b) divided by All InjuryTypes' Total Incurred Claim Amounts by Closed Month over 0-XXm from 2a).



Total Incurred Claim Amounts - Minor Injury %'s2e) Basic Bodily Injury

Represented ClaimsMinor Injuries' Percentage of Total Incurred Claim Amounts (1) (2)

0-12mFLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 59.3% 56.0% 52.9% 51.7% 50.1% 49.2% 48.2% 47.9% 47.5% 47.1% 47.1%2010 59.7% 56.5% 55.2% 53.6% 52.8% 51.5% 50.9% 50.0% 49.5% 49.0% 49.0%2011 63.9% 57.7% 57.1% 55.7% 54.5% 52.9% 51.8% 51.2% 50.7% 50.2% 50.2%2012 60.7% 60.2% 58.6% 57.4% 55.8% 54.6% 53.7% 53.0% 52.5% 52.1% 52.1%2013 62.4% 60.9% 59.0% 57.4% 56.1% 55.1% 54.1% 53.5% 53.0% 52.5% 52.5%2014 63.4% 63.2% 59.5% 57.9% 55.4% 54.0% 53.1% 52.5% 52.0% 51.5% 51.5%2015 71.2% 75.0% 72.9% 68.9% 66.9% 65.3% 64.2% 63.4% 62.8% 62.3% 62.3% 62%2016 78.6% 77.6% 73.1% 70.7% 68.6% 67.0% 65.8% 65.1% 64.4% 63.9% 63.9% 63%2017 75.8% 74.9% 71.6% 69.3% 67.3% 65.7% 64.5% 63.8% 63.1% 62.6% 62.6% 64%2018 77.7% 78.1% 74.7% 72.2% 70.2% 68.5% 67.3% 66.5% 65.9% 65.3% 65.3% 65%2019 65%2020 (3) 66%



(1) Ultimate Percentages of Represented Claims' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Claims' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Claims Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 1.2% (2015-2018 expo trend)



Appendix A.4Basic Bodily Injury Product Reform Allocation ModelTotal Incurred Claim Amounts - General Damages %



Total Incurred Claim Amounts - General Damages %'s1a) Basic Bodily Injury

Unrepresented Minor Injuries - All Heads of DamageTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


2009201020112012201320142015201620172018

1b) Basic Bodily InjuryUnrepresented Minor Injuries - General DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


* FLY = Fiscal Loss Year, April 1 - March 31. Example FLY 2016 = April 1 2015 - March 31 2016.** Claims occuring in Fiscal Loss Year closing in period of 0 to XX months (e.x. 0-12m claim exposures close within 12 months of beginning of given FLY; 0-24m close within 24 months of beginningof FLY, etc.)



Total Incurred Claim Amounts - General Damages %'s1c) Basic Bodily Injury

Unrepresented Minor InjuriesGeneral Damages Cumulative Percentage of Total Incurred Claim Amounts*


1d) Basic Bodily InjuryUnrepresented Minor InjuriesDevelopment Factors - General Damages Cumulative Percentage of Total Incurred Claim Amounts**



** Development factors for XX-YYm calculated from 1c) by dividing Cumulative Percentage of Total Incurred Claim Amounts from 0-YYm by Cumulative Percentage from 0-XXm*** No further development assumed beyond 120 months

* Cumulative Percentage of Total Incurred Claim Amounts equals General Damages Total Incurred Claim Amounts by Closed Month over 0-XXm from 1b) divided by All Heads of Damage TotalIncurred Claim Amounts by Closed Month over 0-XXm from 1a).



Total Incurred Claim Amounts - General Damages %'s1e) Basic Bodily Injury

Unrepresented Minor InjuriesGeneral Damages Percentage of Total Incurred Claim Amounts (1) (2)

Closed MonthFLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 83.4% 82.6% 81.9% 81.6% 81.4% 81.4% 81.4% 81.4% 81.5% 81.5% 81.5%2010 85.1% 83.9% 83.0% 82.8% 82.5% 82.5% 82.4% 82.4% 82.4% 82.4% 82.4%2011 86.6% 85.0% 83.8% 83.6% 83.6% 83.4% 83.3% 83.3% 83.3% 83.3% 83.3%2012 85.2% 82.8% 81.5% 81.2% 80.4% 80.3% 80.1% 80.1% 80.1% 80.2% 80.2%2013 83.8% 81.6% 81.3% 81.1% 80.7% 80.2% 80.1% 80.1% 80.1% 80.1% 80.1%2014 83.2% 82.4% 81.7% 81.4% 81.2% 81.0% 80.9% 80.9% 80.9% 80.9% 80.9%2015 84.6% 83.1% 82.4% 82.4% 82.0% 81.8% 81.7% 81.7% 81.7% 81.7% 81.7% 82%2016 85.0% 83.7% 83.0% 82.8% 82.4% 82.2% 82.1% 82.1% 82.1% 82.1% 82.1% 82%2017 85.5% 83.4% 82.8% 82.6% 82.3% 82.0% 81.9% 81.9% 82.0% 82.0% 82.0% 82%2018 86.2% 84.8% 84.1% 83.9% 83.6% 83.3% 83.2% 83.2% 83.3% 83.3% 83.3% 82%2019 82%2020 (3) 82%



(1) Ultimate Percentages of Unrepresented Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)




Unrepresented Non-Minor Injuries - All Heads of DamageTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


2009201020112012201320142015201620172018

2b) Basic Bodily InjuryUnrepresented Non-Minor Injuries - General DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Unrepresented Non-Minor InjuriesGeneral Damages Cumulative Percentage of Total Incurred Claim Amounts*


2d) Basic Bodily InjuryUnrepresented Non-Minor InjuriesDevelopment Factors - General Damages Cumulative Percentage of Total Incurred Claim Amounts**








Unrepresented Non-Minor InjuriesGeneral Damages Percentage of Total Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Unrepresented Non-Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Non-Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Non-Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)




Represented Minor Injuries - All Heads of DamageTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


3b) Basic Bodily InjuryRepresented Minor Injuries - General DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Minor InjuriesGeneral Damages Cumulative Percentage of Total Incurred Claim Amounts*


3d) Basic Bodily InjuryRepresented Minor InjuriesDevelopment Factors - General Damages Cumulative Percentage of Total Incurred Claim Amounts**




* Cumulative Percentage of Total Incurred Claim Amounts eAFuals General Damages Total Incurred Claim Amounts by Closed Month over 0-XXm from 3b) divided by All Heads of Damage TotalIncurred Claim Amounts by Closed Month over 0-XXm from 3a).




Represented Minor InjuriesGeneral Damages Percentage of Total Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Represented Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 2.0% (2015-2018 expo trend)




Represented Non-Minor Injuries - All Heads of DamageTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


2009201020112012201320142015201620172018

4b) Basic Bodily InjuryRepresented Non-Minor Injuries - General DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Non-Minor InjuriesGeneral Damages Cumulative Percentage of Total Incurred Claim Amounts*


4d) Basic Bodily InjuryRepresented Non-Minor InjuriesDevelopment Factors - General Damages Cumulative Percentage of Total Incurred Claim Amounts**








Represented Non-Minor InjuriesGeneral Damages Percentage of Total Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Represented Non-Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Non-Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Non-Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)



Appendix A.5Basic Bodily Injury Product Reform Allocation ModelTotal Incurred Claim Amounts – Special Damages %



Total Incurred Claim Amounts - Special Damages %'s1a) Basic Bodily Injury



2009201020112012201320142015201620172018

1b) Basic Bodily InjuryUnrepresented Minor Injuries - Special DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018





Total Incurred Claim Amounts - Special Damages %'s1c) Basic Bodily Injury

Unrepresented Minor InjuriesSpecial Damages Cumulative Percentage of Total Incurred Claim Amounts*


1d) Basic Bodily InjuryUnrepresented Minor InjuriesDevelopment Factors - Special Damages Cumulative Percentage of Total Incurred Claim Amounts**




* Cumulative Percentage of Total Incurred Claim Amounts equals Special Damages Total Incurred Claim Amounts by Closed Month over 0-XXm from 1b) divided by All Heads of Damage TotalIncurred Claim Amounts by Closed Month over 0-XXm from 1a).



Total Incurred Claim Amounts - Special Damages %'s1e) Basic Bodily Injury

Unrepresented Minor InjuriesSpecial Damages Percentage of Total Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Unrepresented Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)






2009201020112012201320142015201620172018

2b) Basic Bodily InjuryUnrepresented Non-Minor Injuries - Special DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Unrepresented Non-Minor InjuriesSpecial Damages Cumulative Percentage of Total Incurred Claim Amounts*


2d) Basic Bodily InjuryUnrepresented Non-Minor InjuriesDevelopment Factors - Special Damages Cumulative Percentage of Total Incurred Claim Amounts**








Unrepresented Non-Minor InjuriesSpecial Damages Percentage of Total Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Unrepresented Non-Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Non-Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Non-Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)






3b) Basic Bodily InjuryRepresented Minor Injuries - Special DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Minor InjuriesSpecial Damages Cumulative Percentage of Total Incurred Claim Amounts*


3d) Basic Bodily InjuryRepresented Minor InjuriesDevelopment Factors - Special Damages Cumulative Percentage of Total Incurred Claim Amounts**




* Cumulative Percentage of Total Incurred Claim Amounts eAFuals Special Damages Total Incurred Claim Amounts by Closed Month over 0-XXm from 3b) divided by All Heads of Damage TotalIncurred Claim Amounts by Closed Month over 0-XXm from 3a).




Represented Minor InjuriesSpecial Damages Percentage of Total Incurred Claim Amounts (1) (2)


Selected Trend(4) -6.2%


(1) Ultimate Percentages of Represented Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: -6.2% (2015-2018 expo)






2009201020112012201320142015201620172018

4b) Basic Bodily InjuryRepresented Non-Minor Injuries - Special DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Non-Minor InjuriesSpecial Damages Cumulative Percentage of Total Incurred Claim Amounts*


4d) Basic Bodily InjuryRepresented Non-Minor InjuriesDevelopment Factors - Special Damages Cumulative Percentage of Total Incurred Claim Amounts**








Represented Non-Minor InjuriesSpecial Damages Percentage of Total Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Represented Non-Minor Injuries' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Non-Minor Injuries' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Non-Minor Injuries' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)




Total Incurred Claim Amounts – Past Wage Loss %



Total Incurred Claim Amounts - Past Wage Loss %'s1a) Basic Bodily Injury



2009201020112012201320142015201620172018

1b) Basic Bodily InjuryUnrepresented Minor Injuries - Past Wage LossTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018





Total Incurred Claim Amounts - Past Wage Loss %'s1c) Basic Bodily Injury

Unrepresented Minor InjuriesPast Wage Loss Cumulative Percentage of Incurred Claim Amounts*


1d) Basic Bodily InjuryUnrepresented Minor InjuriesDevelopment Factors - Past Wage Loss Cumulative Percentage of Incurred Claim Amounts**



** Development factors for XX-YYm calculated from 1c) by dividing Cumulative Percentage of Incurred Claim Amounts from 0-YYm by Cumulative Percentage from 0-XXm*** No further development assumed beyond 120 months

* Cumulative Percentage of Incurred Claim Amounts equals Past Wage Loss Incurred Claim Amounts by Closed Month over 0-XXm from 1b) divided by All Heads of Damage Incurred ClaimAmounts by Closed Month over 0-XXm from 1a).



Total Incurred Claim Amounts - Past Wage Loss %'s1e) Basic Bodily Injury

Unrepresented Minor InjuriesPast Wage Loss Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Unrepresented Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 expo trend)






2009201020112012201320142015201620172018

2b) Basic Bodily InjuryUnrepresented Non-Minor Injuries - Past Wage LossTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Unrepresented Non-Minor InjuriesPast Wage Loss Cumulative Percentage of Incurred Claim Amounts*


2d) Basic Bodily InjuryUnrepresented Non-Minor InjuriesDevelopment Factors - Past Wage Loss Cumulative Percentage of Incurred Claim Amounts**








Unrepresented Non-Minor InjuriesPast Wage Loss Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Unrepresented Non-Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Non-Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Non-Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)






3b) Basic Bodily InjuryRepresented Minor Injuries - Past Wage LossTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Minor InjuriesPast Wage Loss Cumulative Percentage of Incurred Claim Amounts*


3d) Basic Bodily InjuryRepresented Minor InjuriesDevelopment Factors - Past Wage Loss Cumulative Percentage of Incurred Claim Amounts**




* Cumulative Percentage of Incurred Claim Amounts eAFuals Past Wage Loss Incurred Claim Amounts by Closed Month over 0-XXm from 3b) divided by All Heads of Damage Incurred ClaimAmounts by Closed Month over 0-XXm from 3a).




Represented Minor InjuriesPast Wage Loss Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Represented Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: -10.5% (2015-2018 expo trend)






2009201020112012201320142015201620172018

4b) Basic Bodily InjuryRepresented Non-Minor Injuries - Past Wage LossTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Non-Minor InjuriesPast Wage Loss Cumulative Percentage of Incurred Claim Amounts*


4d) Basic Bodily InjuryRepresented Non-Minor InjuriesDevelopment Factors - Past Wage Loss Cumulative Percentage of Incurred Claim Amounts**








Represented Non-Minor InjuriesPast Wage Loss Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Represented Non-Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Non-Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Non-Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 average)




Total Incurred Claim Amounts - Legal Costs andDisbursements %



Total Incurred Claim Amounts - Legal Costs and Disbursements %'s1a) Basic Bodily Injury



2009201020112012201320142015201620172018

1b) Basic Bodily InjuryUnrepresented Minor Injuries - Legal Costs and DisbursementsTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018





Total Incurred Claim Amounts - Legal Costs and Disbursements %'s1c) Basic Bodily Injury

Unrepresented Minor InjuriesLegal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts*


1d) Basic Bodily InjuryUnrepresented Minor InjuriesDevelopment Factors - Legal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts**




* Cumulative Percentage of Incurred Claim Amounts equals Legal Costs and Disbursements Incurred Claim Amounts by Closed Month over 0-XXm from 1b) divided by All Heads of DamageIncurred Claim Amounts by Closed Month over 0-XXm from 1a).



Total Incurred Claim Amounts - Legal Costs and Disbursements %'s1e) Basic Bodily Injury

Unrepresented Minor InjuriesLegal Costs and Disbursements Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Unrepresented Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 avg)






2009201020112012201320142015201620172018

2b) Basic Bodily InjuryUnrepresented Non-Minor Injuries - Legal Costs and DisbursementsTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Unrepresented Non-Minor InjuriesLegal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts*


2d) Basic Bodily InjuryUnrepresented Non-Minor InjuriesDevelopment Factors - Legal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts**








Unrepresented Non-Minor InjuriesLegal Costs and Disbursements Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Unrepresented Non-Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Unrepresented Non-Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Unrepresented Non-Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 avg)






3b) Basic Bodily InjuryRepresented Minor Injuries - Legal Costs and DisbursementsTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Minor InjuriesLegal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts*


3d) Basic Bodily InjuryRepresented Minor InjuriesDevelopment Factors - Legal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts**




* Cumulative Percentage of Incurred Claim Amounts eAFuals Legal Costs and Disbursements Incurred Claim Amounts by Closed Month over 0-XXm from 3b) divided by All Heads of DamageIncurred Claim Amounts by Closed Month over 0-XXm from 3a).




Represented Minor InjuriesLegal Costs and Disbursements Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Represented Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 avg)






2009201020112012201320142015201620172018

4b) Basic Bodily InjuryRepresented Non-Minor Injuries - Legal Costs and DisbursementsTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018






Represented Non-Minor InjuriesLegal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts*


4d) Basic Bodily InjuryRepresented Non-Minor InjuriesDevelopment Factors - Legal Costs and Disbursements Cumulative Percentage of Incurred Claim Amounts**








Represented Non-Minor InjuriesLegal Costs and Disbursements Percentage of Incurred Claim Amounts (1) (2)




(1) Ultimate Percentages of Represented Non-Minor Injuries' Incurred Claim Amounts(2) Trended Ultimate Percentages of Represented Non-Minor Injuries' Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Represented Non-Minor Injuries' Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 avg)




Exposure Counts - Out of Province %



Exposure Counts - Out of Province %'s1a) Basic Bodily Injury

All Claim ExposuresExposure Counts by Closed Month as of March 31, 2018


2009 12,791 25,090 32,014 36,228 38,797 40,127 40,792 41,132 41,357 41,5262010 12,153 24,762 31,279 35,475 38,404 39,915 40,624 41,035 41,2762011 15,081 26,825 33,631 38,264 41,674 43,450 44,423 44,9112012 12,649 25,328 33,797 38,523 41,803 43,771 44,7312013 11,030 26,446 34,603 39,025 42,528 44,7072014 12,264 26,783 34,799 39,977 43,8732015 13,591 28,556 38,576 44,1152016 14,385 32,588 43,1732017 16,738 35,3722018 17,648

1b) Basic Bodily InjuryOut of Province Claim ExposuresExposure Counts by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 210 659 930 1,036 1,111 1,143 1,179 1,191 1,198 1,1992010 305 731 919 1,013 1,061 1,088 1,095 1,113 1,1192011 411 902 1,115 1,220 1,305 1,362 1,388 1,4002012 416 848 1,043 1,171 1,223 1,260 1,2662013 334 761 1,001 1,118 1,181 1,2222014 188 530 774 914 9642015 213 673 864 9642016 264 601 7792017 207 5182018 192




Exposure Counts - Out of Province %'s1c) Basic Bodily Injury

Out of Province Claim Exposures' Cumulative Percentage of Exposure CountsClosed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 1.6% 2.6% 2.9% 2.9% 2.9% 2.8% 2.9% 2.9% 2.9% 2.9%2010 2.5% 3.0% 2.9% 2.9% 2.8% 2.7% 2.7% 2.7% 2.7%2011 2.7% 3.4% 3.3% 3.2% 3.1% 3.1% 3.1% 3.1%2012 3.3% 3.3% 3.1% 3.0% 2.9% 2.9% 2.8%2013 3.0% 2.9% 2.9% 2.9% 2.8% 2.7%2014 1.5% 2.0% 2.2% 2.3% 2.2%2015 1.6% 2.4% 2.2% 2.2%2016 1.8% 1.8% 1.8%2017 1.2% 1.5%2018 1.1%

1d) Basic Bodily Injury

Development Factors - Out of Province Claim Exposures' Cumulative Percentage of Exposure Counts**Closed Month

FLY 12-24M 24-36M 36-48M 48-60M 60-72M 72-84M 84-96M 96-108M 108-120M 120M+2009 1.60 1.11 0.98 1.00 0.99 1.01 1.00 1.00 1.002010 1.18 1.00 0.97 0.97 0.99 0.99 1.01 1.002011 1.23 0.99 0.96 0.98 1.00 1.00 1.002012 1.02 0.92 0.98 0.96 0.98 0.982013 0.95 1.01 0.99 0.97 0.982014 1.29 1.12 1.03 0.962015 1.50 0.95 0.982016 1.00 0.982017 1.18

Selected Development Factors(1) Selected 1.25 1.01 0.99 0.97 0.99 1.00 1.00 1.00 1.00 1.00(2) Basis Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 N/A***


* Cumulative Percentage of Exposure Counts for 0-XXm equals Out of Province Exposure Counts by Closed Month over 0-XXm from 1b) divided by All Claim Exposures' ExposureCounts by Closed Month over 0-XXm from 1a).



Exposure Counts - Out of Province %'s1e) Basic Bodily Injury

Out of Province Claim Exposures' Percentage of Exposure Counts (1) (2)Closed Month**

FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 1.6% 2.6% 2.9% 2.9% 2.9% 2.8% 2.9% 2.9% 2.9% 2.9% 2.9%2010 2.5% 3.0% 2.9% 2.9% 2.8% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7%2011 2.7% 3.4% 3.3% 3.2% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1%2012 3.3% 3.3% 3.1% 3.0% 2.9% 2.9% 2.8% 2.8% 2.8% 2.8% 2.8%2013 3.0% 2.9% 2.9% 2.9% 2.8% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7%2014 1.5% 2.0% 2.2% 2.3% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%2015 1.6% 2.4% 2.2% 2.2% 2.1% 2.1% 2.1% 2.1% 2.1% 2.1% 2.1% 2%2016 1.8% 1.8% 1.8% 1.8% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 2%2017 1.2% 1.5% 1.5% 1.5% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 2%2018 1.1% 1.4% 1.4% 1.4% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% 2%2019 2%2020 (3) 2%



(1) Ultimate Percentages of Out of Province Claim Exposures' Exposure Counts(2) Trended Ultimate Percentages of Out of Province Claim Exposures' Exposure Counts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Out of Province Claim Exposures' Exposure Counts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 Avg)





Total Incurred Claim Amounts - Out of Province %



Total Incurred Claim Amounts - Out of Province %'s2a) Basic Bodily Injury

All Claim ExposuresTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 57,448,596 192,130,275 398,718,637 648,647,692 848,009,002 980,619,071 1,050,434,715 1,092,388,506 1,111,770,081 1,127,564,2462010 56,074,390 215,494,542 411,185,135 626,947,104 855,164,848 1,009,265,398 1,092,133,135 1,137,106,589 1,166,787,6242011 79,472,370 221,563,311 396,833,094 636,286,239 914,607,240 1,098,476,012 1,204,297,834 1,264,934,3352012 55,884,410 192,663,378 405,284,507 661,226,975 931,215,683 1,138,355,594 1,254,814,7952013 46,793,372 221,296,583 463,686,604 717,749,800 1,021,569,366 1,264,347,1902014 62,126,589 257,402,267 507,147,535 805,748,982 1,165,920,0362015 72,985,773 274,101,200 580,341,038 920,050,1302016 77,737,191 340,889,529 699,482,1382017 93,325,755 402,178,2692018 113,445,661

2b) Basic Bodily InjuryOut of Province Claim ExposuresTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 808,955 4,677,021 11,614,353 15,403,275 20,138,005 22,566,943 25,740,360 26,931,058 27,458,360 27,717,3012010 1,487,671 6,232,894 12,302,947 15,794,919 18,889,187 20,793,610 22,076,448 23,647,127 24,403,0162011 1,525,481 6,133,075 13,273,527 18,139,209 25,993,686 31,261,211 36,891,960 39,289,6702012 1,878,803 6,385,594 11,029,710 18,920,712 22,928,817 26,229,927 26,652,5472013 1,421,071 6,219,738 14,635,884 20,750,787 25,368,576 28,660,4152014 980,203 6,786,697 12,653,235 22,481,688 28,136,8102015 1,430,785 7,771,537 17,693,333 24,536,8362016 1,556,298 8,909,058 17,790,8332017 1,622,430 7,450,2572018 1,619,922




Total Incurred Claim Amounts - Out of Province %'s2c) Basic Bodily Injury

Out of Province Claim Exposures' Cumulative Percentage of Total Incurred Claim Amounts*Closed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 1.4% 2.4% 2.9% 2.4% 2.4% 2.3% 2.5% 2.5% 2.5% 2.5%2010 2.7% 2.9% 3.0% 2.5% 2.2% 2.1% 2.0% 2.1% 2.1%2011 1.9% 2.8% 3.3% 2.9% 2.8% 2.8% 3.1% 3.1%2012 3.4% 3.3% 2.7% 2.9% 2.5% 2.3% 2.1%2013 3.0% 2.8% 3.2% 2.9% 2.5% 2.3%2014 1.6% 2.6% 2.5% 2.8% 2.4%2015 2.0% 2.8% 3.0% 2.7%2016 2.0% 2.6% 2.5%2017 1.7% 1.9%2018 1.4%

2d) Basic Bodily Injury

Development Factors - Out of Province Claim Exposures' Cumulative Percentage of Total Incurred Claim Amounts**Closed Month

FLY 12-24M 24-36M 36-48M 48-60M 60-72M 72-84M 84-96M 96-108M 108-120M 120M+2009 1.73 1.20 0.82 1.00 0.97 1.06 1.01 1.00 1.002010 1.09 1.03 0.84 0.88 0.93 0.98 1.03 1.012011 1.44 1.21 0.85 1.00 1.00 1.08 1.012012 0.99 0.82 1.05 0.86 0.94 0.922013 0.93 1.12 0.92 0.86 0.912014 1.67 0.95 1.12 0.862015 1.45 1.08 0.872016 1.31 0.972017 1.07

Selected Development Factors(1) Selected 1.37 1.03 0.99 0.90 0.95 1.01 1.02 1.00 1.00 1.00(2) Basis Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 Avg 4 N/A***


* Cumulative Percentage of Total Incurred Claim Amounts for 0-XXm equals Out of Province Claim Exposures' Total Incurred Claim Amounts by Closed Month from 0-XXm from 2b)divided by All Claim Exposures' Total Incurred Claim Amounts by Closed Month from 0-XXm from 2a).



Total Incurred Claim Amounts - Out of Province %'s2e) Basic Bodily Injury

Out of Province Claim Exposures' Percentage of Total Incurred Claim Amounts (1) (2)0-12m

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 1.4% 2.4% 2.9% 2.4% 2.4% 2.3% 2.5% 2.5% 2.5% 2.5% 2.5%2010 2.7% 2.9% 3.0% 2.5% 2.2% 2.1% 2.0% 2.1% 2.1% 2.1% 2.1%2011 1.9% 2.8% 3.3% 2.9% 2.8% 2.8% 3.1% 3.1% 3.1% 3.1% 3.1%2012 3.4% 3.3% 2.7% 2.9% 2.5% 2.3% 2.1% 2.2% 2.2% 2.2% 2.2%2013 3.0% 2.8% 3.2% 2.9% 2.5% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3%2014 1.6% 2.6% 2.5% 2.8% 2.4% 2.3% 2.3% 2.3% 2.4% 2.3% 2.3%2015 2.0% 2.8% 3.0% 2.7% 2.4% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2%2016 2.0% 2.6% 2.5% 2.5% 2.3% 2.1% 2.2% 2.2% 2.2% 2.2% 2.2% 2%2017 1.7% 1.9% 1.9% 1.9% 1.7% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 2%2018 1.4% 2.0% 2.0% 2.0% 1.8% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 2%2019 2%2020 (3) 2%



(1) Ultimate Percentages of Out of Province Claim Exposures' Total Incurred Claim Amounts(2) Trended Ultimate Percentages of Out of Province Claim Exposures' Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Trended Ultimate Percentage of Out of Province Claim Exposures' Total Incurred Claim Amounts for FLY 2020(4) Selected Trend: 0.0% (2015-2018 Avg)




Appendix B.1Basic Bodily Injury Product Reform Costing Model

Summary


Insurance Corporation of British Columbia Appendix B.1Basic BI Costing Model

Summary

Basic Bodily Injury

1a) Exposure Counts - Summary

(1) (2) (3) (4)

Representation/FutureLegal Status Category Injury Category

FLY 2020Forecast

Adjusted FLY 2020Forecast

Adjusted FLY 2020Forecast After

Product Change

Adjusted FLY 2020Forecast After

Product Change &CRT

Unrepresented Minor Injuries 27,463 27,176 26,331 26,331Represented Minor Injuries 30,833 30,512 29,562CRT* Minor Injuries 27,628Over CRT Jurisdiction Minor Injuries 1,934Unrepresented Non-Minor Injuries 2,365 2,652 2,652 2,652Represented Non-Minor Injuries 13,491 13,813 13,813CRT* Non-Minor Injuries 9,484Over CRT Jurisdiction Non-Minor Injuries 4,329Total 74,152 74,152 72,358 72,358Minor Injuries Total 58,296 57,688 55,893 55,893Non-Minor Injuries Total 15,856 16,464 16,464 16,464

* See Chapter 2 of the RRA for further details on Civil Resolution Tribunal (CRT)(1) From Appendix B.2 2a) Fiscal Loss Year 2020 forecast exposure counts(2) From Appendix B.2 2b) Fiscal Loss Year 2020 forecast exposure counts adjusted for claim exposures still impaired after 12 months(3) From Appendix B.2 2c) Fiscal Loss Year 2020 forecast exposure counts adjusted for claim exposures still impaired after 12 months and reflecting anticipated

reduction in exposure counts following product change(4) From Appendix B.2 2d) Fiscal Loss Year 2020 forecast exposure counts adjusted for claim exposures still impaired after 12 months and reflecting anticipated

reduction in exposure counts following product change and shift in claim mix for CRT

1b) Total Severity per Exposure Count - Summary

(5) (6) (7) (8)

Representation/Future Legal Status CategoryInjury CategoryFLY 2020

Forecast

Product Change:Collateral Benefits and

Cost Movement to Part 7


DamagesProduct Change:

Introduction of CRTUnrepresented Minor InjuriesRepresented Minor InjuriesCRT* Minor InjuriesOver CRT Jurisdiction Minor InjuriesUnrepresented Non-Minor InjuriesRepresented Non-Minor InjuriesCRT* Non-Minor InjuriesOver CRT Jurisdiction Non-Minor Injuries

(5) From Appendix B.3 3d) column (11) Fiscal Loss Year 2020 forecast total severity per exposure count(6) From Appendix B.3 3e) column (11) Fiscal Loss Year 2020 forecast total severity per exposure count with reductions applied to Special Damages, Past Wage Loss and Future Care(7) From Appendix B.3 3f) column (11) Fiscal Loss Year 2020 forecast total severity per exposure count with reductions applied to Special Damages, Past Wage Loss and Future Care,

and General Damages cap applied (for minor injuries)(8) From Appendix B.3 3g) (11) Fiscal Loss Year 2020 forecast total severity per exposure count following introduction of CRT with reductions applied to Special Damages,

Past Wage Loss and Future Care, and General Damages cap applied (for minor injuries)



Summary

Basic Bodily Injury

1c) Total Incurred ($000s)

(1) (2) (3) (4) (5) (6)

Representation/Future Legal Status CategoryInjury CategoryFLY 2020

ForecastAdjustment for 12 Month

Impairment Condition




Damages


Exposure CountsProduct Change:

Introduction of CRTUnrepresented Minor InjuriesRepresented Minor InjuriesCRT* Minor InjuriesOver CRT Jurisdiction Minor InjuriesUnrepresented Non-Minor InjuriesRepresented Non-Minor InjuriesCRT* Non-Minor InjuriesOver CRT Jurisdiction Non-Minor InjuriesTotal $3,175,101 $3,180,297 $2,917,397 $1,842,081 $1,813,973 $1,700,868Minor Injuries Total $2,151,442 $2,129,001 $1,978,917 $903,601 $875,493 $789,898Non-Minor Injuries Total $1,023,659 $1,051,296 $938,480 $938,480 $938,480 $910,970

(1) Exposure Counts from 1a) column (2) times Total Severity per Exposure Count from 1b) column (7)(2) Exposure Counts from 1a) column (3) times Total Severity per Exposure Count from 1b) column (7)(3) Exposure Counts from 1a) column (3) times Total Severity per Exposure Count from 1b) column (8)(4) Exposure Counts from 1a) column (3) times Total Severity per Exposure Count from 1b) column (9)(5) Exposure Counts from 1a) column (4) times Total Severity per Exposure Count from 1b) column (9)(6) Exposure Counts from 1a) column (5) times Total Severity per Exposure Count from 1b) column (10)

1d) Forecast Savings/(Increase) ($000s)

(7) (8) (9) (10) (11) (12)

Representation/Future Legal Status CategoryInjury Category


Condition

Product Change:Collateral Benefits and

Cost Movement to Part 7


Damages


Exposure CountsProduct Change:

Introduction of CRT TotalUnrepresented Minor InjuriesRepresented Minor InjuriesCRT* Minor InjuriesOver CRT Jurisdiction Minor InjuriesUnrepresented Non-Minor InjuriesRepresented Non-Minor Injuries CRT* Non-Minor InjuriesOver CRT Jurisdiction Non-Minor InjuriesTotal ($5,197) $262,901 $1,075,316 $28,108 $113,105 $1,474,233Minor Injuries Total $22,440 $150,084 $1,075,316 $28,108 $85,595 $1,361,544Non-Minor Injuries Total ($27,637) $112,816 $0 $0 $27,510 $112,689

(7) Total Incurred from 1c) column (1) minus Total Incurred from 1c) column (2)(8) Total Incurred from 1c) column (2) minus Total Incurred from 1c) column (3). Note that a portion of these savings to Bodily Injury costs will shift to Part 7 Benefits.(9) Total Incurred from 1c) column (3) minus Total Incurred from 1c) column (4)(10) Total Incurred from 1c) column (4) minus Total Incurred from 1c) column (5)(11) Total Incurred from 1c) column (5) minus Total Incurred from 1c) column (6)(12) Total Incurred from 1c) column (1) minus Total Incurred from 1c) column (6)




Exposure Counts



Exposure Counts

Basic Bodily InjuryClaim Exposure Counts

2a) Fiscal Loss Year 2020 Forecast

Representation Category Injury CategoryFLY 2020 ForecastExposure Counts4

Unrepresented Minor Injuries 27,463Unrepresented Non-Minor Injuries 2,365Represented Minor Injuries 30,833Represented Non-Minor Injuries 13,491Total 74,152Minor Injuries Total 58,296Non-Minor Injuries Total 15,856

4 From Appendix A.1 1e) column (5)

2b) Adjustment for claim exposures still impaired after 12 months

Under the Minor Injury definition, minor injuries do not include those which result in serious impairment. Two criteria define serious impairment, i) the impairment is not resolved within 12 months,or another prescribed period, if any, after the date of an accident, and ii) the impairment meets prescribed criteria.Below, the FLY 2020 forecasted exposure counts from 1b) are adjusted to reflect that 0.82%5 of claimants with injuries which otherwise meet the Minor Injury definition are expected to be impairedbeyond 12 months.

(1) Total exposure counts shifting from minor to non-minor 608 = Total exposure counts from 2a) times percentage shifting = 74,152 x 0.82%(2) % of minor injuries which are unrepresented 47% = Unrepresented minor injury exposure counts divided by total minor injury exposure counts (both from 2a)) = 27,463 / 58,296(3) Unrepresented exposure counts shifting 286 = (1) x (2)(4) Represented exposure counts shifting 322 = (1) - (3)

Representation Category Injury Category

Adjusted FLY 2020Forecast Exposure

CountsUnrepresented Minor Injuries 27,176 = 27,463 from 2a) - 286 from (3)Unrepresented Non-Minor Injuries 2,652 = 2,365 from 2a) + 286 from (3)Represented Minor Injuries 30,512 = 30,833 from 2a) - 322 from (3)Represented Non-Minor Injuries 13,813 = 13,491 from 2a) + 322 from (3)Total 74,152Minor Injuries Total 57,688Non-Minor Injuries Total 16,464

5 0.82% assumption is based on results of the Closed Claim Study discussed in Appendix E



Exposure Counts

Basic Bodily InjuryClaim Exposure Counts

2c) Product Change: Anticipated reduction in exposure counts

Below, the Adjusted FLY 2020 exposure counts from 2c) are reduced for the overall decrease in claim count exposures of 2.42%5 anticipated as a result of product change. The overall decrease isassumed to come exclusively from Minor Injury exposures.

(1) Total reduction in exposure counts 1,794 = Total exposure counts from 2b) times reduction percentage = 74,152 x 2.42%(2) % of minor injuries which are unrepresented 47% = Unrepresented minor injury exposure counts divided by total minor injury exposure counts (both from 2b)) = 27,176 / 57,688(3) Reduction in unrepresented exposure counts 845 = (1) x (2)(4) Reduction in represented exposure counts 949 = (1) - (3)

Representation Category Injury Category


Counts AfterProduct Change

Unrepresented Minor Injuries 26,331 = 27,176 from 2b) - 845 from (3)Unrepresented Non-Minor Injuries 2,652Represented Minor Injuries 29,562 = 30,512 from 2b) - 949 from (3)Represented Non-Minor Injuries 13,813Total 72,358Minor Injuries Total 55,893Non-Minor Injuries Total 16,464

5 2.42% assumption is based on results of the Closed Claim Study discussed in Appendix E

2d) Product Change: Introduction of CRT

As part of the product changes, the Civil Resolution Tribunal (CRT) will resolve certain disputes concerning certain motor vehicle injury claims.The CRT will handle claims withsettlements below $50,000. It is expected claims handled by the CRT will also have Third Party Disbursements limited to $5,000 and ICBC Disbursements limited to $5,000.The mix of claims following the introduction of the CRT is assumed to change as follows:

- 0% of unrepresented exposures are expected to go through CRT- 93%6 of represented minor injury exposures are expected to go through CRT- 69%7 of represented non-minor injury exposures are expected to go through CRT

Future Legal Status Injury Category


Counts AfterProduct Change &

CRTUnrepresented Minor Injuries 26,331CRT Minor Injuries 27,628 = Represented minor injury exposure counts from 2c) times 93% expected to go through CRT = 29,562 x 93%Over CRT Jurisdiction Minor Injuries 1,934 = Represented minor injury exposure counts from 2c) times 7% not expected to go through CRT = 29,562 x [1 - 93%]Unrepresented Non-Minor Injuries 2,652CRT Non-Minor Injuries 9,484 = Represented non-minor injury exposure counts from 2c) times 69% expected to go through CRT = 13,813 x 69%Over CRT Jurisdiction Non-Minor Injuries 4,329 = Represented non-minor injury exposure counts from 2c) times 31% not expected to go through CRT = 13,813 x [1 - 69%]Total 72,358Minor Injuries Total 55,893Non-Minor Injuries Total 16,464

6 For represented minor injury claim exposures closed in 2017, payments were trended to FLY 2020 using severity adjustment factors from Appendix B.3 Table 3c), then calculated percentageof claim exposures with settlement under $50,000 after product change cost reductions and General Damages cap

7 For represented non-minor injury claim exposures closed in 2017, payments were trended to FLY 2020 using severity adjustment factors from Appendix B.3 Table 3c), then calculated percentageof claim exposures with settlement under $50,000 after product change cost reductions




Severity per Exposure Count




Basic Bodily InjurySeverity per Exposure Count

3a) Claim Exposures Closed in 2017

(1) (2) (3) (4) (5) (6)

RepresentationCategory Injury Category

GeneralDamages

SpecialDamages

Past WageLoss

Legal Costsand

Disbursements Other Costs


CountUnrepresented Minor InjuriesUnrepresented Non-Minor InjuriesRepresented Minor InjuriesRepresented Non-Minor Injuries

(1) to (5) Total incurred under each head of damage/grouping from claim exposures closed in 2017 divided by the number of claim exposures closed in 2017Note: (4) Legal Costs and Disbursements includes Third Party Costs, Third Party Disbursements, ICBC Legal Costs and ICBC Disbursements heads of damage. (5) Other Costs includes Future Wage Loss, Future Care, and Other Costs heads of damage.

(6) = (1) + (2) + (3) + (4) + (5)

3b) Allocated Fiscal Loss Year 2020 Forecast Severity

FLY 2020 severities are calculated from the allocated forecasted total incurred claim amounts and exposure counts from the Allocation Model Exhibit X.Y.1

(1) (2) (3) (4) (5) (6)


GeneralDamages

SpecialDamages

Past WageLoss

Legal Costsand


Allocated FLY2020 Forecast

ExposureCounts

Unrepresented Minor Injuries 27,463Unrepresented Non-Minor Injuries 2,365Represented Minor Injuries 30,833Represented Non-Minor Injuries 13,491

(7) (8) (9) (10) (11) (12)


GeneralDamages

SpecialDamages

Past WageLoss

Legal Costsand




(1) to (5) Allocated FLY 2020 Forecast Total Incurred Claim Amounts ($000) from Appendix A.1 Table 2f) (9) = (3) / (6)(6) Allocated FLY 2020 Forecast Exposure Counts from Appendix A.1 Table 1e) (10) = (4) / (6)(7) = (1) / (6) (11) = (5) / (6)(8) = (2) / (6) (12) = (7) + (8) + (9) + (10) + (11)

3c) Severity Adjustment Factors

The ratios of the FLY 2020 severities per exposure count to the 2017 closed year severities produce the severity adjustment factors.

(1) (2) (3) (4) (5)


GeneralDamages

SpecialDamages

Past WageLoss

Legal Costsand

Disbursements Other CostsUnrepresented Minor Injuries 1.02 0.98 0.97 0.34 1.26Unrepresented Non-Minor Injuries 1.08 1.12 0.93 0.25 1.13Represented Minor Injuries 1.32 0.98 0.79 0.80 2.42Represented Non-Minor Injuries 1.15 0.98 1.13 0.80 1.65

(1) = (7) from 3b) / (1) from 3a) (4) = (10) from 3b) / (4) from 3a)(2) = (8) from 3b) / (2) from 3a) (5) = (11) from 3b) / (5) from 3a)(3) = (9) from 3b) / (3) from 3a)

Severity per Exposure Count by Head of Damage

Allocated FLY 2020 Forecast Total Incurred Claim Amounts ($000)

FLY 2020 Severity per Exposure Count by Head of Damage

Severity Adjustment Factors





3d) Fiscal Loss Year 2020 Forecast Severity

Applying the severity adjustment factors from 3c) to the incurred losses from each of the claim exposures closed in 2017, the resulting severities by head of damage are:

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Representation CategoryInjury CategoryGeneral

DamagesSpecial

DamagesPast Wage

LossFuture Wage

Loss Future CareThird Party

CostsThird Party

DisbursementsICBC Legal

CostsICBC




(1) to (10) Total incurred under each head of damage from claim exposures closed in 2017 after applying severity adjustment factors from 3c), divided by the number of claim exposures closed in 2017(11) Sum of (1) to (10)

3e) Product Change: Collateral Benefit on Past Wage Loss and Cost Movement to Part 7 Benefits

As discussed in Sections 8 and 9, there will be changes regarding the priority of payer for certain benefits as well as costs are expected to shift to Part 7 Benefits in light of the increased benefit limits. As a result:- Special Damages expected to reduce by 63%1 due to movement of costs to Part 7 Benefits- Past Wage Loss expected to reduce by 56%2 due to Collateral Benefits and Movement of Costs to Part 7 Benefits- Future Care expected to reduce by 63%1 due to movement of costs to Part 7 Benefits

Below are the severities accounting for the expected reductions to these heads of damage.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)


DamagesSpecial

DamagesPast Wage

LossFuture Wage


CostsThird Party


CostsICBC




(1) to (10) Severity per Exposure Count by Head of Damage at FLY 2020 Level from 3b) (11) to (20) with reductions applied to Special Damages, Past Wage Loss, and Future Care(11) Sum of (1) to (10)

1 63% reduction based on analysis from Part 7 Benefits Costing Model - Medical Benefits (Appendix D.1)2 56% reduction based on analysis from Part 7 Benefits Costing Model - Weekly Income Benefits (Appendix D.2)

3f) Product Change: General Damages capping applied

The $5,500 cap on general damages for claimants with injuries meeting the minor injury definition is applied on a claim exposure basis to their respective FLY 2020 level general damages.For claimants with FLY 2020 level general damages greater than $4,500, it was assumed their general damages would increase to the cap of $5,500.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)


DamagesSpecial

DamagesPast Wage

LossFuture Wage


CostsThird Party


CostsICBC




(1) to (10) Severity per Exposure Count by Head of Damage at FLY 2020 Level from 3c) (1) to (10) with cap applied to General Damages for minor injuries(11) Sum of (1) to (20)

FLY 2020 Forecast Severity per Exposure Count by Head of Damage - Adjusted for General Damages Cap

FLY 2020 Severity per Exposure Count by Head of Damage

FLY 2020 Forecast Severity per Exposure Count by Head of Damage - Adjusted for Collateral Benefits and Cost Movements to Part 7





3g) Product Change: Introduction of CRT

As discussed in 2d), as part of the product changes, the Civil Resolution Tribunal (CRT) will resolve certain disputes concerning certain motor vehicle injury claims. It is expected the CRT will handle claims withsettlements below $50,000, Third Party Disbursements limited to $5,000 and ICBC Disbursements limited to $5,000 Based on these criteria, the Severity per Exposure Count by Head of Damage at FLY 2020 Levelwere recalculated from claim exposures closed in 2017 with the following characteristics:

- Unrepresented: Unrepresented claim exposures- CRT: Represented claim exposures with Third Party Disbursements less than or equal to $5,000, ICBC Disbursements less than or equal to $5,000, and settlement amount after General Damages capping1 and

other cost reductions less than or equal to $50,000- Over CRT Jurisdiction: Represented claim exposures with settlement amounts after General Damages capping1 and other cost reductions greater than $50,000

Below are the resulting severities by head of damage for each of these groups:

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Future Legal Status Injury CategoryGeneral

DamagesSpecial

DamagesPast Wage

LossFuture Wage


CostsThird Party


CostsICBC



CountUnrepresented Minor InjuriesCRT Minor InjuriesOver CRT Jurisdiction Minor InjuriesUnrepresented Non-Minor InjuriesCRT Non-Minor InjuriesOver CRT Jurisdiction Non-Minor Injuries

(1) to (10) Severity per Exposure Count by Head of Damage at FLY 2020 Level using only claim exposures meeting criteria described above(11) Sum of (1) to (10)

1 General Damages capping only applies to minor injuries

FLY 2020 Forecast Severity per Exposure Count by Head of Damage - Adjusted for CRT




Appendix C.1Basic Bodily Injury Collateral Benefits Costing Model

Special Damages


Insurance Corporation of British Columbia Appendix C.1Collateral Benefits Costing Model

Special Damages1a) Basic Savings

(1) FLY 2019 Total (Basic + Optional) BI Incurred ($000s) From ICBC's Claims Costs Analysis as of FLY 2019 Q2, forecast BI total incurred claim amounts for Basic and Optional combined(2) BI Special Damages % of Total Incurred 3% From Appendix C.1 Table 2e) Row (3)(3) Basic Portion From Appendix C.1 Table 3e) Row (3)(4) May 17 2018 - April 1 2019 % of Year 87% = Days between May 17 2018 and March 31 2019 divided by 365(5) Basic Special Damages Incurred ($000s) for period $81,976 = (1) x (2) x (3) x (4)

(6) % of Special Damages related to medical costs 75% Based on ICBC internal data (from Guidewire), % of Special Damages Medical incurred claim amounts vs Special Damages Other(7) % of claimants with extended health insurance coverage 63% Number of people with extended health plans in BC as of 2016 from Canadian Life and Health Insurance Facts 2017* (link below)(8) % of treatments covered under extended health plan 25%

(9) Basic Savings ($000s) $9,692 = (5) x (6) x (7) x (8)

* Canadian Life and Health Insurance Facts 2017, Appendices, pg 4 (http://clhia.uberflip.com/i/878834-canadian-life-and-health-insurance-facts-2017-appendices/0) as a percentage of BC's 2016 population fromStatistics Canada (https://www2.gov.bc.ca/gov/content/data/statistics/people-population-community/population/population-estimates)

Assumption using ICBC's extended health plan as a proxy. ICBC plan covers about 10 sessions, Claims personnel estimated averagenumber of total treatments for claimants to be 40.



Special Damages2a) Total Bodily Injury (Basic + Optional)

All Heads of DamageTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


2b) Total Bodily Injury (Basic + Optional)Special DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


* FLY = Fiscal Loss Year, April 1 - March 31. Example FLY 2016 = April 1 2015 - March 31 2016.** Claims occuring in Fiscal Loss Year closing in period of 0 to XX months (e.x. 0-12m claim exposures close within 12 months of beginning of given FLY; 0-24m close within 24 months ofbeginning of FLY, etc.)



Special Damages2c) Total Bodily Injury (Basic + Optional)

Special Damages Cumulative Percentage of Total Incurred Claim Amounts*Closed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 6.1% 6.4% 6.0% 5.2% 5.0% 4.7% 4.5% 4.5% 4.4% 4.4%2010 6.0% 6.0% 5.6% 5.3% 4.8% 4.6% 4.4% 4.4% 4.3%2011 5.2% 6.3% 6.4% 5.6% 5.0% 4.7% 4.6% 4.5%2012 6.3% 7.2% 6.5% 5.8% 5.2% 4.9% 4.7%2013 6.4% 7.0% 6.3% 5.6% 4.9% 4.5%2014 6.1% 6.1% 5.9% 5.5% 4.8%2015 5.4% 5.8% 5.5% 5.1%2016 5.1% 5.7% 5.5%2017 5.3% 5.3%2018 4.8%

2d) Total Bodily Injury (Basic + Optional)

Development Factors - Special Damages Cumulative Percentage of Total Incurred Claim Amounts**Closed Month

FLY 12-24M 24-36M 36-48M 48-60M 60-72M 72-84M 84-96M 96-108M 108-120M 120M+2009 1.05 0.92 0.87 0.97 0.94 0.95 0.98 0.99 0.992010 0.99 0.94 0.94 0.91 0.95 0.96 0.99 0.992011 1.21 1.02 0.88 0.90 0.94 0.97 0.982012 1.14 0.91 0.89 0.89 0.94 0.962013 1.10 0.90 0.88 0.89 0.932014 0.99 0.97 0.93 0.882015 1.08 0.96 0.922016 1.10 0.982017 1.01


** Development factors for XX-YYm calculated from 2c) by dividing Cumulative Percentage of Total Incurred Claim Amounts from 0-YYm by Cumulative Percentage of Total Incurred Claim Amounts from 0-XXm*** No further development assumed beyond 120 months

* Cumulative Percentage of Total Incurred Claim Amounts equals Special Damages Total Incurred Claim Amounts by Closed Month over 0-XXm from 2b) divided by All Heads of DamageTotal Incurred Claim Amounts over 0-XXm from 2a).



Special Damages2e) Total Bodily Injury (Basic + Optional)

Special Damages Percentage of Incurred Claim Amounts (1) (2)Closed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 6.1% 6.4% 6.0% 5.2% 5.0% 4.7% 4.5% 4.5% 4.4% 4.4% 4.4%2010 6.0% 6.0% 5.6% 5.3% 4.8% 4.6% 4.4% 4.4% 4.3% 4.3% 4.3%2011 5.2% 6.3% 6.4% 5.6% 5.0% 4.7% 4.6% 4.5% 4.5% 4.4% 4.4%2012 6.3% 7.2% 6.5% 5.8% 5.2% 4.9% 4.7% 4.6% 4.5% 4.5% 4.5%2013 6.4% 7.0% 6.3% 5.6% 4.9% 4.5% 4.4% 4.3% 4.3% 4.2% 4.2%2014 6.1% 6.1% 5.9% 5.5% 4.8% 4.5% 4.4% 4.3% 4.3% 4.2% 4.2%2015 5.4% 5.8% 5.5% 5.1% 4.5% 4.3% 4.1% 4.0% 4.0% 4.0% 4.0% 4%2016 5.1% 5.7% 5.5% 5.0% 4.5% 4.2% 4.0% 4.0% 3.9% 3.9% 3.9% 4%2017 5.3% 5.3% 5.1% 4.6% 4.1% 3.8% 3.7% 3.6% 3.6% 3.6% 3.6% 4%2018 4.8% 5.0% 4.8% 4.3% 3.8% 3.6% 3.5% 3.4% 3.4% 3.3% 3.3% 3%2019 (3) 3%


Projected percentages, equal to percentage in prior period multiplied by appropriate selected development factor from Appendix C.1 Table 2d) row (1)

(1) Special Damages Ultimate Percentages of Total Incurred Claim Amounts(2) Special Damages Trended Ultimate Percentages of Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Special Damages Trended Ultimate Percentage of Total Incurred Claim Amounts for FLY 2019(4) Selected Trend: -5.8% (2015-2018 expo trend)



Special Damages3a) Total Bodily Injury (Basic + Optional)

Special DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


3b) Basic Bodily InjurySpecial DamagesTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 3,408,159 11,943,096 22,863,171 32,739,562 40,901,120 45,019,166 46,893,778 48,116,834 48,690,250 49,136,3762010 3,269,103 12,680,657 22,743,067 31,937,179 40,514,780 46,102,431 48,601,129 50,122,748 51,025,6122011 4,102,295 13,266,919 24,308,798 34,656,870 45,916,308 52,495,613 56,389,518 58,313,0762012 3,470,624 13,427,455 25,639,478 37,269,143 47,834,274 56,053,617 59,928,7472013 3,000,202 15,150,739 28,432,641 39,023,765 50,408,204 58,914,2032014 3,821,086 15,727,648 29,367,012 43,147,369 56,748,3572015 3,912,317 15,612,505 31,950,394 46,147,1272016 4,091,143 19,481,433 38,385,9512017 4,932,787 21,490,1992018 5,427,258




Special Damages3c) Basic Bodily Injury

Special DamagesBasic Cumulative Percentage of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts*

Closed MonthFLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009201020112012201320142015201620172018

3d) Basic Bodily InjurySpecial DamagesDevelopment Factors - Basic Cumulative Percentage of Total Bodily Injury Total Incurred Claim Amounts**




* Basic Cumulative Percentage of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts equals Basic Special Damages Total Incurred Claim Amounts by Closed Month over 0-XXmfrom 3b) divided by Total Bodily Injury (Basic + Optional) Past Wage Wage Loss Total Incurred Claim Amounts over 0-XXm from 3a).



Special Damages3e) Basic Bodily Injury

Basic Percentage of Incurred Claim Amounts (1) (2)Closed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended20092010201120122013201420152016201720182019 (3)



(1) Basic Ultimate Percentages of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts(2) Basic Trended Ultimate Percentages of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Basic Trended Ultimate Percentage of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts for FLY 2019(4) Selected Trend: 0.3% (2015-2018 expo trend)




Appendix C.2Basic Bodily Injury Collateral Benefits Costing Model

Past Wage Loss



Past Wage Loss1a) Basic Savings

(1) FLY 2019 Total (Basic + Optional) BI Incurred ($000s) From ICBC's Claims Costs Analysis as of FLY 2019 Q2, forecast BI total incurred claim amounts for Basic and Optional combined(2) BI Past Wage Loss % of Total Incurred 6% From Appendix C.2 Table 2e) Row (3)(3) Basic Portion From Appendix C.2 Table 3e) Row (3)(4) May 17 2018 - April 1 2019 % of Year 87% = Days between May 17 2018 and March 31 2019 divided by 365(5) Basic Past Wage Loss Incurred ($000s) for period $131,463 = (1) x (2) x (3) x (4)

(6) Overall Percentage Savings 50% From Table 1b) Row (4) below(7) Basic Savings ($000s) $65,164 = (5) x (6)

1b) Overall Percentage Savings

(a) (b) (c)Without A Group Plan With A Group Plan Weighted Average

(1) % of Claimants 54% 46% 100%Weekly Bodily Injury - Past Wage Loss

(2) Current Product Weekly $417 $585 $494(3) May 17 2018 - April 1 2019 $417 $52 $249(4) Overall Percentage Savigns 50%

(1a) = 1 - (1b)(1b)

(2a) From Table 1d) column (7). Bodily Injury - past wage loss average weekly payouts under current product for claimants without a group plan(2b) From Table 1d) column (10). Bodily Injury - past wage loss average weekly payouts under current product for claimants with a group plan(2c) = (1a) x (2a) + (1b) x (2b) = Weighted average Bodily Injury - past wage loss average weekly payouts under current product for all claimants(3a) From Table 1e) column (7). Bodily Injury - past wage loss average weekly payouts for period of May 17 2018 - April 1 2019 for claimants without a group plan(3b) From Table 1e) column (10). Bodily Injury - past wage loss average weekly payouts for period of May 17 2018 - April 1 2019 for claimants with a group plan(3c) = (1a) x (3a) + (1b) x (3b) = Weighted average Bodily Injury - past wage loss average weekly payouts for period of May 17 2018 - April 1 2019 for all claimants(4) = 1 - (3c) / (2c) = Percentage savings comparing payouts for period of May 1 2018 - April 1 2019 to current product for all claimants

Number of people with group disability plans in BC as of 2016 from Canadian Life and Health Insurance Facts 2017, Appendices, pg 4 (http://clhia.uberflip.com/i/878834-canadian-life-and-health-insurance-facts-2017-appendices/0) as a percentage of the number of people with employment income in BC from Statistics Canada Table 206-0053



Past Wage Loss1c) BC Employment Income Summary

(1) (2) (3) (4) (5)

Income Level

Percent of BCWorkers at Income

Level Income Level Mid-

Point Average Gross

Weekly Earnings Weekly 2016

Income Tax

Average NetWeekly

Earningsunder $5,000 (including losses) 15% $2,500 $48 $0 $48$5,000 to $9,999 8% $7,500 $144 $0 $144$10,000 to $19,999 13% $15,000 $288 $10 $278$20,000 to $29,999 12% $25,000 $481 $49 $432$30,000 to $39,999 11% $35,000 $673 $92 $581$40,000 to $49,999 9% $45,000 $865 $134 $731$50,000 to $59,999 8% $55,000 $1,058 $188 $870$60,000 to $69,999 6% $65,000 $1,250 $242 $1,008$70,000 to $79,999 4% $75,000 $1,442 $297 $1,146$80,000 to $89,999 4% $85,000 $1,635 $355 $1,279$90,000 to $99,999 3% $95,000 $1,827 $422 $1,405$100,000 and over 8% $140,331 $2,699 $772 $1,927Average Weekly Amount $808 $650Average Annual Amount $42,000

(1)

(2)

(3) = (2) / 52. Average weekly amount calculated using percent of BC workers at income level in column (1) and average weekly earnings at each income level in column (3)(4) 2016 annual income tax calculated for each Mid-Point using EY income tax calculator, then divided by 52.

http://www.ey.com/ca/en/services/tax/tax-calculators-2016-personal-tax(5) = (4) - (5). Average weekly amount calculated using percent of BC workers at income level in column (1) and average weekly earnings at each income level in column (5)

BC Employment Income Statistics for 2016 from Statistics Canada (Statistics Canada. Table 206-0053 - Distribution of employment income of individuals by sex and work activity Canada, provinces and selectedcensus metropolitan areas, annual).Mid-point of income level. For $100,000 and over income level, solved for mid-point of range which would result in annual average amount matching 2016 average employment income for BC from Stats Can($42,000) using % of workers at income levels and mid-points from prior levels.



Past Wage Loss1d) Weekly Wage Loss Payouts - Current Product

(1) Average percentage of disability benefits from group plans 67%(2) Part 7 Weekly Income Benefit weekly limit until April 1 2019 $300

(3) (4) (5) (6) (7) (8) (9) (10) (11)

Income Level Average Gross

Weekly Earnings Average Net Weekly

Earnings Disability Benefitsfrom Group Plans

Part 7 - WeeklyIncome Benefits

Bodily Injury -Past Wage Loss

ICBC TotalPast Wage Loss

Payout Part 7 - WeeklyIncome Benefits



Payoutunder $5,000 (including losses) $48 $48 $32 $36 $12 $48 $4 $44 $48$5,000 to $9,999 $144 $144 $97 $108 $36 $144 $12 $133 $144$10,000 to $19,999 $288 $278 $193 $216 $62 $278 $23 $255 $278$20,000 to $29,999 $481 $432 $322 $300 $132 $432 $38 $393 $432$30,000 to $39,999 $673 $581 $451 $300 $281 $581 $54 $527 $581$40,000 to $49,999 $865 $731 $580 $300 $431 $731 $69 $662 $731$50,000 to $59,999 $1,058 $870 $709 $300 $570 $870 $85 $785 $870$60,000 to $69,999 $1,250 $1,008 $838 $300 $708 $1,008 $100 $908 $1,008$70,000 to $79,999 $1,442 $1,146 $966 $300 $846 $1,146 $115 $1,030 $1,146$80,000 to $89,999 $1,635 $1,279 $1,095 $300 $979 $1,279 $131 $1,148 $1,279$90,000 to $99,999 $1,827 $1,405 $1,224 $300 $1,105 $1,405 $146 $1,259 $1,405$100,000 and over $2,699 $1,927 $1,808 $300 $1,627 $1,927 $216 $1,711 $1,927Average Weekly Amount* $808 $650 $233 $417 $650 $65 $585 $650

* Average weekly amounts calculated using percent of BC Workers at Income Level from Table 1c) column (1)(1) Source: Jurisdictional Scan Report produced by Deloitte for ICBC(2) ICBC's weekly limit for Part 7 Weekly Income Benefit prior to April 1 2019(3) Average gross weekly earnings from Table 1c) Column (3) above(4) Average net weekly earnings from Table 1c) Column (5) above(5) = (1) x (3) = % of benefits from group plans times average gross weekly earnings(6) = min(75% x (3), $300) = lower amount between i) 75% of average gross weekly earnings, or ii) $300.(7) = (4) - (6) = amount which would be sought through Bodily Injury Past Wage Loss head of damage(8) = (6) + (7) = total amount recoverable between Part 7 Disability Benefit and Bodily Injury Past Wage Loss head of damage for claimants without a group plan(9) = min(75% x (3) - (5), $300) = lower amount between i) 75% of average gross weekly earnings minus disability benefits from group plan, or ii) $300.(10) = (4) - (9) = amount which would we be sought through Bodily Injury Past Wage Loss head of damage(11) = (9) + (10) = total amount recoverable between Part 7 Disability Benefit and Bodily Injury Past Wage Loss head of damage for claimants with a group plan

Without A Group Plan With A Group Plan



Past Wage Loss1e) Weekly Wage Loss Payouts - May 17 2018 to April 1 2019

(1) Average percentage of disability benefits from group plans 67%(2) Part 7 Weekly Income Benefit weekly limit until April 1 2019 $300

(3) (4) (5) (6) (7) (8) (9) (10) (11)




Part 7 - WeeklyIncome Benefits



Payout Part 7 - WeeklyIncome Benefits



Payoutunder $5,000 (including losses) $48 $48 $32 $36 $12 $48 $4 $12 $16$5,000 to $9,999 $144 $144 $97 $108 $36 $144 $12 $36 $48$10,000 to $19,999 $288 $278 $193 $216 $62 $278 $23 $62 $85$20,000 to $29,999 $481 $432 $322 $300 $132 $432 $38 $71 $110$30,000 to $39,999 $673 $581 $451 $300 $281 $581 $54 $76 $130$40,000 to $49,999 $865 $731 $580 $300 $431 $731 $69 $82 $151$50,000 to $59,999 $1,058 $870 $709 $300 $570 $870 $85 $76 $161$60,000 to $69,999 $1,250 $1,008 $838 $300 $708 $1,008 $100 $70 $170$70,000 to $79,999 $1,442 $1,146 $966 $300 $846 $1,146 $115 $64 $179$80,000 to $89,999 $1,635 $1,279 $1,095 $300 $979 $1,279 $131 $53 $184$90,000 to $99,999 $1,827 $1,405 $1,224 $300 $1,105 $1,405 $146 $34 $181$100,000 and over $2,699 $1,927 $1,808 $300 $1,627 $1,927 $216 $0 $216Average Weekly Amount* $808 $650 $233 $417 $650 $65 $52 $117

* Average Weekly Amounts calculated using percent of BC Workers at Income Level from Table 1c) column (1)(1) Source: Jurisdictional Scan Report produced by Deloitte for ICBC(2) ICBC's weekly limit for Part 7 Weekly Income Benefit prior to April 1 2019(3) Average gross weekly earnings from Table 1c) Column (3) above(4) Average net weekly earnings from Table 1c) Column (5) above(5) = (1) x (3) = % of benefits from group plans times average gross weekly earnings(6) = min(75% x (3), $300) = lower amount between i) 75% of average gross weekly earnings, or ii) $300.(7) = (4) - (6) = amount which would be sought through Bodily Injury Past Wage Loss head of damage(8) = (6) + (7) = total amount recoverable between Part 7 Disability Benefit and Bodily Injury Past Wage Loss head of damage for claimants without a group plan(9) = min(75% x (3) - (5), $300) = lower amount between i) 75% of average gross weekly earnings minus disability benefits from group plan, or ii) $300.(10) = max((4) - (5) - (9), 0) = if positive, average net weekly earnings minus amounts received from group plans and Part 7 Disability Benefit, otherwise 0.(11) = (9) + (10) = total amount recoverable between Part 7 Disability Benefit and Bodily Injury Past Wage Loss head of damage for claimants with a group plan




Past Wage Loss2a) Total Bodily Injury (Basic + Optional)

All Heads of DamageTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


2b) Total Bodily Injury (Basic + Optional)Past Wage LossTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018





Past Wage Loss2c) Total Bodily Injury (Basic + Optional)

Past Wage Loss Cumulative Percentage of Total Incurred Claim Amounts*Closed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 9.8% 9.5% 8.9% 8.9% 9.2% 9.4% 9.6% 9.6% 9.6% 9.7%2010 8.0% 8.2% 8.1% 8.3% 8.9% 9.2% 9.5% 9.6% 9.6%2011 7.1% 7.5% 7.5% 8.1% 8.7% 9.0% 9.3% 9.5%2012 7.4% 7.9% 7.8% 8.1% 8.7% 9.2% 9.5%2013 7.6% 7.5% 7.3% 7.8% 8.6% 9.1%2014 7.2% 6.9% 7.0% 7.5% 8.3%2015 5.7% 6.0% 6.3% 6.9%2016 5.3% 5.6% 6.0%2017 5.1% 5.4%2018 4.5%

2d) Total Bodily Injury (Basic + Optional)

Development Factors - Past Wage Loss Cumulative Percentage of Total Incurred Claim Amounts**Closed Month

FLY 12-24M 24-36M 36-48M 48-60M 60-72M 72-84M 84-96M 96-108M 108-120M 120M+2009 0.97 0.93 1.01 1.03 1.03 1.02 1.00 1.00 1.002010 1.02 1.00 1.02 1.07 1.04 1.02 1.02 1.002011 1.07 1.00 1.08 1.07 1.03 1.03 1.022012 1.07 0.98 1.04 1.07 1.06 1.032013 0.99 0.97 1.06 1.10 1.062014 0.97 1.00 1.07 1.112015 1.04 1.05 1.102016 1.04 1.082017 1.07



* Cumulative Percentage of Total Incurred Claim Amounts equals Past Wage Loss Total Incurred Claim Amounts by Closed Month over 0-XXm from 2b) divided by All Heads of DamageTotal Incurred Claim Amounts over 0-XXm from 2a).



Past Wage Loss2e) Total Bodily Injury (Basic + Optional)

Past Wage Loss Percentage of Incurred Claim Amounts (1) (2)Closed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended2009 9.8% 9.5% 8.9% 8.9% 9.2% 9.4% 9.6% 9.6% 9.6% 9.7% 9.7%2010 8.0% 8.2% 8.1% 8.3% 8.9% 9.2% 9.5% 9.6% 9.6% 9.7% 9.7%2011 7.1% 7.5% 7.5% 8.1% 8.7% 9.0% 9.3% 9.5% 9.5% 9.6% 9.6%2012 7.4% 7.9% 7.8% 8.1% 8.7% 9.2% 9.5% 9.6% 9.7% 9.7% 9.7%2013 7.6% 7.5% 7.3% 7.8% 8.6% 9.1% 9.3% 9.4% 9.5% 9.5% 9.5%2014 7.2% 6.9% 7.0% 7.5% 8.3% 8.7% 8.9% 9.0% 9.0% 9.1% 9.1%2015 5.7% 6.0% 6.3% 6.9% 7.5% 7.9% 8.1% 8.2% 8.2% 8.2% 8.2% 8%2016 5.3% 5.6% 6.0% 6.4% 7.0% 7.3% 7.5% 7.6% 7.7% 7.7% 7.7% 8%2017 5.1% 5.4% 5.6% 6.0% 6.5% 6.8% 7.0% 7.1% 7.1% 7.1% 7.1% 7%2018 4.5% 4.6% 4.8% 5.1% 5.6% 5.8% 6.0% 6.1% 6.1% 6.1% 6.1% 6%2019 (3) 6%



(1) Past Wage Loss Ultimate Percentages of Total Incurred Claim Amounts(2) Past Wage Loss Trended Ultimate Percentages of Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Past Wage Loss Trended Ultimate Percentage of Total Incurred Claim Amounts for FLY 2019(4) Selected Trend: -9.3% (2015-2018 expo trend)



Past Wage Loss3a) Total Bodily Injury (Basic + Optional)

Past Wage LossTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018


3b) Basic Bodily InjuryPast Wage LossTotal Incurred Claim Amounts ($) by Closed Month as of March 31, 2018

Closed Month**FLY* 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009 5,634,157 18,414,523 35,721,791 57,394,395 76,683,963 89,881,285 97,253,913 101,485,695 103,499,325 105,215,7742010 4,530,198 17,702,660 33,791,430 51,546,033 73,912,579 89,973,098 99,297,637 104,252,159 107,272,9902011 5,615,218 16,898,272 30,388,913 50,637,500 77,396,847 95,532,533 106,779,219 113,735,2972012 4,015,265 15,101,959 31,488,448 52,647,248 78,368,032 99,704,799 112,063,8602013 3,541,890 16,597,539 33,730,269 54,856,092 84,125,904 108,330,9212014 4,446,192 17,707,927 34,846,082 57,888,093 91,207,8782015 4,191,209 16,428,428 36,791,710 63,292,9082016 4,111,127 19,345,742 42,783,2622017 4,735,665 21,905,7542018 5,130,472




Past Wage Loss3c) Basic Bodily Injury

Past Wage LossBasic Cumulative Percentage of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts*

Closed MonthFLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m2009201020112012201320142015201620172018

3d) Basic Bodily InjuryPast Wage LossDevelopment Factors - Basic Cumulative Percentage of Total Bodily Injury Total Incurred Claim Amounts**




* Basic Cumulative Percentage of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts equals Basic Past Wage Loss Total Incurred Claim Amounts by Closed Month over 0-XXmfrom 3b) divided by Total Bodily Injury (Basic + Optional) Past Wage Wage Loss Total Incurred Claim Amounts over 0-XXm from 3a).



Past Wage Loss3e) Basic Bodily Injury

Basic Percentage of Incurred Claim Amounts (1) (2)Closed Month

FLY 0-12m 0-24m 0-36m 0-48m 0-60m 0-72m 0-84m 0-96m 0-108m 0-120m Ultimate Trended20092010201120122013201420152016201720182019 (3)



(1) Basic Ultimate Percentages of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts(2) Basic Trended Ultimate Percentages of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts using Selected Trend in row (4)(3) Selected Basic Trended Ultimate Percentage of Total Bodily Injury (Basic + Optional) Total Incurred Claim Amounts for FLY 2019(4) Selected Trend: -0.1% (2015-2018 expo trend)



Appendix D.1Part 7 Benefits Product Reform Costing Models



Insurance Corporation of British Columbia Appendix D.1Part 7 Benefits Costing Model


1a) Fiscal Loss Year 2020 Medical Rehabilitation (MR) - Current Product Summary

(1) (2) (3) (4) (5)

CWA Claim CountsMR Total Incurred Claim

Amounts ($000s)

MR Total Paid LossAmounts ($000s)(excl. expenses)

Medical Cost Coveredunder BI SD and FC

($000s)Unlimited Medical Cost

($000s)a) Non-at-fault 48,671 $187,918 $172,022 $187,895 $359,917b) At-fault 13,602 $41,816 $39,921 $0 $39,921c) Total MR 62,272 $229,734 $211,943 $187,895 $399,838

* CWA = Completed with amount, claims closed or completed with paid loss + paid expense > 0.

1a) From Table 1e) row (3) 4a) From Table 1f) row (8)1b) From Table 1e) row (4) 4b) At-fault claimants have no Bodily Injury coverage, thus $01c) = 1a) + 1b) 4c) = 4a) + 4b)2a) From Table 1e) row (7) 5a) = (3a) + (4a)2b) From Table 1e) row (8) 5b) = (3b) + (4b)2c) = 2a) + 2b) 5c) = 5a) + 5b)3a) From Table 1e) row (11)3b) From Table 1e) row (12)3c) = 3a) + 3b)

1b) Fiscal Loss Year 2020 Medical Rehabilitation (MR) - After Product Change Summary

(6) (7) (8) (9)

CWA Claim Counts

MR Total Paid LossAmounts ($000s)(excl. expenses) MR Expenses ($000s)

MR Total Incurred ClaimAmounts ($000s)

a) Non-at-fault 47,493 $328,643 $15,512 $344,155b) At-fault 27,203 $188,241 $8,885 $197,125c) Total MR 74,696 $516,884 $24,397 $541,280


6a) From Table 1g) row (3) 8a) = [(2a) - (3a)] / (1a) x (6a) = Average expenses under current product times number of claims6b) From Table 1g) row (6) 8b) = [(2b) - (3b)] / (1b) x (6b) = Average expenses under current product times number of claims6c) = 6a) + 6b) 8c) = 8a) + 8b)7a) From Table 1g) row (12) 9a) = (7a) + (8a)7b) = (7a) / (6a) x (6b) 9b) = (7b) + (8b)

= Non-at-fault severity times number of at-fault claims 9c) = 9a) + 9b)7c) = 7a) + 7b)




1c) Summary of Fiscal Loss Year 2020 Impacts

Increase in Medical RehabilitationTotal Incurred Claim Amounts ($000s):

(1) Current Product $229,734 From Table 1a) column (2) Total MR(2) After Product Change $541,280 From Table 1b) column (9) Total MR(3) Increase $311,546 = (2) - (1)

1d) Source of Payments for Medical Related Costs

(4) (5) (6) (7)At-fault MR Non-at-fault MR Covered under BI Unlimited Medical Cost

(a) Current Product $39,921 $172,022 $187,895 $399,838(b) After Product Change $188,241 $328,643 $31,274 $548,157

4a) From Table 1a) column (3) row b) 4b) From Table 1b) column (7) row b)5a) From Table 1a) column (3) row a) 5b) From Table 1b) column (7) row a)6a) From Table 1a) column (4) row a) 6b)7a) = (4a) + (5a) + (6a)

7b) = (4b) + (5b) + (6b)

= Table 1a) column (5) row a) minus Table 1b) column (7) row a) = Portion of Non-at-fault Unlimited Medical Cost not covered by MR afterproduct change.




1e) Medical Rehabilitation - Current Product

FLY 2020 Claim Counts(1) MR Total CWA* claim counts 62,272 From ICBC's Claims Costs Analysis as of FLY 2019 Q2.(2) % Non-at-fault 78% From Appendix D.1 Table 2a) row (5)

(3) Non-at-fault CWA claim counts 48,671 = (1) x (2)(4) At-fault CWA claim counts 13,602 = (1) - (3)

FLY 2020 Total Incurred Claim Amounts(5) MR total incurred claim amounts ($000s) $229,734 From ICBC's Claims Costs Analysis as of FLY 2019 Q2.(6) % Non-at-fault 82% From Appendix D.1 Table 2b) row (5)(7) Non-at-fault total incurred claim amounts $187,918 = (5) x (6)(8) At-fault total incurred claim amounts $41,816 = (5) - (7)

% Loss Only (ie excluding expenses)(9) Non-at-fault 92% From Appendix D.1 Table 2c) row (4)

(10) At-fault 95% From Appendix D.1 Table 2c) row (8)

(11) Non-at-fault paid loss amounts (excl. expenses) $172,022 = (7) x (9)(12) At-fault paid loss amounts (excl. expenses) $39,921 = (8) x (10)





1f) Medical Related Costs in Bodily Injury - Current Product

Current Medical Rehabilitation Limit = $150,000Total Spend on Medical Rehabilitation from ICBC Basic = MR + Portion of Basic BI Special Damages related to MR + Portion of Basic BI Future Care related to MR

FLY 2020 Basic BI Special Damages and Future Care Exposure Counts and Total Incurred Claim Amounts

(1) (2) (3)

Exposure Counts (excl.out of province)

Special DamagesSeverity Per Exposure

CountFuture Care SeverityPer Exposure Count

Unrepresented Minor Injuries 27,463Unrepresented Non-Minor Injuries 2,365Represented Minor Injuries 30,833Represented Non-Minor Injuries 13,491Total 74,152 $1,387 $1,936

(1) From Appendix B.2 Table 2a)(2) From Appendix B.3 Table 3d) column (2)(3) From Appendix B.3 Table 3d) column (5)

Portion of FLY 2020 Basic BI Special Damages and Future Care related to MR

(4) Total claim exposure counts (incl. out of province) 75,378 From Appendix A.1 Table 1d) row 1(5) Special damages and Future care combined severity $3,324 = Total (2) + Total (3) from above(6) Total Special Damages and Future Care incurred claim amounts ($000) $250,527 = (4) x (5) / 1000(7) % related to MR 75% From Appendix C.1 Table 1a) row (6). Percentage of SD and FC related to medical costs(8) Portion of total incurred claim amounts related to MR $187,895 = (6) x (7)

FLY 2020 Forecasts




1g) Medical Rehabilitation - After Product Change

Assumptions:% Increase/(decrease) in number of non-at-fault claim counts for the first year post reform (2.42%) MR with BI claims will follow BI count reduction% Increase/(decrease) in number of at-fault claim counts for the first year post reform 100.00% JudgmentalSeverity adjustment factor for change in Medical Rehabilitation limit 0.94 From Appendix D.1 Table 3a) row (7)

FLY 2020 Claim Counts(1) Non-at-fault CWA claim counts before changes 48,671 From Table 1e) row (3)(2) % reduction in first year (2.42%) From assumptions above(3) Resulting non-at-fault CWA claim counts 47,493 = (1) x [1 + (2)]

(4) At-fault CWA claim counts before changes 13,602 From Table 1e) row (4)(5) % increase in first year 100.00% From assumptions above(6) Resulting at-fault CWA claim counts 27,203 = (4) x [1 + (5)]

FLY 2020 Total Incurred Claim Amounts(7) $359,917

(8) Non-at-fault CWA claim counts before changes 48,671 From Table 1e) row (3)(9) Non-at-fault Unlimited MR severity before changes $7,395 = (7) / (8) x 1000

(10) Severity adjustment factor 0.94 From Appendix D.1 Table 3a) row (7). Represents the portion of Unlimited Total Medical severity that will be covered by MR(11) Non-at-fault MR severity after changes $6,920 = (9) x (10). MR severity after product change excluding expenses(12) Non-at-fault MR total paid loss amounts ($000s) $328,643 = (3) x (11). MR total paid loss amounts after product change excluding expenses

Non-at-fault Unlimited MR total paid loss amountsbefore changes

Non-at-fault (excluding expenses) total paid loss amounts from Table 1e) row (11) plus portion of BI Special Damages and Future Carerelated to MR from Table 1f) row (8)




Claim Counts

2a) Percentage of Medical Rehabilitation (MR) Claim Counts with MR and Bodily Injury (BI) (Non-at-fault)

(1) (2) (3) (4)

Fiscal ClosedYear*

Claim Counts with MRand BI

(Non-at Fault)

Claim Counts with MROnly

(At Fault) MR Total Claim Counts

% of Claim Counts fromMR with BI

(Non-at-fault)2009 39,899 10,884 50,783 79%2010 38,508 10,319 48,827 79%2011 40,665 10,743 51,408 79%2012 39,304 10,612 49,916 79%2013 39,603 11,699 51,302 77%2014 43,761 11,444 55,205 79%2015 39,119 9,346 48,465 81%2016 38,643 12,606 51,249 75%2017 46,508 13,356 59,864 78%2018 48,405 15,261 63,666 76%

(5) Selected 78%

(1) Number of MR claims with MR and BI (Non-at-fault)(2) Number of MR claims with MR only (At-fault)(3) = (1) + (2) = total number of MR claims regardless of fault(4) = (1) / (3) = percentage of MR claims with MR and BI (Non-at-fault)(5) Selected percentage based on 2009-2018 average

* Fiscal Closed Year - claims are counted as belonging to a given fiscal closed year if they closed during that fiscal year. Fiscal years are April 1 - March 31, ex FY 2016 = April 1 2015 -March 31 2016




Total Incurred Loss Amounts

2b) Percentage of Medical Rehabilitation (MR) Total Incurred Claim Amounts from Claims with MR and Bodily Injury (BI) (Non-at-fault)

(1) (2) (3) (4)

Fiscal ClosedYear*

Total Incurred ClaimAmounts from Claims

with MR and BI(Non-at Fault)

Total Incurred ClaimAmounts from Claims

with MR Only(At Fault)

Total incurred ClaimAmountsMR Total

% of Total Incurred ClaimAmounts from MR with BI

claimants(Non-at-fault)

2009 81%2010 80%2011 80%2012 81%2013 82%2014 85%2015 80%2016 80%2017 86%2018 83%

(5) Selected 82%

(1) MR total incurred claim amounts from claims with MR and BI (Non-at-fault)(2) MR total incurred claim amounts from claims with MR only (At-fault)(3) = (1) + (2) = MR total incurred claim amounts from all claim counts regardless of fault(4) = (1) / (3) = percentage of MR total incurred claim amounts from claims with MR and BI (Non-at-fault)(5) Selected percentage based on 2009-2018 average

2c) Percentage of MR Total Incurred Claim Amounts that are Loss Payments (ie excluding expenses)

(1) (2) (3) (5) (6) (7)

Fiscal ClosedYear

MR Total Incurred LossAmounts

Loss Amounts Only(ie excluding expenses)

Loss Amounts as % ofTotal Incurred Claim

AmountsMR Total Incurred Loss

AmountsLoss Amounts Only

(ie excluding expenses)


Amounts2009 $60,019,302 $53,393,168 89% $14,290,873 $13,724,758 96%2010 $57,382,566 $51,280,519 89% $14,615,073 $13,724,579 94%2011 $71,138,386 $63,691,209 90% $17,962,249 $17,016,677 95%2012 $71,284,386 $65,001,150 91% $16,377,578 $15,574,014 95%2013 $75,237,807 $69,238,999 92% $15,990,101 $15,233,347 95%2014 $84,122,570 $77,846,803 93% $14,463,943 $13,738,821 95%2015 $82,634,477 $77,707,710 94% $21,048,045 $20,576,000 98%2016 $80,459,372 $74,943,371 93% $20,038,089 $19,364,642 97%2017 $94,610,640 $87,305,495 92% $15,088,087 $14,318,723 95%2018 $104,285,944 $96,294,498 92% $22,050,750 $21,028,567 95%

(4) Selected 92% (8) Selected 95%

(1) From 2b) column (1)(2) MR loss amounts (excluding expenses) from claims with MR and BI (Non-at-fault)(3) = (2) / (3) = percentage of MR total incurred claim amounts from loss amounts (ie excluding expenses) for claims with MR and BI (Non-at-fault)(4) Selected percentage based on 2009-2018 average(5) From 2b) column (2)(6) MR loss amounts (excluding expenses) from claims with MR only (At-fault)(7) = (5) / (6) = percentage of MR total incurred claim amounts from loss amounts (ie excluding expenses) for claims with MR only (At-fault)(8) Selected percentage based on 2009-2018 average

* Fiscal Closed Year - claims are counted as belonging to a given fiscal closed year if they closed during that fiscal year. Fiscal years are April 1 - March 31, ex FY 2016 = April 1 2015 -March 31 2016

At-fault claimantsNon-at-fault claimants




3a) Severity Adjustment Factor for Change in Medical Rehabilitation Limit

Calculate severities from unlimited and limited results and compare to obtain ratio. Ratio will be used to calculate portion of Total Medical Unlimited belonging to MR following product change.

(1) (2) (3) (4) (5) (6)

Fiscal ClosedYear*

Total MedicalUnlimited($000s)

Total MedicalLimited to $300,000

($000s)MR with BI

Claim Counts

Severity per ClaimCount - Total Medical

Unlimited

Severity per ClaimCount - Total MedicalLimited to $300,000

Ratio of Limited Severityto Unlimited Severity

2009 39,869 0.892010 38,465 0.892011 40,577 0.862012 39,151 0.922013 39,356 0.922014 43,311 0.922015 38,570 0.902016 37,898 0.932017 44,972 0.942018 45,112 0.93

(7) Selected Ratio 0.94

(1) Sum of MR, BI Special Damage, and BI Future Care total incurred loss amounts from non-at-fault claimants with their MR and BI claim exposures closed in the fiscal year(2) Sum of MR, BI Special Damage, and BI Future Care total incurred loss amounts from non-at-fault claimants with their MR and BI claim exposures closed in the fiscal year capped at $300,000(3) Number of MR claims for non-at-fault claimants with their MR and BI claim exposures closed(4) = (1) / (3) x 1000 = Unlimited Total Medical severity(5) = (2) / (3) x 1000 = Total Medical severity using Total Medical amounts limited to $300,000(6) = (5) / (4) = Ratio of limited severity to unlimited severity(7) = Selected ratio of limited severity to unlimited severity based on average from latest 3 years

* Fiscal Closed Year - claims are counted as belonging to a given fiscal closed year if they closed during that fiscal year. Fiscal years are April 1 - March 31, ex FY 2016= April 1 2015 - March 31 2016

For all closed medical rehabilitation (MR) claims with BI (non-at-fault) where BI claim is also closed, calculate Total Medical incurred loss amounts as MR + BI SpecialDamage + BI Future Care total incurred loss amounts, referred to as Total Medical Unlimited. Then, cap the individual claimants' Total Medical incurred loss amounts atthe new MR limit of $300,000, referred to as Total Medical Limited to $300,000.




Weekly Benefits



Weekly Benefits

1a) Fiscal Loss Year 2020 Weekly Benefits - Current Product Summary

(1) (2) (3) (4) (5)

CWA Claim Counts

WB Total IncurredClaim Amounts

($000s)

WB Total PaidLoss Amounts


BI Past WageLoss ($000s)

Total Wage LossPaid Loss

Amounts ($000s)a) Non-at-fault 2,750 $32,830 $32,907 $195,886 $228,793b) At-fault 647 $7,721 $7,739 $0 $7,739c) Total 3,397 $40,551 $40,645 $195,886 $236,532


1a) From Table 1c) row (3) 4a) From Table 1d) row (5)1b) From Table 1c) row (4) 4b) At-fault claimants have no Bodily Injury coverage, thus $02a) From Table 1c) row (6) 5a) = (3a) + (4a)2b) From Table 1c) row (7) 5b) = (3b) + (4b)3a) From Table 1c) row (9)3b) From Table 1c) row (10)

1b) Summary Fiscal Loss Year 2020 Weekly Benefits - After Product Change

(6) (7) (8) (9) (10) (11)

CWA Claim Counts

WB Total IncurredClaim Amounts

($000s)

WB Total PaidLoss Amounts


WB Paid ExpenseAmounts ($000)

BI Past WageLoss ($000s)

Total Wage LossPaid Loss

Amounts ($000s)a) Non-at-fault 2,750 $55,863 $55,940 ($76) $86,611 $142,550b) At-fault 1,293 $26,274 $26,310 ($36) $0 $26,310c) Total 4,043 $82,138 $82,250 ($112) $86,611 $168,861


6a) From Table 1e) row (3) 9a) = [(2a) - (3a)] / (1a) x (6a) = Average expenses under current product times number of claims6b) From Table 1e) row (6) 9b) = [(2b) - (3b)] / (1b) x (6b) = Average expenses under current product times number of claims7a) = (8a) + (9a) 10a) = (11a) - (8a)7b) = (8b) + (9b) 10b) = (11b) - (8b)8a) From Table 1e) row (12) 11a) From Table 1e) row (16)8b) From Table 1e) row (13) 11b) = (8)



Weekly Benefits

1c) Weekly Benefits - Current Product

FLY 2020 Claim Counts(1) WB Total CWA* claim counts 3,397 From ICBC's Claims Costs Analysis as of FLY 2019 Q2(2) % Non-at-fault 81% From Appendix D.2 Table 3a) row (5)

(3) Non-at Fault CWA claim counts 2,750 = (1) x (2)(4) WB Total CWA claim counts 647 = (1) - (3)

FLY 2020 Total Incurred Claim Amounts ($000s)(5) WB total incurred claim amounts ($000s) $40,551 From ICBC's Claims Costs Analysis as of FLY 2019 Q2

(6) Non-at Fault Total Inc. Claim Amounts ($000s) $32,830 = (5) / (1) x (3). Assume severity is the same for non-at-fault and at-fault claimants(7) At Fault Total Inc. Claim Amounts ($000s) $7,721 = (5) / (1) x (4). Assume severity is the same for non-at-fault and at-fault claimants

(8) Paid Loss % of Incurred Claim Amounts 100% From Table 3b) row (4)

(9) Non-at Fault Paid Loss Amounts ($000s) $32,907 = (6) x (8)(10) At Fault Paid Loss Amounts ($000s) $7,739 = (7) x (8)


1d) Weekly Benefits Costs in Bodily Injury - Current Product

FLY 2020 Basic BI Past Wage Loss Exposure Counts and Total Incurred Claim Amounts

(1) (2)Exposure Counts

(excl. out ofprovince)

Past Wage LossSeverity Per

Exposure CountUnrepresented Minor Injuries 27,463Unrepresented Non-Minor Injuries 2,365Represented Minor Injuries 30,833Represented Non-Minor Injuries 13,491Total 74,152 $2,599

(1) From Appendix B.2 Table 2a)(2) From Appendix B.3 Table 3d) column (3)

Total Fiscal Loss Year 2020 Weekly Income Covered through BI Past Wage Loss

(3) Total claim exposure counts (incl. out of province) 75,378 From Appendix A.1 Table 1d) row 1(4) Past wage loss severity $2,599 = Total (2) from above(5) Total past wage loss incurred claim amounts ($000) $195,886 = (3) x (4) / 1000

FLY 2020 Forecasts



Weekly Benefits

1e) Weekly Benefits - After Product Change

Assumptions:% Increase/(decrease) in number of non-at-fault claim counts for the first year post reform 0% No WB reduction observed in closed claim study% Increase/(decrease) in number of at-fault claim counts for the first year post reform 100% JudgmentWeekly Benefits severity adjustment factor 1.70 From Appendix D.2 Table 2a) row (4)Total wage loss severity adjustment factor 0.62 From Appendix D.2 Table 2a) row (7)

FLY 2020 Claim Counts(1) Non-at-fault CWA claim counts before changes 2,750 From Table 1c) row (3)(2) % reduction in first year 0% From assumptions above(3) Resulting non-at-fault CWA claim counts 2,750 = (1) x [1 + (2)]

(4) At-fault CWA claim counts before changes 647 From Table 1c) row (4)(5) % increase in first year 100% From assumptions above(6) Resulting at-fault CWA claim counts 1,293 = (4) x [1 + (5)]

FLY 2020 Total Incurred Claim AmountsWeekly Benefits Paid Loss Severity prior to product change

(7) Non-at-fault $11,966 Table 1c) row (9) divided by Table 1c) row (3)(8) At-fault $11,966 Table 1c) row (10) divided by Table 1c) row (4)(9) Weekly Benefits severity adjustment factor 1.70 From assumptions above. Factor representing the increase in weekly benefits following the limit increase to $740/week

Weekly Benefits adjusted paid loss severities(10) Non-at-fault $20,341 = (7) x (9). WB non-at-fault total paid loss amounts after product change(11) At-fault $20,341 = (8) x (9). WB non-at-fault total paid loss amounts after product change

Weekly Benefits total paid loss after product change(12) Non-at-fault ($000s) $55,940 = (3) x (10)(13) At-fault ($000s) $26,310 = (6) x (11)

Total Wage Loss paid loss prior to product change(14) Non-at-fault $228,793 Table 1c) row (9) plus Table 1d) row (5). WB Paid Loss plus BI Past Wage Loss(15) Total wage loss severity adjustment factor 0.62 From assumptions above. Factor representing the decrease in total wage loss following the limit increase to $740/week

Total Wage Loss paid loss after product change(16) Non-at-fault $142,550 = (14) x (15). Total Wage Loss total paid loss amounts after product change for non-at-fault



Weekly Benefits

2a) Loss Adjustment Factors Following Product Change

(a) (b) (c)Without A Group Plan With A Group Plan Weighted Average

(1) % of Claimants 54% 46% 100%Part 7 Weekly Benefits Weekly Payout

(2) Current Product $233 $65 $156(3) After Product Change $434 $65 $265(4) Change in Weighted Average Payout 1.70

Without A Group Plan With A Group Plan Weighted AverageTotal Wage Loss Payout

(5) Current Product $650 $650 $650(6) After Product Change $650 $117 $405(7) Change in Weighted Average Payout 0.62

(1a) = 1 - (1b)(1b)

(2a) From Appendix D.2 Table 2c) column (6). Current product Part 7 Weekly Benefit weekly payout for claimants without a group plan(2b) From Appendix D.2 Table 2c) column (9). Current product Part 7 Weekly Benefit weekly payout for claimants with a group plan(2c) = (1a) x (2a) + (1b) x (2b) = weighted average Part 7 Weekly Benefit weekly payout under the current product for all claimants(3a) From Appendix D.2 Table 2d) column (6). Part 7 Weekly Benefit weekly payout after product change for claimants without a group plan(3b) From Appendix D.2 Table 2d) column (9). Part 7 Weekly Benefit weekly payout after product change for claimants with a group plan(3c) = (1a) x (3a) + (1b) x (3b) = weighted average Part 7 Weekly Benefit weekly payout after product change for all claimants(4c) = (3c) / (2c) = weighted average Part 7 Weekly Benefit weekly payout after product change relative to current product product weighted average(5a) From Appendix D.2 Table 2c) column (8). Current product total weekly past wage loss payout (Part 7 Weekly Benefit + BI Past Wage Loss) for claimants without a group plan(5b) From Appendix D.2 Table 2c) column (11). Current product total weekly past wage loss payout (Part 7 Weekly Benefit + BI Past Wage Loss) for claimants with a group plan(5c) = (1a) x (5a) + (1b) x (5b) = weighted average total weekly past wage loss payout under the current product for all claimants(6a) From Appendix D.2 Table 2d) column (8). Total weekly past wage loss payout (Part 7 Weekly Benefit + BI Past Wage Loss) after product change for claimants without a group plan(6b) From Appendix D.2 Table 2d) column (11). Total weekly past wage loss payout (Part 7 Weekly Benefit + BI Past Wage Loss) after product change for claimants with a group plan(6c) = (1a) x (6a) + (1b) x (6b) = weighted average total weekly past wage loss payout after product change for all claimants(7c) = (6c) / (5c) = weighted average total weekly past wage loss payout after product change relative to current product product weighted average

Number of people with group disability plans in BC as of 2016 from Canadian Life and Health Insurance Facts 2017, Appendices, pg 4 (http://clhia.uberflip.com/i/878834-canadian-life-and-health-insurance-facts-2017-appendices/0) as a percentage of the number of people with employment income in BC from Statistics Canada Table 206-0053



Weekly Benefits

2b) BC Employment Income Summary

(1) (2) (3) (4) (5)

Income Level

Percent of BCWorkers at Income

Level Income Level Mid-

Point Average Gross

Weekly Earnings Weekly 2016

Income Tax

Average NetWeekly

Earningsunder $5,000 (including losses) 15% $2,500 $48 $0 $48$5,000 to $9,999 8% $7,500 $144 $0 $144$10,000 to $19,999 13% $15,000 $288 $529 $278$20,000 to $29,999 12% $25,000 $481 $2,550 $432$30,000 to $39,999 11% $35,000 $673 $4,792 $581$40,000 to $49,999 9% $45,000 $865 $6,977 $731$50,000 to $59,999 8% $55,000 $1,058 $9,782 $870$60,000 to $69,999 6% $65,000 $1,250 $12,602 $1,008$70,000 to $79,999 4% $75,000 $1,442 $15,422 $1,146$80,000 to $89,999 4% $85,000 $1,635 $18,482 $1,279$90,000 to $99,999 3% $95,000 $1,827 $21,957 $1,405$100,000 and over 8% $140,331 $2,699 $40,127 $1,927Average Weekly Amount $808 $650Average Annual Amount $42,000

(1)

(2)

(3) = (2) / 52. Average weekly amount calculated using percent of BC workers at income level in column (1) and average weekly earnings at each income level in column (3)(4) 2016 annual income tax calculated for each Mid-Point using EY income tax calculator, then divided by 52.

http://www.ey.com/ca/en/services/tax/tax-calculators-2016-personal-tax(5) = (4) - (5). Average weekly amount calculated using percent of BC workers at income level in column (1) and average weekly earnings at each income level in column (5)

BC Employment Income Statistics for 2016 from Statistics Canada (Statistics Canada. Table 206-0053 - Distribution of employment income of individuals by sex and work activity Canada, provinces and selected censusmetropolitan areas, annual).Mid-point of income level. For $100,000 and over income level, solved for mid-point of range which would result in annual average amount matching 2016 average employment income for BC from Stats Can ($42,000)using % of workers at income levels and mid-points from prior levels.



Weekly Benefits

2c) Weekly Wage Loss Payouts - Current Product

(1) Average percentage of disability benefits from group plans 67%(2) Part 7 Weekly Benefit weekly limit until April 1 2019 $300

(3) (4) (5) (6) (7) (8) (9) (10) (11)




Part 7 - WeeklyBenefits

Bodily Injury -Past Wage

Loss

ICBC TotalPast Wage

Loss Payout Part 7 - Weekly

Benefits


Loss

ICBC TotalPast Wage

Loss Payoutunder $5,000 (including losses) $48 $48 $32 $36 $12 $48 $4 $44 $48$5,000 to $9,999 $144 $144 $97 $108 $36 $144 $12 $133 $144$10,000 to $19,999 $288 $278 $193 $216 $62 $278 $23 $255 $278$20,000 to $29,999 $481 $432 $322 $300 $132 $432 $38 $393 $432$30,000 to $39,999 $673 $581 $451 $300 $281 $581 $54 $527 $581$40,000 to $49,999 $865 $731 $580 $300 $431 $731 $69 $662 $731$50,000 to $59,999 $1,058 $870 $709 $300 $570 $870 $85 $785 $870$60,000 to $69,999 $1,250 $1,008 $838 $300 $708 $1,008 $100 $908 $1,008$70,000 to $79,999 $1,442 $1,146 $966 $300 $846 $1,146 $115 $1,030 $1,146$80,000 to $89,999 $1,635 $1,279 $1,095 $300 $979 $1,279 $131 $1,148 $1,279$90,000 to $99,999 $1,827 $1,405 $1,224 $300 $1,105 $1,405 $146 $1,259 $1,405$100,000 and over $2,699 $1,927 $1,808 $300 $1,627 $1,927 $216 $1,711 $1,927Average Weekly Amount $808 $650 $233 $417 $650 $65 $585 $650

* Average weekly amounts calculated using percent of BC Workers at Income Level from Table 2b) column (1)(1) Source: Jurisdictional Scan Report produced by Deloitte for ICBC(2) ICBC's weekly limit for Part 7 Weekly Benefit prior to product changes(3) Average gross weekly earnings From Appendix D.2 Table 2b) Column (3)(4) Average net weekly earnings From Appendix D.2 Table 2b) Column (5)(5) = (1) x (3) = % of benefits from group plans times average gross weekly earnings(6) = min(75% x (3), $300) = lower amount between i) 75% of average gross weekly earnings, or ii) $300.(7) = (4) - (6) = amount which would be sought through Bodily Injury Past Wage Loss head of damage(8) = (6) + (7) = total amount recoverable between Part 7 Weekly Benefit and Bodily Injury Past Wage Loss head of damage for claimants without a group plan(9) = min(75% x (3) - (5), $300) = lower amount between i) 75% of average gross weekly earnings minus disability benefits from group plan, or ii) $300.(10) = (4) - (9) = amount which would we be sought through Bodily Injury Past Wage Loss head of damage(11) = (9) + (10) = total amount recoverable between Part 7 Weekly Benefit and Bodily Injury Past Wage Loss head of damage for claimants with a group plan




Weekly Benefits

2d) Weekly Wage Loss Payouts - After Product Reform

(1) Average percentage of disability benefits from group plans 67%(2) Part 7 Weekly Benefit weekly limit after April 1 2019 $740

(3) (4) (5) (6) (7) (8) (9) (10) (11)




Part 7 - WeeklyBenefits


Loss

ICBC TotalPast Wage

Loss Payout Part 7 - Weekly

Benefits


Loss

ICBC TotalPast Wage

Loss Payoutunder $5,000 (including losses) $48 $48 $32 $36 $12 $48 $4 $12 $16$5,000 to $9,999 $144 $144 $97 $108 $36 $144 $12 $36 $48$10,000 to $19,999 $288 $278 $193 $216 $62 $278 $23 $62 $85$20,000 to $29,999 $481 $432 $322 $361 $71 $432 $38 $71 $110$30,000 to $39,999 $673 $581 $451 $505 $76 $581 $54 $76 $130$40,000 to $49,999 $865 $731 $580 $649 $82 $731 $69 $82 $151$50,000 to $59,999 $1,058 $870 $709 $740 $130 $870 $85 $76 $161$60,000 to $69,999 $1,250 $1,008 $838 $740 $268 $1,008 $100 $70 $170$70,000 to $79,999 $1,442 $1,146 $966 $740 $406 $1,146 $115 $64 $179$80,000 to $89,999 $1,635 $1,279 $1,095 $740 $539 $1,279 $131 $53 $184$90,000 to $99,999 $1,827 $1,405 $1,224 $740 $665 $1,405 $146 $34 $181$100,000 and over $2,699 $1,927 $1,808 $740 $1,187 $1,927 $216 $0 $216Average Weekly Amount $808 $650 $434 $215 $650 $65 $52 $117

(1) Source: Jurisdictional Scan Report produced by Deloitte for ICBC(2) ICBC's weekly limit for Part 7 Weekly Benefit after product changes(3) Average gross weekly earnings From Appendix D.2 Table 2b) Column (3)(4) Average net weekly earnings From Appendix D.2 Table 2b) Column (5)(5) = (1) x (3) = % of benefits from group plans times average gross weekly earnings(6) = min(75% x (3), $740) = lower amount between i) 75% of average gross weekly earnings, or ii) $740.(7) = (4) - (6) = amount which would be sought through Bodily Injury Past Wage Loss head of damage(8) = (6) + (7) = total amount recoverable between Part 7 Weekly Benefit and Bodily Injury Past Wage Loss head of damage for claimants without a group plan(9) = min(75% x (3) - (5), $740) = lower amount between i) 75% of average gross weekly earnings minus disability benefits from group plan, or ii) $740.(10) = max((4) - (5) - (9), 0) = if positive, average net weekly earnings minus amounts received from group plans and Part 7 Weekly Benefit, otherwise 0.(11) = (9) + (10) = total amount recoverable between Part 7 Weekly Benefit and Bodily Injury Past Wage Loss head of damage for claimants with a group plan




Weekly Benefits

Claim Exposure Counts

3a) Percentage of Weekly Benefit (WB) Claim Counts with WB and Bodily Injury (BI) (Non-at-fault)

(1) (2) (3) (4)

Fiscal LossYear**

Claim Counts with WBand BI

(Non-at Fault)

Claim Counts with WBOnly

(At Fault) WB Total Claim Counts

% of Claim Counts fromWB with BI

(Non-at-fault)2009 5,883 1,049 6,932 85%2010 5,268 930 6,198 85%2011 5,556 903 6,459 86%2012 5,739 927 6,666 86%2013 5,427 862 6,289 86%2014 4,829 820 5,649 85%2015 7,312 941 8,253 89%2016 5,474 1,089 6,563 83%2017 4,180 983 5,163 81%2018 2,337 673 3,010 78%

(5) Selected 81%

* Open and Completed with Amount (CWA) claims, claims closed or completed with paid loss + paid expense > 0.** Fiscal Loss Year - claims are counted as belonging to a given fiscal loss year if they occured during that fiscal year. Fiscal years are April 1 - March 31, ex FY 2016 = April 1 2015 - March 31 2016

(1) Number of WB claims with WB and BI (Non-at-fault)(2) Number of WB claims with WB only (At-fault)(3) = (1) + (2) = total number of WB claims regardless of fault(4) = (1) / (3) = percentage of WB claims with WB and BI (Non-at-fault)(5) Selected percentage based on FLY 2017 given EI waiting period change and immaturity of FLY 2018 year



Weekly Benefits

Total Incurred Loss Amounts

3b) Percentage of Weekly Benefits (WB) Total Incurred Loss Amounts that are Loss Payments (ie excluding expenses and recoveries)

(1) (2) (3)

Fiscal LossYear*

Total Incurred ClaimAmounts

Loss Amounts Only (ieexcluding expenses)


Amounts2009 $29,121,856 $29,050,139 100%2010 $27,428,626 $27,467,672 100%2011 $42,526,405 $42,854,396 101%2012 $44,804,927 $44,922,722 100%2013 $44,390,196 $44,601,243 100%2014 $41,575,458 $41,669,189 100%2015 $50,692,282 $51,079,641 101%2016 $40,653,108 $40,732,629 100%2017 $67,725,166 $67,632,978 100%2018 $37,279,086 $37,231,908 100%

(4) Selected 100%

* Fiscal Loss Year - claims are counted as belonging to a given fiscal loss year if they occured during that fiscal year. Fiscal years are April 1 - March 31, ex FY 2016 = April 1 2015 - March 31 2016(1) WB total incurred claim amounts including expenses and recoveries(2) WB loss amounts (excluding expenses and recoveries)(3) = (2) / (1) = percentage of WB total incurred claim amounts from loss amounts (ie excluding expenses and recoveries)(4) Selected percentage based on 2009-2018 average





Death Benefits



Death Benefits

1a) Summary of Changes to Death Benefits

Benefit Type Current Benefit Level New Benefit Level Increase in Benefit Level Benefit Probability

OverallExpectedImpact*

(1) Funeral Benefit $2,500 $7,500 $5,000 100% $5,000Death of Dependent Child Benefit

(2) Dependent aged 0-4 years $500 $3,000 $2,500 5% $119(3) Dependent aged 5-9 years $1,000 $3,000 $2,000 5% $102(4) Dependent aged 10-18 years $1,500 $3,000 $1,500 9% $142

Survivor Benefit(5) Survivor is the lower wage earner $20,080 $30,000 $9,920 25% $2,452(6) Survivor is the higher wage earner $17,580 $30,000 $12,420 25% $3,069(7) Each dependent $4,640 $6,000 $1,360 30% $403

(8) Weighted Average $13,399 $24,686 $11,287

(9) Percentage Increase in Benefit Levels 84%(10) Fiscal Loss Year 2020 total incurred claim amount ($000) $2,853(11) Product change impact ($000) $2,403(12) Fiscal Loss Year 2020 total incurred claim amount ($000) after change $5,256

* Overall Expected Impact = Increase in Benefit Level x Benefit Probability

(1) From Table 1b)(2)-(4) From Table 1c)(5)-(7) From Table 1d)

(8)

(9) = Weighted average new product benefit level divided by weighted average current benefit level minus 1(10) From ICBC's Claims Costs Analysis as of FLY 2019Q2, forecast Part 7 death benefits total incurred claim amounts(11) = (9) x (10)(12) = (10) + (11)

Equals weighted average benefit levels using benefit probabilities. For instance, 100% of claimants receiving death benefits receive funeral benefit; based on BC's demographics, the probability a death benefit claim involves the death of adependent child aged 0-4 years is 5%, the probability a death benefit claim involves the death of a higher earning spouse is 25%, etc.



Death Benefits

1b) Funeral Benefit

(1) Current Benefit Level $2,500 Current funeral benefit(2) New Benefit Level $7,500 Funeral benefit as of April 1 2019(3) Increase in Benefit Level $5,000 = (2) - (1)(4) Benefit Probability 100% All claimants will receive higher funeral benefit

1c) Death of Dependent Child Benefit

(a) (b) (c)Dependent aged 0-4

years Dependent aged 5-9 yearsDependent aged 10-18

years(1) Current Benefit Level $500 $1,000 $1,500 Current benefits for death of dependent varies by age of dependent(2) New Benefit Level $3,000 $3,000 $3,000 Benefit will be increased and the same for dependents of all ages(3) Increase in Benefit Level $2,500 $2,000 $1,500 = (2) - (1)

Benefit Probability(4) BC Population in age group 220,625 236,900 441,044 From Statistics Canada 2016 Census, Population age characteristics for British Columbia(5) Percentage of total BC population 5% 5% 9% = (4) / 4,648,055, total British Columbia population from Statistics Canada 2016 Census



Death Benefits

1d) Survivor Benefit(a) (b) (c)

Survivor is the lowerwage earner

Survivor is the higher wageearner Each dependent

(1) Current Benefit Level $20,080 $17,580 $4,640 Currently, survivor receives different benefit depending on who was the higher earner in the household(2) New Benefit Level $30,000 $30,000 $6,000 As of April 1 2019, same benefit regardless of who was higher earner, and benefits increased for all(3) Increase in Benefit Level $9,920 $12,420 $1,360 = (2) - (1)(4) Benefit Probability 25% 25% 30% See calculations of probabilities below

Probabilities(4a)/(4b) Survivor is the lower/higher wage earner

(1) BC Population 4,648,055 Statistics Canada 2016 Census(2) Married or living common law population 2,297,325 Statistics Canada 2016 Census(3) Probability of being married or common law 49% = (2) / (1)(4) 50%

(5) 25% = (3) x (4)

(4c) Surviving dependents

Number of persons in private households in BC 4,560,240

Private households by household size in BCPrivate household size Number of households Total Number of Persons1 person 541,910 541,910 = Private household size times number of households2 persons 663,770 1,327,540 = Private household size times number of households3 persons 277,690 833,070 = Private household size times number of households4 persons 243,125 972,500 = Private household size times number of households5 or more persons 155,470 885,220 = Total number of persons in private households minus number of persons in households with 4 or fewer personsTotal 1,881,965 4,560,240

For households with 1 person, no survivor benefits payableFor households with more than 1 person, the following assumptions are made:

4,018,330 total number of persons in households with greater than 1 person1,340,055 households with greater than 1 person

For BC population in private households with more than 2 persons, assume 1 person is the income source and the rest are dependents.

Average number of dependents per household for households with more than 2 persons = 3 - 1 = 2 dependents

Probability of being a dependent = 2 dependents per household for households with more than 2 persons676,285 the number of households with more than 2 persons

1,351,644 dependents from households with more than 2 persons = 2 x 676,28530% percent relative to total number of persons in private housholds = 1,351,644 / 4,560,240

Assume survivors equally likely to be lower/higherwage earnerProbability of being a surviving spouse and beingthe lower/higher wage earner

Average number of persons per household for households with more than one person = 3 =




Appendix EClosed Claim Study Report


Insurance Corporation of British Columbia2018 Closed Claim Study

September 2018

Author: Mr. Liam M. McFarlaneInsurance and Actuarial Advisory ServicesErnst & Young LLPEY Tower100 Adelaide Street West,Toronto, Canada M5H 0B3Phone: 416 941-7751Fax: 416 943-3796Email: [email protected]

TABLE OF CONTENTS

1. INTRODUCTION ________________________________________________________________ 3

1.1 Context for Study _________________________________________________________ 3

1.2 Purpose of Study _________________________________________________________ 3

1.3 Scope ____________________________________________________________________ 3

1.4 Insurance Regulations _____________________________________________________ 4

1.5 Risks and uncertainties ____________________________________________________ 4

1.6 Reliance and Limitations ___________________________________________________ 4

1.7 Use and Distribution _______________________________________________________ 5

2. EXECUTIVE SUMMARY _________________________________________________________ 6

3. CLOSED CLAIM STUDY DESIGN _________________________________________________ 7

3.1 Claim Questionnaire _______________________________________________________ 7

3.2 Minor Injury Definition _____________________________________________________ 7

3.3 Sampling _________________________________________________________________ 8

4. EXTRAPOLATION OF STUDY RESULTS TO TOTAL POPULATION __________________ 11

5. STUDY RESULTS – DETAILED TABLES __________________________________________ 14

ICBC Closed Claim Study 2018

3

1. Introduction1.1 Context for StudyAutomobile insurance in British Columbia is set to undergo significant reform in 20191 asanyone injured in a crash will be able to access enhanced Part 72 benefits aimed at improvingcare and recovery, while limits to pain and suffering awards for minor injury claims will takeeffect. A new dispute resolution model will also be implemented to resolve disputesconcerning certain motor vehicle injury claims. These reforms and the others accompanyingthem will dramatically change the automobile insurance environment in the province and areexpected to rein in claim costs which have escalated over the last few years.

1.2 Purpose of StudyEstimating claim costs savings following the reforms is challenging given the numerouschanges and the legal, societal, and behavioural changes that will accompany these reforms.A closed claim study is an effective tool to aid in estimating the change in future costs as itallows experienced reviewers to assess what historical closed claims would have cost had theyoccurred in the future reformed state.

The purpose of this study is obtain information from closed claims to validate and informhypotheses and assumptions underlying product change savings estimates. By reviewing asample of closed claims, detailed information can be gathered to allow the assessment ofexpected changes in claim costs by type of injury, Head of Damage3 and other relevant claimcharacteristics.

1.3 ScopeEY was engaged by the Insurance Corporation of British Columbia (ICBC) to design theframework and elements of a closed claim study in collaboration with ICBC personnel. Thestudy was carried out by ICBC claims personnel with monitoring and oversight from EY. Theresults of the study will be used to inform ICBC’s underlying assumptions related to savingsresulting from the automobile insurance product reforms.

1 See Appendix A for a more detailed description of the insurance product reforms.2 Part 7 benefits are for medical rehabilitation and wage loss.3 Head of Damage refers to the type of claim payment such as past wage loss, future wage loss, general damages (painand suffering), special damages and future care.

Confidential | All Rights Reserved | EY


4

1.4 Insurance RegulationsThe analysis underlying this report was completed during the summer of 2018 using datafrom claims closed during 2017. On May 7, 2018, the B.C. Legislature passed Bill 22, the CivilResolution Tribunal Amendment Act, 2018, and shortly thereafter, on May 10, 2018, the B.C.Legislature also passed Bill 20, the Insurance (Vehicle) Amendment Act, 2018. Both billsreceived royal assent on May 17, 2018. Our analysis reflected our understanding of ProductReform at the time of these amendments. This analysis was performed prior to theamendment of the Insurance (Vehicle) Regulation. Users of this report, therefore, must referto the Insurance (Vehicle) Regulation as the authority on changes that were made toimplement Product Reform, and not this report.

1.5 Risks and uncertaintiesEstimates of future claims experience (claim numbers and payments) are inherently uncertainbecause they depend on the outcome of future events that cannot be forecast precisely.Examples of influences on claims experience that are particularly challenging to forecastinclude changes to social, economic and legal environments.

There is always uncertainty associated with reassessing claims costs in a post-reform state.When dealing with legislative reforms, the degree of uncertainty in estimating claim costs inthe future increases substantially. A major part of this increased uncertainty relates to thechanges in behaviour of claimants and their representatives, and this is difficult to predict. Incompleting the study, the reviewers have used their best judgment but actual claimsexperience may emerge at levels higher or lower than the estimates.

1.6 Reliance and LimitationsIn performing the closed claim study, ICBC relied upon internal data from their claim systemsas well as physical claims files when required. We have reviewed this information forreasonableness, but without independent audit or verification. The accuracy of the results isdependent on the accuracy and completeness of this data.

It is essential that any reader of this report understand its associated qualifications andlimitations. Judgments regarding the data, methods and assumptions contained in this reportshould be made only after studying the entire report, as conclusions reached by a review of asection or sections on an isolated basis may be incorrect.



5

1.7 Use and DistributionThis report was prepared for the use of ICBC and was based on confidential informationsupplied by them. The closed claim study has been performed to inform ICBC’s underlyingassumptions related to savings resulting from the insurance product reforms and this reportwill be filed with the British Columbia Utilities Commission (BCUC) in support of ICBC’supcoming revenue requirements application. It is not intended nor necessarily suitable for anyother purpose. This report contains work-papers that may be considered trade secrets orconfidential belonging to ICBC.

No further distribution of this report may be made without the prior permission of ICBC andErnst & Young LLP. ICBC and EY should be notified immediately following any requests fordisclosure of any part of this report. Should the report be disclosed, it must be provided in itsentirety and recipients advised that the author is available at their cost to discuss this report.



6

2. Executive SummaryAutomobile insurance in British Columbia is set to undergo significant reform in 2019 and aclosed claim study was undertaken by EY to assist ICBC in estimating the impact of thereforms on Basic Bodily Injury claims costs.

Approximately 1200 claim exposures from different categories by type of injury, thoserepresented by legal counsel and those not represented were selected from claims closed in2017 for this study. A detailed review of these exposures was completed to derive theassumptions used in the Product Reform Costing Report related to (i) minor injury mapping(ii) 12 month impairment factor and (iii) claim count reduction. The most significantassumption is the minor injury mapping and we believe this review is sufficient for thispurpose since the sample has been stratified to include claim exposures that are currentlyclassified by ICBC as mild Soft Tissue4 and other claim exposures that are more likely to beminor injuries after Product Reform.

The collective view of the reviewers indicates that:

• A significant portion of claims sampled will meet the minor injury definition afterproduct reform5.

• Product reform will result in a moderate frequency reduction (claims not beingpursued after reform).

• There will be material savings in claim payments following reform largely due to thecap on general damages for minor injuries and the associated reduction in plaintiff anddefence legal costs and disbursements.

4 A Soft Tissue Injury is an injury of the muscles, ligaments, and tendons, which may result in general soreness, aches,and pain. Typical injuries may include: contusions, sprains, strains and whiplash associated disorders.5 The proportion meeting the minor injury definition in this sample is not the same as the total population based on thesample design. Extrapolation to the total population must consider the sampling approach used in this study. Similarly, inorder to estimate dollar savings across the total population extrapolation would have to consider the sampling approachused in this study.



7

3. Closed Claim Study Design3.1 Claim QuestionnaireEY personnel reviewed claim related information available in ICBC’s Legacy system as well asGuidewire, its replacement system, to identify data that would be relevant in assessing theimpact of product reform on Basic BI claims costs. Then, in collaboration with ICBC personnel,a claims questionnaire was created in Microsoft Excel and refined through several iterationsfocusing on questions pertaining to the changing environment in BC and areas where the datacaptured was considered insufficient for estimating the impact of product reform.

The questionnaire was completed by reviewers at the claim exposure level. Claim exposuresrepresent the part of a claim raised against one specific coverage component by a claimant, inthis case the Bodily Injury component. A claim exposure is created for each claimant making ademand against a coverage group. A claim may contain multiple claim exposures and multipleclaim exposures related to a single coverage group.

To maximize the efficiency of the reviews, relevant details of the claim exposures wereextracted from the claims database and pre-populated in the Microsoft Excel basedquestionnaire allowing the reviewers to focus their time and effort on those questionsapplicable to each claim exposure. The reviewers6 selected responses to the applicablequestions through drop-down boxes, eliminating free form answers and minimizing errors. Incompleting the reviews, the reviewers referred to the claim file details to assess whether theinjury meets the minor injury definition and to estimate the impact of the product reforms onclaims costs where the data in the system was insufficient or inaccurate.

Prior to the study beginning, the reviewers participated in a workshop to better understandthe details of the reforms and to align the group’s interpretations of the changes. Calibrationmeetings also took place regularly as the study began to help ensure a consistentinterpretation and approach.

3.2 Minor Injury DefinitionAs we understand it at the time of completing this study, minor injuries were to be definedunder product reform as a strain or sprain, a contusion, laceration or abrasion, a painsyndrome, temporomandibular joint dysfunction (TMJ), as well as a psychological orpsychiatric condition that does not result in serious impairment persisting beyond 12 months.

6 The reviewers consisted of a team of ICBC claims quality assurance personnel. These are experienced resources withexpertise in claims adjudication as well as ICBC’s claims systems.



8

3.3 SamplingTo sample claim exposures for the closed claim study, six segments of claims were identified:

Segment Representation Status Injury Type Litigation StatusType 1 Unrepresented Mild Soft Tissue Injury7 N/AType 2 Unrepresented Other Injury N/AType 3 Represented8 Mild Soft Tissue Injury Not LitigatedType 4 Represented Other Injury Not LitigatedType 5 Represented Mild Soft Tissue Injury LitigatedType 6 Represented Other Injury Litigated

At the outset, the intention was to include a similar number of claims in each segment,however as a result of missing injury information for certain claims, the review ultimately wasnot balanced between these six segments (see Table 1 below).

The following claim exposures were excluded from the sample:

• Claim exposures handled by the catastrophic injury claims handling unit. Theserepresented 1.4% of Bodily Injury completed with amount (CWA)9 claim exposuresclosed in 2017. These claims are not expected to be impacted by the reforms.

• Claim exposures with represented indicator equal to 0 (unrepresented) and litigationindicator equal to 1 (litigated). These represent roughly 0.1% of Bodily Injury CWAclaim exposures closed in 2017 and were excluded due to potential miscoding of thelegal status.

The complete sample of claim exposures drawn for the closed claim study totaled 1,509.From this sample, claim exposures were not reviewed if they met any of the following criteria:

• Claim exposures where the claimant had claims for multiple motor vehicle accidents(MVA) open simultaneously. In such instances, payments on the closure of the claimexposure reflects the circumstances of the multiple claims. These claim exposureswere thus not reviewed to avoid biasing the estimated savings under reform. MVA’saccounted for approximately 17% of Bodily Injury CWA claim exposures closed in2017.

• Claim exposures where the claimant or plaintiff is an employee of ICBC were excludedas these claims are restricted with regards to access to claim notes, thus thereviewers would not be able to fairly evaluate the claim.

• Claims resolved by trial were not reviewed due to the unique nature of these claims.• Claim exposures where the loss occurred out of province were excluded as these

would be unaffected by the reforms.

7 A Soft Tissue Injury is an injury of the muscles, ligaments, and tendons, which may result in general soreness, aches,and pain. Typical injuries may include: contusions, sprains, strains and whiplash associated disorders.8 Represented means that the claimant was represented by legal counsel.9 Completed With Amount (CWA) is defined as claim exposures closed or completed with paid loss + paid expense > 0.



9

• A single claim exposure drawn for the sample was closed in a year other than 2017thus this claim exposure was not reviewed.

275 claim exposures met the foregoing criteria, leaving 1,234 claim exposures to bereviewed for the study. Table 1 displays the breakdown of these exposures by segment incomparison to the total of all CWA claim exposures closed in 2017.

Table 1- Closed Claim Study Sample

Segment DescriptionClosed

Claim Study% of

Reviewed2017 Closed

Year CWA

% ofTotal

ReviewedType 1 Unrep, Mild STI 206 16.7% 18,935 39.9%Type 2 Unrep, Other Injury 198 16.0% 3,517 7.4%Type 1 & 2 Unrep, Missing injury 72 5.8% 3,765 7.9%Type 3 Rep, Not Litigated, Mild STI 173 14.0% 7,084 14.9%Type 4 Rep, Not Litigated, Other Injury 175 14.2% 2,610 5.5%Type 3 & 4 Rep, Not Litigated, Missing injury 50 4.1% 1,191 2.5%Type 5 Rep, Litigated, Mild STI 140 11.3% 5,271 11.1%Type 6 Rep, Litigated, Other Injury 204 16.5% 4,549 9.6%Type 5 & 6 Rep, Litigated, Missing injury 16 1.3% 476 1.0%Total Reviewed 1,234 100.0% 47,398 100.0%Claim Exposures Not Sampled/Reviewed

Multiple MVAs 257 10,189Out of Province 17 826Closed year other than 2017 1 N/AHandled by Cat-Injury Unit N/A 881BI paid <= 0 N/A 1,523Miscoded Legal Status N/A 84

Grand Total 1,509 60,901

As seen in Table 2 below, the severities10 of claim exposures reviewed in the closed claimstudy, particularly those with injury information, are reasonably consistent with the severitiesof total CWA claim exposures from closed year 2017:

10 Claim severity is the average cost for the CWA claim exposure.



10

Table 2 – Severity Comparison

Segment Description Closed Claim Study 2017 Closed Year CWAType 1 Unrep, Mild STIType 2 Unrep, Other InjuryType 1 & 2 Unrep, Missing InjuryType 3 Rep, Not Litigated, Mild STIType 4 Rep, Not Litigated, Other InjuryType 3 & 4 Rep, Not Litigated, Missing injuryType 5 Rep, Litigated, Mild STIType 6 Rep, Litigated, Other InjuryType 5 & 6 Rep, Litigated, Missing injury

Mild STI Total $29,990 $21,566Other Injury Total $53,820 $55,676Missing Injury Total $21,296 $12,896

The study results shown in Section 4 are based on the reviewed claim exposures.Extrapolating these results to the total portfolio of claims closed in 2017 requiresconsideration of the sampling method. As displayed in Table 1, the distribution of claimexposures reviewed versus the total portfolio is not consistent and these differences must beaccounted for if results are to be extrapolated.



11

4. Extrapolation of Study Results to TotalPopulation

The following table provides an estimate of Basic BI savings for all claims closed in 2017under the assumption that the savings by injury type implied by the closed claims study forreviewed claims would apply to all claims closed in 2017 of the same type. For the reviewedclaim exposures, the savings by injury type estimated for the total population is a linearextrapolation of the savings observed by injury type in the closed claim study. There werecertain claim exposures that were not reviewed and these are also listed in the table belowand savings are assumed to relate only to the transfer of BI claims costs to Part 7 Benefits asa result of the increased Part 7 benefits post reform.



12

Closed Claim Study Closed Year 2017 Extrapolation

Claim Exposures Reviewed inClosed Claim Study

# of ClaimExposures

# StillPursued

ActualIncurred

($M)

ReviewersMidpoint11

Estimates($M)

# of ClaimExposures

ActualIncurred

($M)# Still

PursuedMidpoint

EstimatesType 1 – Unrep, Mild STI 206 196 18,935 18,016Type 2 – Unrep, Other Injury 198 192 3,517 3,410

Type 1&2 – Unrep, Missing Injury 72 70 3,765 3,660Type 3 – Rep, Mild STI 173 171 7,084 7,002Type 4 – Rep, Other Injury 175 172 2,610 2,565Type 3&4 – Rep, Missing Injury 50 48 1,191 1,143Type 5 – Rep & Lit, Mild STI 140 139 5,271 5,233Type 6 – Rep & Lit, Other Injury 204 199 4,549 4,438Type 5&6 – Rep & Lit, Missing Injury 16 16 476 476Reviewed Claim Exposures Total 1,234 1,203 $49.6M $29.6M 47,398 $1,339.3M 45,944 $765.9MClaim Exposures Not Reviewed/Sampled FromMultiple MVAs (Not Reviewed) 10,189 $391.7M 10,189 $361.5MOut of Province (Not Reviewed) 826 $23.8M 826 $19.8MExposures Handled by Cat-Injury Unit (Excluded from Sample) 881 $98.1M 881 $85.1MExposures with BI Incurred or Paid less than or equal to 0 (Excluded from Sample) 1,523 $5.4M 1,523 $5.4MExposures with Rep Indicator = 0 & Lit Indicator = 1 (Excluded from Sample) 84 $6.9M 84 $6.4MGrand Totals (Excluding Out of Province) 60,075 $1,841.4M 58,621 $1,244.1M% Reductions (Excluding Out of Province) 2.4% 33.5%

These savings are estimated for claims that closed in 2017 if the product reforms were in place at that time.Extrapolation of these savings to future time periods would have to reflect trends in costs to the future period as well aschanges in mix of claims by injury type and representation over that time. As a result expected savings for future periodsmay differ materially from those estimated from this study.

11 Reviewers estimated savings by Head of Damage by selecting from a menu of ranges of potential savings (e.g. 0%, 0%-25%, 26%-50% etc). The midpoint ofthe selected range was used to estimate the post reform cost.



13

The following additional table provides an estimate of the number of claim exposures with minor injuries expected to beimpaired beyond 12 months.

Closed Claim StudyClosed Year

2017 Extrapolation

Claim Exposures Reviewed inClosed Claim Study

# of ClaimExposures

# of ClaimExposures

Still Pursued

# Identified asMinor Injuries

and StillImpaired After

12 Months# of ClaimExposures

# of ClaimExposures

Still Pursued

Identified asMinor Injuries

and StillImpaired After

12 MonthsType 1 – Unrep, Mild STI 206 196 0 18,935 18,016 0Type 2 – Unrep, Other Injury 198 192 0 3,517 3,410 0Type 1&2 – Unrep, Missing Injury 72 70 0 3,765 3,660 0Type 3 – Rep, Mild STI 173 171 0 7,084 7,002 0Type 4 – Rep, Other Injury 175 172 5 2,610 2,565 75Type 3&4 – Rep, Missing Injury 50 48 1 1,191 1,143 24Type 5 – Rep & Lit, Mild STI 140 139 2 5,271 5,233 75Type 6 – Rep & Lit, Other Injury 204 199 13 4,549 4,438 290Type 5&6 – Rep & Lit, Missing Injury 16 16 1 476 476 30Reviewed Claim Exposures Total 1,234 1,203 22 47,398 45,944 493Claim Exposures Not Reviewed/Sampled FromMultiple MVAs (Not Reviewed) 10,189 10,189 0Out of Province (Not Reviewed) 826 826 0Exposures Handled by Cat-Injury Unit (Excluded from Sample) 881 881 0Exposures with BI Incurred or Paid less than or equal to 0 (Excluded from Sample) 1,523 1,523 0Exposures with Rep Indicator = 0 & Lit Indicator = 1 (Excluded from Sample) 84 84 0Grand Totals (Excluding Out of Province) 60,075 58,621 493Percentage Relative to Closed Year 2017 Claim Exposures (Excluding Out of Province) 0.82%



14

5. Study Results – Detailed TablesThe tables below display the results from questions posed in the claim questionnaire. Thestudy focuses on the impact of the entirety of the reforms on Basic BI costs. Part of thereduction in Basic BI costs is expected to shift to Part 7 Benefits as these are beingsignificantly enhanced, however the questions and results below only contemplate theimpacts to BI.

Results from this study that relate to (i) minor injury mapping (ii) 12 month impairment factorand (iii) claim count reduction, are used as input into the Product Reform Costing Report.Other results relating to claimant behaviour and cost reduction were reviewed against theproduct reform costing model results to determine if there were significant inconsistenciesthat should be investigated.

Table 3 – Minor Injury Identification

Question: Does the claim exposure meet the proposed minor injurydefinition for B.C.?

Yes 1,026 83.1%No 180 14.6%

Unsure 19 1.5%Blank responses 9 0.7%

1,234 100.0%



15

Table 4 – Minor Injury Mapping

For claim exposures (excluding Multiple MVAs) with coded injury information assessed to be accurate by the reviewers, the percentageof reviewed claim exposures identified as minor injuries was calculated for each injury type and severity combination. A threshold of67% was used for including injuries in the Minor Injury Mapping, with exceptions noted below the table. The following injury type andseverity combinations were included in the mapping.

Mild Injury Severity Moderate Injury Severity Unknown Injury Severity

Injury TypeNumber

Reviewed

%Identifiedas MinorInjuries

Includedin

MappingNumber

Reviewed


Includedin

MappingNumber

Reviewed


Includedin

MappingSoft Tissue Injury 534 98% ✔ 77 95% ✔Soft Tissue Injury - Spine 54 87% ✔ 20 75% ✔Headaches 20 84% ✔Contusion 12 100% ✔General Pain Complaints 11 91% ✔Joint Injury (Other than Spine) 4 75% ✔Laceration* 4 50% ✔Other** 3 100% ✔Psych - PTSD 3 67% ✔Unknown 3 67% ✔ 136 89% ✔Abrasion 2 100% ✔Strain* 1 0% ✔Psych - Adjustment Disorder 1 100% ✔Chronic Pain - GP 1 100% ✔Psych - Depression 1 100% ✔Vertigo/Dizziness 1 100% ✔Sprain* 0 N/A ✔Dental - TMJ* 0 N/A ✔Psych - Other* 0 N/A ✔* These injuries were included despite falling below the 67% threshold as their sample size was small and the nature of the injuries met the definitionin regulations/legislation at the time of analysis.** The ‘Other’ injury type represents claim exposures with injury type coded as Other. It does not represent all other injury types not listed in thetable.



16

Table 5 – Serious Impairment

Question: Given the claim exposure meets the proposed minor injurydefinition in B.C., considering the enhanced Part 7 benefits, treatment

protocols, and other aspects of the reforms, do you expect theclaimant would be significantly impaired after 12 months under the

new product?Yes 22 2.1%No 998 97.3%

Unsure 6 0.6%1,026 100.0%

Table 6 – Change in representation distribution12

CurrentClosed Claim Study Results

Post ReformClaim Exposures Distribution Claim Exposures Distribution

Represented 762 61.8% 374 30.3%Unrepresented 472 38.2% 816 66.1%Unsure 40 3.2%N/A or blank responses 4 0.3%

1,234 100.0% 1,234 100.0%

Table 7 – Representation Changes

Question: Do you believe the claim exposure would still be representedafter reform? (question applicable to represented exposures)Yes 374 49.1%No 344 45.1%Unsure 40 5.2%N/A or blank responses 4 0.5%

762 100.0%

12 It was assumed that disputes for claims under $50,000 would be resolved through the Civil Resolution Tribunal (CRT)and reviewers felt that a number of these claims would be resolved by the CRT. Claims that are expected to be resolvedby the CRT are classified as Unrepresented in this study, however it is unclear as to whether or not these claims willcontinue to be Represented.



17

Table 8 – Frequency Changes – Represented Claim Exposures

Question: Given you don’t believe this claim exposure would still berepresented after reform, do you believe this claim exposure wouldstill be pursued but without representation?Yes 328 95.3%No 13 3.8%Unsure 3 0.9%

344 100.0%

Table 9 – Frequency Changes – Unrepresented ClaimExposures

Question: Do you believe this claim would still be pursued afterreform? (question applicable to unrepresented exposures)Yes 422 89.4%No 18 3.8%Unsure 32 6.8%

472 100.0%



18

Table 10 – Severity Reduction

For each head of damage, if you believe the amount paid will be reduced as a result of the reformmeasures, select by how much from these ranges:

· 0-25%· 26-50%· 51-75%· 76-99%· 100%

Study results below are based on the midpoint reductions of the responses, e.g. if response is 26-50%, 38% reduction is applied to that head of damage for that claim exposure.

Closed Claim StudyResults

Current Post ReformHead ofDamage

# of ClaimExposures Incurred Severity Incurred Severity

% Reduction

GeneralDamages 1,196 $29,183,337 $24,401 $15,430,576 $12,902 47%

Future WageLoss 85 $5,222,680 $61,443 $4,611,793 $54,256 12%

Past WageLoss 433 $4,116,937 $9,508 $2,714,795 $6,270 34%

Future Care 291 $1,238,423 $4,256 $466,479 $1,603 62%PlaintiffDisbursements 673 $2,772,399 $4,119 $2,029,945 $3,016 27%

Plaintiff Costs 308 $1,263,650 $4,103 $782,675 $2,541 38%Defence LegalFees 251 $2,289,264 $9,121 $1,744,751 $6,951 24%

Defence LegalDisbursements 274 $501,870 $1,832 $403,129 $1,471 20%

MedicalReports 187 $884,618 $4,731 $756,379 $4,045 14%

SpecialDamages 903 $1,871,884 $2,073 $411,072 $455 78%

Other heads 142 $212,728 $1,498 $212,728 $1,498 0%Total 1,234 $49,557,789 $40,160 $29,564,322 $23,958 40%



19

Table 11 – Collateral Benefits

Question: Do you believe the collateral benefits and enhanced Part 7benefits would reduce the settlement to less than $50,000?Yes 91 7.4%No 137 11.1%Unsure 5 0.4%N/A 1,001 81.1%

1,234 100.0%

Table 12 – Gross Weekly Income Distribution

Question: What was the claimant’s gross weekly income?Under $300 346 28.0%$300-600 143 11.6%$600-900 130 10.5%$900-1200 95 7.7%$1200-1500 50 4.1%$1500-1800 30 2.4%$1800-2100 12 1.0%$2100-2400 7 0.6%$2400-2700 5 0.4%$2700-3000 1 0.1%Over $3000 4 0.3%Unknown 402 32.6%Blank responses 9 0.7%

1,234 100.0%



20

Table 13 –Expert Reports – Represented Claims

Question: How many expert reports were obtained by plaintiff’scounsel? (question applicable to represented claim exposures)0 476 62.5%1 168 22.0%2 41 5.4%3 17 2.2%4 21 2.8%5 9 1.2%6 4 0.5%7 12 1.6%8 6 0.8%9 0 0.0%10 2 0.3%11 2 0.3%Blank Responses 4 0.5%

762 100.0%Table 14 –Expert Reports – Litigated Claims

Question: How many expert reports were obtained by plaintiff’scounsel? (results for litigated claims only)

0 147 40.1%1 110 30.0%2 36 9.8%3 17 4.6%4 21 5.7%5 9 2.5%6 4 1.1%7 11 3.0%8 6 1.6%9 0 0.0%10 2 0.5%11 2 0.5%Blank Responses 2 0.5%

367 100.0%


Insurance Corporation of British Columbia December 14, 2018

CHAPTER 10 B

2018/19 ANNUAL INFORMATION

TECHNOLOGY CAPITAL

EXPENDITURE PLAN

ICBC’s December 14, 2018 Filing with the BC Utilities Commission

Insurance Corporation of British Columbia 10B-i December 14, 2018

Table of Contents

A Introduction ............................................................................................... 10B-1

B IT Capital Plan ............................................................................................ 10B-2

B.1 Purpose ................................................................................................. 10B-2 B.2 Basic Insurance Funded Projects ............................................................... 10B-3 B.3 Definition and Capitalization of IT Capital Projects ....................................... 10B-3 B.4 IT Capital Reporting................................................................................. 10B-4

C IT Capital Plan for 2016/17 to 2019/20 ..................................................... 10B-5

C.1 Classification of IT Capital Expenditure....................................................... 10B-6 C.2 Capital Projects ....................................................................................... 10B-7

D Depreciation and Amortization of IT Capital Expenditures ....................... 10B-13

E Conclusion ................................................................................................ 10B-14

Attachment 10 B1 – MapR Hadoop Pilot Project Update .................................. 10B1


Insurance Corporation of British Columbia 10B-ii December 14, 2018

Table of Figures

Figure 10B.1 – Total IT Capital Expenditures .......................................................... 10B-7

Figure 10B.2 – Renewal and Business Change Projects with IT Capital Expenditures over

$2 Million ...................................................................................................... 10B-8

Figure 10B.3 – Depreciation and Amortization of IT Capital Expenditures ................. 10B-14


Insurance Corporation of British Columbia 10B-1

December 14, 2018

A INTRODUCTION

1. In the January 9, 2008 Decision on the 2007 Revenue Requirements Application

(Order G-3-08), the British Columbia Utilities Commission (BCUC) directed the Insurance

Corporation of British Columbia (ICBC) to:

…continue the existing reporting regime consisting of a comprehensive annual

IT capital plan filing that would identify the total IT capital expenditures (actuals

and forecast). In addition, those individual projects that exceed a capital

expenditure of $1 million are to be reported, with explanatory detail and project

justification, in a timely way for Commission comments, once internal corporate

approvals have been achieved, but before implementation.1

2. With respect to the Annual Information Technology Capital Expenditure Plan (IT capital

plan), the BCUC stated:

For reporting and internal management purposes, capital expenditures are

divided into two main categories: capital renewal projects and business change

projects. A rolling five-year forecast is presented (two years of actuals and a

three-year rolling forecast). The description of the various projects is adequate

for Commission purposes and provides a model that can be employed going

forward.2

3. In April 2018, ICBC filed its 2018 Application to Streamline Information Technology

Compliance Reporting Requirements (2018 Streamlining IT Reporting Application). In its

July 26, 2018 Decision on ICBC’s Application to Streamline IT Compliance Reporting

Requirements (Order G-139-18), the BCUC directed ICBC to:

…report on individual IT capital projects that exceed a capital expenditure of

$2 million in a manner consistent with the instructions set out in the ICBC 2007

RRA Decision.3

4. In addition, the BCUC approved ICBC’s proposal to discontinue the provision of the

asset category cost details reported in the IT capital plan, and to reduce the forecast period

in the IT capital plan from three years to two years. The BCUC also approved ICBC’s proposal

to consolidate the renewal projects and business change projects figures, but directed ICBC

to continue providing year-over-year actual and forecast information, with the following

modifications:

1 Order G-3-08, page 64. 2 Ibid, page 62. 3 Order G-139-18, page 4.



December 14, 2018

• Add a summary line of the IT capital expenditures that are below the

reporting threshold;

• Provide forecast end dates for those projects where the project status is

“active”; and

• Provide forecast start and end dates for those projects where the project

status is “not yet started”.4

5. This filing presents ICBC’s IT capital expenditures on a four-year rolling basis (two

years actuals and two years forecast) in accordance with the BCUC’s directions. The IT Capital

Plan is organized as follows:

Section B provides an overview of the purpose of the IT Capital Plan and the definition

of IT capital projects.

Section C sets out the IT Capital Plan expenditures on a four-year time horizon. Any

individual IT capital projects exceeding the $2 million reporting threshold of IT capital

expenditure are identified and described.

Section D identifies the fiscal years 2016/17 to 2019/20 depreciation and amortization

resulting from ICBC’s IT capital expenditures.

6. ICBC notes that Figure 10B.2 and three paragraphs (paragraphs 35, 42, and 47) in

this Chapter include financial information which, if publicly disclosed, could influence

negotiations on future IT capital projects and could result in economic harm to ICBC or third

parties. As a result, it has been redacted in this Application. ICBC is filing an unredacted

version of this Chapter under separate confidential cover, filed contemporaneously with this

Application, and respectfully requests that the unredacted version be treated as confidential

in a manner consistent with BCUC guidelines.

B IT CAPITAL PLAN

7. This Section provides an overview of the purpose of the IT capital plan, the definition

of IT capital projects, and a summary of changes to IT capital reporting since the previous IT

Capital Plan.

B.1 PURPOSE

8. The purpose of preparing and submitting this IT Capital Plan to the BCUC is to provide

transparency of ICBC’s capital technology expenditures (defined in Section B.3 below), and

resulting depreciation and amortization, in support of ICBC’s Basic insurance revenue

4 Order G-139-18, page 7.



December 14, 2018

requirements applications. As noted above, in accordance with the BCUC’s direction, ICBC

includes in its IT capital plans a description of any items forecasted to exceed the $2 million

reporting threshold of IT capital expenditures. The information provided in the IT Capital Plan

also aligns with, and helps to achieve, the objectives of the IT Strategic Plan.

B.2 BASIC INSURANCE FUNDED PROJECTS

9. This IT Capital Plan includes information on only those IT capital projects with costs

that are 100% allocated to Basic insurance or have a portion of their costs allocated to Basic

insurance. Those projects that are funded 100% by Optional insurance, including Rate

Affordability Action Plan (RAAP) related costs after March 5, 2018,5 are not included.

B.3 DEFINITION AND CAPITALIZATION OF IT CAPITAL PROJECTS

10. IT capital projects, on which ICBC files information with the BCUC, may be undertaken

in any business area. ICBC's IT assets capitalization policy, which is compliant with

International Financial Reporting Standards (IFRS), is to capitalize costs that result in

probable future economic benefit to ICBC for more than one year.6 Activities not related to

development such as planning, decommissioning, training, and data migration are expensed

as they do not meet the asset capitalization criteria.

11. Under ICBC’s current capitalization policy, ICBC capitalizes individual IT projects where

capital costs exceed $200,000 per project. As of April 1, 2019, as a result of the mandatory

adoption of IFRS 16 Leases (IFRS 16),7 ICBC will reduce this threshold and capitalize individual

IT assets that are over $50,000. At the time of this Application, ICBC has not yet completed

quantification of the impact of the adoption of IFRS 16 on its IT capital assets.

12. As noted in Chapter 7, Operating Expenses and Allocation Information, page 7-2, in

early 2016, ICBC’s fiscal year-end changed from December 31 to March 31. As a result of

this change, 2016/17 was a 15-month transitional fiscal period from January 1, 2016 to

5 In accordance with the Government Directive of February 13, 2018 with respect to Funding Rate Affordability Action Plan from Optional Insurance approved by Order in Council 84, March 5, 2018, RAAP initiatives costs incurred after March 5, 2018 are funded by Optional insurance, or by Government. All RAAP costs prior to March 5, 2018 are allocated between Basic insurance and Optional insurance in accordance with the BCUC-approved financial allocation methodology. 6 Project costs that extend the useful life or increases the service capacity of an asset are capitalized, and may include automation, end-of-life replacements, disaster recovery and enhanced security, hardware upgrades, and configuration of ICBC internal systems to externally owned software. Project costs for repairs and maintenance, including non-enhancement software upgrades are expensed. 7 IFRS 16 is an international reporting standard providing guidance on accounting for leases. IFRS 16 was issued in January 2016 and will replace the current lease standard (International Accounting Standards 17 Leases). The effective date for ICBC’s adoption of IFRS 16 is April 1, 2019.



December 14, 2018

March 31, 2017. From that point forward, ICBC’s fiscal year is from April 1 to March 31. The

presentation of information in this Chapter aligns accordingly.

13. ICBC’s total IT capital consists of both capital renewal expenditures and business

change expenditures, as described in Section C.1 of this Chapter.

B.4 IT CAPITAL REPORTING

14. As noted above, for IT capital projects exceeding the reporting threshold (now

$2 million), ICBC files individual IT capital project reports with the BCUC after internal

approval for the project to proceed has been obtained, and before project commencement.8

15. In September 2011, ICBC filed its Application to Streamline IT Capital Reporting

Requirements with a proposal to discontinue filing individual IT capital reports on projects

that involve routine replacement of computer hardware, software, and software infrastructure

(evergreening projects).9 In its November 17, 2011 Decision on ICBC’s Application to

Streamline IT Capital Reporting Requirements (Order G-189-11), the BCUC approved ICBC’s

proposal. The BCUC also directed ICBC to continue providing information on these projects

in the IT capital plan. Accordingly, evergreening projects that were or are going to be

undertaken during the 4-year time horizon for this IT Capital Plan (two years of actual

expenditures and a rolling two-year forecast) are identified in Section C.2. In

November 2015, ICBC filed a request with the BCUC to include future Genesys upgrades (call

routing software) to the list of evergreening projects that no longer require individual IT

capital project reports. The BCUC approved ICBC’s request in its December 3, 2015 Decision

on Addition of 2016 Genesys Upgrade to List of Evergreening Projects (Order G-191-15).

16. In Order G-139-18, the BCUC approved proposals to exclude hardware and software

costs for new employees, and true-up costs from the requirement to file individual IT capital

project reports, effective the date of the Order.10 However, ICBC’s proposal to exclude system

enhancements costs from this reporting requirement was not accepted and ICBC was directed

to:

8 Project commencement refers to the point where ICBC begins, or commits to, spending IT capital. 9 Evergreening IT capital projects (a subset of renewal projects) are recurring projects that involve replacement of technology assets that have a regular replacement cycle, typically once every three to five years, where there is little change in the purpose of that technology from one replacement cycle to the next. IT assets that ICBC considers as evergreening include: end-user devices, end-user software, servers and mainframe, output management devices, data networks, and storage. 10 Order G-139-18, pages 8 to 9.



December 14, 2018

…file, in a manner consistent with the instructions set out in the ICBC 2007 RRA

Decision, an individual IT capital project report to the BCUC where aggregate

system enhancement costs for any individual IT system currently in use at ICBC

are estimated to exceed $2 million.11

17. System enhancement work is forecasted before the start of a fiscal year in consultation

with business partners. Since ICBC does not forecast IT system enhancements more than

one year ahead, ICBC has assumed that on a go-forward basis, each upcoming fiscal year is

the period for determining whether individual systems enhancement costs will exceed the

reporting threshold. In other words, ICBC will look for system enhancement costs on

individual IT systems that exceed the reporting threshold on a year-by-year basis and not

aggregated across multiple years. In accordance with the BCUC’s direction, ICBC will provide

individual IT capital project reports for system enhancement costs on individual IT systems

that exceed the $2 million threshold on this basis. For the 2018/19 fiscal year, there are no

system enhancement costs for individual IT systems that are forecasted to exceed the

$2 million threshold. For reporting in the IT capital plan, system enhancement costs for all

IT systems over the course of a fiscal year have been aggregated.

C IT CAPITAL PLAN FOR 2016/17 TO 2019/20

18. This Section explains the IT Capital Plan on a four-year time horizon, including two

years of actual expenditures and a rolling two-year forecast, for the fiscal years 2016/17 to

2019/20.

19. The IT Capital Plan is not a static plan, and it is revised, as appropriate, on an ongoing

basis. ICBC’s planning of future IT capital expenditures must remain flexible, as technology

advancements may introduce unknown opportunities (or challenges), and vendor, product

stability, or business needs may change.

20. This IT Capital Plan provides explanations for any significant year-to-year variances in

order to provide the BCUC with assurance that ICBC’s IT capital expenditures are being

managed efficiently and effectively. ICBC employs a centralized and strategic approach to

prioritizing projects and managing project scope and costs in order to ensure strong executive

oversight and accountability for project prioritization and delivery.

11 Ibid, page 9.



December 14, 2018

21. ICBC regularly reviews and updates project costs to identify risks and savings. This

approach ensures that all projects are consistent with the corporate strategy, and that project

costs are managed prudently.

22. Renewal and business change projects have been minimized in 2018/19 and 2019/20

due to ICBC’s focus on the RAAP projects. As a result, IT capital for renewal and business

change is lower in these years; however, these expenditures will be required in future years

as technology assets have a limited life span and eventually need to be replaced or upgraded.

C.1 CLASSIFICATION OF IT CAPITAL EXPENDITURE

23. In this Section, the forecasted IT capital expenditures affecting Basic insurance rates

are classified as either IT capital renewal or IT capital business change projects.

24. An IT capital renewal project is the routine maintenance, or the outright replacement

of, existing technology assets at or near end-of-life. These projects sustain existing

applications, infrastructure, and operational services at required service levels, and ensure

compliance with mandated legislative and regulatory demands. Renewal projects include

capital expenditures for items such as servers, mainframe computers, telephone systems and

routing software, network components, software licences, desktop computer hardware,

including laptops and tablets, and maintenance and version upgrades of Commercial Off The

Shelf (COTS) products. A business change, by contrast, is a project where the primary

business driver for the IT technology is to support a change to internal business processes

and workflows that will enhance the business capabilities, a change that affects external

stakeholders (e.g., suppliers, customers, and the general public), and investments made in

new information security and disaster recovery capabilities.

25. Capital expenditures from fiscal years 2016/17 to 2019/20 for purchase of information

technology are shown in Figure 10B.1 below. Figure 10B.1 disaggregates renewal and

business change.



December 14, 2018

Figure 10B.1 – Total IT Capital Expenditures

($ millions)

Description 2016/17 2017/18 2018/19 2019/20

Actuals1 Actuals Outlook Forecast

IT Capital for renewal >$2M 9.3 5.6 5.4 7.1

IT Capital for renewal <$2M 3.2 1.7 2.2 3.6

IT Capital for business change >$2M 18.2 29.7 4.4 3.1

IT Capital for business change <$2M 3.9 3.2 2.6 0.4

Total IT Capital Expenditures($)2 34.5 40.1 14.6 14.1

1 The 2016/17 actuals period reflects a 15-month transitional fiscal period. 2 Rounding may affect totals.

26. More information on capital projects can be found in Section C.2 below.

C.2 CAPITAL PROJECTS

27. IT capital renewal and business change projects with a capital expenditure of greater

than $2 million are shown in Figure 10B.2 below. IT capital expenditures for all years are

shown if the multi-year capital expenditure exceeds the $2 million reporting threshold.

28. IT capital renewal, as defined in paragraph 24, is the routine maintenance or the

outright replacement of existing technology assets at or near end-of-life.

29. Business change projects are those where the primary business driver for the IT

technology is to support a change to internal business processes and workflows, or a change

that affects external stakeholders (e.g., suppliers, customers, and the general public).

Projects that are funded 100% by Optional insurance, such as RAAP related costs after

March 5, 2018, are not included.

30. Project descriptions and timing are based on current estimates and understanding of

project scope, and subject to change, as further analysis is completed throughout the year,

and projects are re-prioritized.


10B-8 Insurance Corporation of British Columbia

December 14, 2018

Figure 10B.2 – Renewal and Business Change Projects with IT Capital Expenditures over $2 Million (Redacted)

($ millions) Planned Schedule Actual Schedule

2016/17 Actuals1

2017/18 Actuals

2018/19 Forecast

2019/20 Forecast

Capital Budget

Total Actuals to

Date2

Estimate at Completion

Status Start End Start End

Renewal Projects

1 Data Network Evergreening

Annual - - - -

2 SAN Evergreening Annual - - - -

3 Server Evergreening Annual - - - -

4 Desktop Laptop Monitor Evergreening

Annual - - - -

5 Managed Print Solutions - - - Completed Apr-15 Nov-15 May-15 Dec-15

6 Guidewire Licensing True-Up Adjustment (ClaimCenter)

Annual - - - -

Business Change Projects

7 System Enhancements - Annual - - - -

8 Material Damage Strategic Solution

- - Completed Jan-15 Dec-15 Jul-14 Jan-18

9 Online Claims Status and Reporting

- - - Completed Apr-16 Jun-17 Mar-16 Feb-17

10 Insurance Business Capability Project

- - Completed Aug-16 Jun-17 Oct-16 Nov-17

11 PolicyCenter Additional Products

- - - Completed Jul-17 Nov-17 Jul-17 Feb-18

12 PolicyCenter Fleet and Garage

- - Completed Dec-17 May-18 Dec-17 Jul-18

13 Master Data Management - - - Completed Apr-13 Jun-14 Mar-13 Nov-16

14 Guidewire Rating - - - Completed Jan-18 Mar-18 Jan-18 Mar-18

15 Data and Analytics Platform

- Active Apr-18 Dec-19 Jul-18 Active

Total3 27.4 35.2 9.8 10.1 95.3 86.3 103.4

1 The 2016/17 actuals reflect a 15-month transitional fiscal period. 2 Project actuals include costs from project inception up to July 31, 2018. 3 Rounding may affect totals.



December 14, 2018

Description of Renewal Line Items

31. Line item one, Data Network Evergreening, is the replacement of switches (computer

networking devices that connect network segments), wireless access points (similar to

switches, but provide secure network connectivity via wireless), firewalls, and other related

technology (e.g., Wide Area Application Services, a network optimization technology that

prevents network slow-down and, in turn eliminates, and/or minimizes business and customer

impact).

32. Line item two, Storage Area Networks (SAN) Evergreening, is the evergreening cycle

taking place in 2016/17 through to 2019/20 to replace the SAN (i.e., shared disk space) that

are at end-of-life.

33. Line item three, Server Evergreening, involves the replacement and retirement of

servers and system software that are at end-of-life, to maintain a reliable and cost-effective

computing environment in support of ICBC’s business operations. The estimate at completion

(EAC) is $0.7 million higher than the capital budget because software and labour costs that

were originally expected to be expensed are capitalized as per the corporate capitalization

policy.

34. Line item four, Desktop Laptop Monitor Evergreening is the evergreen cycle for desktop

and laptops computers.

35. Line item five, Managed Print Solutions, reflects costs associated with equipment

leasing for all printer and multi-function devices. The EAC was $ million higher than the

original capital budget, because lease payments that were originally classified as expense

were later reclassified as capital costs.

36. Line items one to five are evergreening projects for which IT capital project reports

were previously filed and/or ICBC is not required to file individual IT capital reports on, as per

Orders G-189-11 and G-191-15. In accordance with the BCUC’s Orders, ICBC will continue

to provide information on these projects in its future IT capital plan filings.

37. Line item six, Guidewire Licensing True-Up Adjustment for Guidewire ClaimCenter®

(ClaimCenter), are additional licensing costs based on the contractual terms agreed upon with

the ClaimCenter vendor. The licensing costs are based on net premiums written, and this

metric increased over time beyond a specified amount, resulting in additional licensing fees

being owed to the vendor. These terms were included in Guidewire software licences



December 14, 2018

purchased by ICBC, and could be included in contractual terms for other software products in

the future. In Order G-139-18, the BCUC approved ICBC's proposal to exclude true-up costs

from the requirement to file individual IT capital project reports. However, ICBC will continue

to provide the capital true-up costs for individual agreements, where they are expected to

exceed the reporting threshold over the course of an existing individual agreement.

Description of Business Change Line Items

38. Line item seven, System Enhancements, are the capitalization of aggregated labour

costs for ongoing system enhancements to claims, insurance, driver licensing, and corporate

applications, where the related costs meet the criteria for capitalization in accordance with

ICBC’s capital assets policy. Examples of the types of these system enhancements include

business rule changes and enhanced reporting.

39. Line item eight, Material Damage Strategic Solution (MDSS), is replacement of the

legacy material damage (MD) estimating platform with a new platform, Mitchell WorkCenter™

(WorkCenter) which completed in January 2018. WorkCenter also includes an internal audit

and compliance tool that enhances ICBC’s ability to monitor and audit repair estimates, and

provides greater flexibility for supporting the development of future MD strategies and

initiatives. In 2015, the scope and timeline of MDSS underwent significant re-planning, which

occurred after further consultations with the vendor and in consideration of the

implementation timeframes for other key corporate initiatives, which impacted MDSS in terms

of availability of required assets/resources. This re-planning resulted in a shift forward of the

MDSS project timeline, moving the implementation date from 2015 to 2018. The EAC was

$3.1 million higher than the original capital budget as a result of the increased complexity of

the work required to implement the new MD estimating platform.

40. Line item nine, Online Claims Status and Reporting, purchased and implemented a

claims portal that integrates with ClaimCenter in order to provide customers with the ability

to view their claims status online. The project ended four months earlier than planned, which

resulted in a $1.3 million favourable variance.

41. Line item ten, Insurance Business Capability Project (IBCP), built upon the foundation

put in place with the completion of the Insurance Sales and Administration System (ISAS)

project. ISAS delivered the core functionality of Guidewire PolicyCenter® (PolicyCenter) as

the replacement of ICBC’s legacy policy administration system (PAS) under the

Transformation Program. IBCP extended PolicyCenter by delivering additional products and



December 14, 2018

functionality. This included non-core functionality for delivery of some special coverages, as

well as the initial technical design to enable the future delivery of the Fleet and Garage

business. The IBCP project started later than anticipated due to the stabilization period

associated with ISAS. The change in the start date of IBCP, the ongoing need to stabilize

ISAS, as well as technical design challenges resulted in a change in the project scope from

the original IBCP IT capital project report filed with BCUC on June 23, 2016. At the beginning

of 2017, in order to better manage technical and delivery risk, ICBC updated its plan for its

goals related to fleet and garage policies, and additional products through smaller and

sequenced projects, PolicyCenter Additional Products (PCAP), and PolicyCenter Fleet and

Garage (PCFG), which are discussed below. As a result of this new delivery approach, the

revised scope IBCP concluded in November 2017 with $3.2 million lower IT capital costs than

the original project plan.

42. The initial capital budget for IBCP was $ million. However, as noted above, the

project was split into two additional sequenced projects, PCAP and PCFG, in order to better

manage the technical and delivery risk. The actuals for all three of these projects combined,

totalled $ million, significantly higher than the original IBCP capital budget. The key

reason for the increase was due to unanticipated complexity of the technical solution required

for the fleet and garage business model, including:

A unique set of requirements to deliver garage and fleet business at ICBC, including:

the ability to aggregate individual policies into a fleet, the ability to apply a single

payment across individual policies within a fleet, special error handling capability, and

automation techniques to manage workload.

Provision of a multi-policy framework that could scale to the size of ICBC’s largest

fleets (over 9,000 vehicles), and resolve limitations within the PolicyCenter framework.

Vehicle registration and licencing requirements which necessitated customized add-

ons to the PolicyCenter framework.

43. In addition to the requirements above, ICBC needed to augment internal teams with

technical resources and expert consultants that it did not have in-house.

44. Line item eleven, PolicyCenter Additional Products (PCAP), as noted above in

paragraph 41, the scope of work originally under IBCP related to implementation of additional

insurance products (special coverage policies) into PolicyCenter, was segmented into its own

individual project. As the scope of this project was included in the original IT capital project

report for IBCP filed on June 23, 2016, a separate IT capital project report was not



December 14, 2018

undertaken. Implementation of the additional products into PolicyCenter was completed, as

planned, in November 2017 and the project completion date was in February 2018. The

$0.5 million favourable variance is due to cost efficiencies realized from the integrated

management and delivery of the PCAP and PCFG projects.

45. Line item twelve, PolicyCenter Fleet and Garage (PCFG), as noted above in

paragraph 41, the scope of work originally under IBCP related to implementation of fleet and

garage products into PolicyCenter was segmented into its own individual project. As the scope

of this project was included in the original IT capital project report for IBCP filed on

June 23, 2016, a separate IT capital project report was not undertaken. Completion of the

project was two months later than originally planned due to delaying implementation of the

bulk renewal functionality to better manage project delivery and risk. Delaying bulk renewals

did not impact the project “go-live” date for implementing fleet and garage policies into

PolicyCenter, as the bulk renewal functionality was not required until after the project go-live.

New fleets and garage policies were processed in PolicyCenter at planned go-live

(March 4, 2018) but the bulk renewal functionality was not required until the first fleet

renewals were migrated from the legacy PAS to PolicyCenter (policies expiring June 30, 2018).

The functionality was delivered in time for that need. The $0.6 million favourable variance is

due to cost efficiencies realized from the integrated management and delivery of the PCAP

and PCFG projects.

46. Line item thirteen, Master Data Management (MDM), was required to establish an

enhanced capability for the management of master data, such as customer data, using a

highly configurable COTS solution. Core features of the solution include a flexible data model,

built-in data quality processes, and rule-based governance features (e.g., for security and

privacy). The original MDM project focused on implementing the core MDM foundation with

the first application to incorporate the technology with PolicyCenter (which was delivered

under the ISAS project). An IT capital report for MDM was filed on May 10, 2013 and the

project was completed in November 2016. The EAC was $8.7 million higher than the original

capital budget due to the increased complexity of MDM integration and because of costs

shifting from the ISAS project for work required to integrate with MDM that was not

foundational to the delivery of ISAS.

47. Line item fourteen, Guidewire Rating, replaced ICBC's end-of-life rating engine, which

is used for calculation of policyholder premiums during policy issuance. Guidewire Rating,

which is an add-on module to PolicyCenter, improves ICBC’s ability to implement rating



December 14, 2018

changes quickly and efficiently, and provide necessary foundational capabilities for any future

rate design, rating or Optional insurance product change initiatives. An IT capital project

report was filed on April 16, 2018 for the capitalized licensing costs of the Guidewire Rating

software purchased earlier in Q4 2017/18. An IT capital project report was not submitted in

advance of incurring costs, as the Guidewire Rating contract is for a two-year term with a

total value under $1 million. However, when taking expected future license renewals into

account, the appropriate treatment under IFRS was to recognize this as a capital lease for a

total amount of $ million. Once it was determined that the project exceeded the $1 million

IT capital reporting threshold, ICBC began preparing the IT capital report.12

48. Line item fifteen, Data and Analytics Platform (DAP) will replace ICBC's current

Enterprise Data Warehouse platform that is nearing end-of-life. The new solution will have a

more integrated and flexible approach in design of its data and analytics platform. An IT

capital project report was filed on June 4, 2018. In accordance with the BCUC’s request

following its review of the DAP IT Capital Project Report, ICBC has included in

Attachment 10 B1 to this IT Capital Plan, an update on the pilot phase of the project.13

D DEPRECIATION AND AMORTIZATION OF IT CAPITAL EXPENDITURES

49. On page 51 of ICBC's 2017/18 Annual Service Plan Report (ASPR),14 ICBC’s accounting

policies state that property and equipment are initially recorded at fair value and subsequently

measured at cost less accumulated depreciation and impairment losses. Cost includes

expenditures that are directly attributable to the acquisition or construction of the items,

including retirement costs. Subsequent costs, such as betterments, are included in the asset

only when it is probable that future economic benefits associated with the item will flow to

ICBC. All other subsequent expenditures are recognized as repairs and maintenance.

Capitalized software that is an integral part of the equipment is accounted for as equipment.

Property and equipment is depreciated when it is available for use on a straight-line basis

over the estimated useful life of each asset.

50. Finite life intangible assets, which are discussed on page 52 of the 2017/18 ASPR, are

initially recorded at fair value and subsequently carried at cost less accumulated amortization

12 This was discussed during the June 19, 2018 Streamlined Review Process on ICBC’s 2018 Streamlining IT Reporting Application (T1: 25-28). 13 BCUC’s request was for, “ … the learning outcomes associated with the pilot and confirmation on whether ICBC will be committing to the full amount of the capital expenditure with Hadoop technology from MapR” in L-17-18. 14 https://www.icbc.com/about-icbc/company-info/Documents/ar-18.pdf

https://www.icbc.com/about-icbc/company-info/Documents/ar-18.pdf



December 14, 2018

and impairment losses. Intangible assets with finite useful lives are amortized over their

estimated useful lives when they are available for use on a straight-line basis at 10% to 33%,

taking into account the residual value.

51. ICBC performs an annual asset review in compliance with IFRS.

52. Total depreciation and amortization for fiscal years 2016/17 to 2019/20 resulting from

IT capital expenditures is shown in Figure 10B.3 below.

Figure 10B.3 – Depreciation and Amortization of IT Capital Expenditures

($ millions)

2016/17 2017/18 2018/19 2019/20

Description Actuals1 Actuals Forecast Forecast

1 Depreciation and Amortization of IT Capital2

$ 16.1 $ 15.1 $ 17.6 $ 18.9

2 % of ICBC's operating expenses 1.9% 2.1% 2.3% 2.3%

1 The 2016/17 actuals reflect a 15-month transitional fiscal period. 2 Rounding may affect totals.

53. Depreciation is forecasted to remain steady at 2.3% of ICBC’s operating expenses.

E CONCLUSION

54. This IT Capital Plan contains information that is consistent with the BCUC’s current

reporting requirements and includes two years of historical and two years of forecast

expenditures, segregated into capital renewal and business change projects.

55. ICBC believes this IT Capital Plan meets its commitment to the BCUC to provide further

information on IT capital expenditures that could materially impact Basic insurance rates and

provides further assurance that its IT capital expenditures are being managed efficiently and

effectively.


Insurance Corporation of British Columbia

December 14, 2018

Attachment 10 B1 – MapR Hadoop Pilot Project Update


Insurance Corporation of British Columbia 10B1-1

December 14, 2018

INTRODUCTION

1. This report is being provided in accordance with the British Columbia Utilities

Commission’s (BCUC) request in Letter L-17-18 pertaining to the Insurance Corporation of

British Columbia’s (ICBC) Confidential June 4, 2018 filing of the Data and Analytics

Platform (DAP) IT Capital Project Report, for additional information about its Hadoop-

based technology pilot project. ICBC undertook this pilot project prior to committing to its

agreement with the vendor, MapR. Among other items, the BCUC requested ICBC to provide

the following: An update to be included in the next revenue requirements application…

regarding the result of the Hadoop technology pilot, the learning outcomes

associated with the pilot and confirmation on whether ICBC will be committing

to the full amount of the capital expenditure with Hadoop technology from

MapR.

2. The purpose of the DAP project is to replace ICBC’s current Enterprise Data Warehouse

(EDW) that is nearing end of life, with a Hadoop-based technology that provides a more

flexible and scalable data platform to meet ICBC’s current and future data and analytics needs.

A pilot project was undertaken to determine the viability of the Hadoop–based technology,

provided through MapR, in meeting ICBC’s business requirements.

PILOT DESIGN AND APPROACH

3. The pilot was designed to confirm the ability of the proposed MapR/Hadoop solution to

deliver business reporting and meet analytical needs, simplify the data architecture, and

confirm the technical viability of the solution. The pilot also confirmed the ability of the

platform to scale to ICBC data volumes and to refine the delivery methods, processes and

technical design to be used for the full scale implementation of the solution across ICBC.

4. The approach used for the pilot was to demonstrate the viability of the MapR/Hadoop

solution by using a subset of ICBC information, beginning with source data from operational

systems that was processed through the MapR system and then delivered to the business via

reporting and ad hoc tools. In order to accomplish this, ICBC provisioned the necessary

hardware, and configured a pilot test environment.

5. The pilot started on March 5, 2018 and ended on July 5, 2018.



December 14, 2018

PILOT OUTCOMES

6. Business needs:

Analytic/Predictive modeling – MapR technology was used to develop a test

predictive model that was executed, and results confirmed.

Operational and ad hoc reporting – the pilot demonstrated the ability to create,

deploy, and access an operational report and access the information for ad hoc

reporting purposes. The MapR/Hadoop data model is simpler and allows for easier

interaction, analysis, and reporting as compared to the current EDW.

7. Data simplification:1

Approach for simplifying data structures was validated within the MapR system.

For example, the MapR solution enabled the reduction of claim file data from

approximately 75 tables in the current EDW to 7 tables.

Proved the ability to simplify ICBC’s data and still meet business needs with the

new technology.

8. Technical Viability:

Validated that the technical design and MapR platform capabilities can perform

and scale to ICBC data volumes and reporting requirements.

9. Repeatable processes and frameworks for future development:

Repeatable delivery methods and frameworks were confirmed, and will be

exercised in the project delivery. During the pilot, the project team created the

development processes, standards, and estimates models necessary for the full

project delivery.

CONCLUSION

10. The pilot completed successfully and outcomes met the use cases and business needs

set out for the pilot; therefore, ICBC has committed to proceed with the project to migrate

the current EDW information to the MapR platform and also committed to the full amount of

the associated capital expenditure, as outlined in the IT capital project report.

1 Validate that simplified data structures and design are feasible, and also enable business agility and platform migration needs.



December 14, 2018

11. In addition to the pilot confirming the capabilities of the MapR/Hadoop platform, ICBC

has gained a better understanding of the time required for existing staff to become sufficiently

experienced in the new technology in order to perform at a similar speed and efficiency as

they are able in the existing platform. These learnings have been factored into the MapR

project schedule and resource plan.