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14952 – 95A Avenue Surrey, British Columbia. V3R 7T6 17 September 2014

Ms. Erica Hamilton Commission Secretary British Columbia Utilities Commission Sixth Floor, 900 Howe Street Vancouver, British Columbia V6Z 2N3

Dear Ms Hamilton,

Re: Insurance Corporation of British Columbia Order G-129-14 and Letter L43-14

2014 Revenue Requirements Application INTERVENER C1 - Matters of Interest

Further to Commission Order G-129-14 and Letter L43-14 with respect to the above noted Application, I am pleased to file my “Matters of Interest” with the BCUC and ICBC.

As recorded in my reply letter of August 234th 2014, I believe the schedule time frame provided by the BCUC Preliminary Schedule for the submission of Intervener Matters of Interest is too short. I regret the brevity of these matters of interest due to the time constraints. This has lead to my incomplete presentation of matters of interest. While affording ICBC the opportunity to misunderstand my matters of interest ahead of the Review Working Session schedule for September 26th 2014

Based on attending previous workshops and the most recent ICBC Informal Presentation September 8th, I am gravely concerned the streamlining of the current application process “ILL Serves” every British Columbian affected by the current application, by the adjunctive streamlining of the application schedule. This is also reflected in the “Intervener Submission on further process” due September 29th 2014. If no other intervener needs more time, I most certainly do, since I am one person attempting to integrate the following functions in this application process by: reading, digesting (a word provided by ICBC), comprehending (if I can), researching, developing well reasoned argument with responses (if I have the time), typing / formatting / indexing /exhibits etc; the aforesaid and filing. Quite frankly, I find it impossible, and do hereby file my protest.

Kind regards,

Richard T. Landale cc: ICBC and Registered Interveners

C1-3

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Intervener C1 - Matters of Interest.

2014 C1-1 Reference my letter to the BCUC Date July 21 2014 page 3 and page 4 I suggested starting the conversation with reference to the 5.2% Indicated Rate Change and discussing the impact of the indicated rate change with two graphs on page 4. I have since updated those graphs accordingly; see Appendix A In this letter I asked in a simple manner, “where is the ceiling ? in comparison to the Canadian Consumer Index and CPP”, see Appendix B During the ICBC Informal Presentation Ms. Minogue briefly acknowledged the Federal CPI basket of goods as being different to the ICBC basket of goods used in the actuarial calculations. 2014 C1-1.1 Now I am requesting a “Detailed” listing of the ICBC Basket of goods so that comparisons can be made between the Federal CPI and the ICBC CPI ? 2014 C1-1.2 Where in the Indicated Rate Change of 5.2% and in Figure 3.2. does the ICBC CPI manifest itself and its impact…. Exactly ? 2014 C1-1.3 Will ICBC please provide the historical data, say back to 2007 and forward to today their CPI data/basket, with the annual index number for each of those years? 2014 C1-1.4 If ICBC can not provide these numbers, please explain why PY2014 is different in regard to their provision of their CPI index, and on a Corporation wide basis, What is the given policy in regard to the CPI for matters pertaining to Basic Insurance Premiums? 2014 C1-1.5 If either the Federal or the ICBC CPI has not been applied to the PY2014 in regard to the 5.2% Indicated Rate Change, Will ICBC please explain why not, how detrimental would it be to the 5.2% Indicated Rate Change if they were applied, please provide graphic examples for the upcoming Workshop September 26 ?

2014 C1-2 Reference to Appendix A. The graph titled “Progress Rate Change” demonstrates the extremes of the Hi / Lo 1.5% impact on a progressive and compounding linier basis through the years 2013 to 2020, based upon Special Direction IC2. 2014 C1-2.1 Does ICBC dispute this representation in any fashion ? If so, please provide background, discussion and future perceived impacts of 1.5% Rate Smoothing looking forward? Especially in light of PY2015 and the elimination of Prior Rate Exclusion (+6.6) (Slide #10 for example) ?) The graph titled “Equivalent Premium Rate Change” Please also pay particular attention to the “Span” line given in this graph, (incidentally the $1141 number comes from my PY2013 presentations). ICBC is at liberty to vary this number if found necessary for their reply. 2014 C1-2.2 Does ICBC dispute this representation in any fashion ? If so, please provide background, discussion and future perceived impacts of 1.5% Rate Smoothing looking forward? Especially in light of PY2015 and the elimination of Prior Rate Exclusion (+6.6) (Slide #10 for example) ? 2014 C1-2.3 Does ICBC dispute the representation of the Equivalent Premium Rate Change Low band rising $835 a 73% increase over 7 years ? and the Hi Band rising $1,252 a 109.7% increase over 7 years. In either case these increases far exceed normalized CPI forecasts ? Moving onto the Canadian Pension Plan (CPP) During the PY 2013 RRA; I established the link between the Federal CPP and the Federal CPI. Which has been updated in “RTL-Exhibit 03” comparing the CPP/CPI Inflation Rates verses the ICBC Basic Premium Rates (BPR) ± 1.5% Rate Change Band for Rate Smoothing, see 2014 RRA Figure 2.3 Referring to RTL Exhibit 03 the CPP/CPI line shows a fairly flat rate over the 2007 to 2015 date range. Verses the ICBC BPR 1.5 Rate Increase line of the same date range, with PY 2015 estimated.

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Since 2013 (Special Direction IC2) the PY2013 BPR fixed by the BCUC at 5.2% the BPR 1.5 Rate Decrease line shows how when applied the permissible - 1.5% Rate Change Band Decreasing in consecutive years almost normalizes the ICBC BPR to the CPP/CPI, as estimated for PY2015 2014 C1-3.1 Does ICBC dispute this representation in any fashion ? If so, please provide background, discussion and future perceived impacts of ± 1.5% Rate Change Band Smoothing looking forward? Especially in light of PY2015 and the elimination of Prior Rate Exclusion (+6.6) (Slide #10 for example) ? 2014 C1-3.2 What inhibits ICBC from following the Federal CPP/CPI index ? What inhibits ICBC from adding the CPP/CPI index (actuarially if ICBC wishes) to the Figure 3.2 and sundry text within the PY2014 RRA. ? For discussion purposes please provide graphic examples for the upcoming Workshop September 26 ? 2014 C1-3.2 Will ICBC please affirm or decry the need for an order by the BCUC to utilize the Federal CPP/CPI in this current and future applications. Before moving onto other matters of interest, I wish to remind the BCUC and ICBC I circulated at the end of the Informal Presentation September 8th with permission from Mr. Ghikas a two page document published on the BCUC website as C1-2 titled “15% Rate Smoothing Calculation for ICBC 2014 RRA”. 2014 C1-4.1 I am anticipating ICBC will respond to this circulated document at the upcoming Workshop September 26 ? The Minimum Capital Test (MCT) in the 2014PY would seem to be a none issue……… The MCT is on target. Just a minute !, where are the numbers to support such a statement, Slide 10 of the Information Presentation actually gives the reader no information, other than an Outlook point of 145% Figure 3.2 line 6 Capital Maintenance +0.2 PPT According to Ms. Minogue reply to my question; - One PPT is equal to $50 million of Capital Maintenance / Build (or top up) (by the way I am not confused; Maintenance and Build are the same, capital is capital in all its forms) to the 145% Outlook for Rate Smoothing. $50 million this year, what next year. Capital Maintenance is compounding annually, just sitting in the bank account, building and building for Rate Smoothing. Exactly how does that work, where are the numbers to support this Capital Maintenance / Build for Rate Smoothing ? Referring to RTL – Exhibit 01 Minimum Capital Test, this exhibit has been updated based on current information from last years RRA. 2014 C1-5.1 To repeat the question for a formal answer; Exactly how does that work, where are the numbers to support this Capital Maintenance / Build for Rate Smoothing ? 2014 C1-5.2 What are the components that accumulate to the determination of the magnitude of the Rate Smoothing value for the 2014PY ? For example, MCT falls below 150% but above 130% MCT, the MCT is above 140%, but below 146%? 2014 C1-5.3 Will ICBC please provide a Table to explain the Rate Smoothing components, their respective PPT and dollar value ? 2014 C1-5.4 It really would have been kinder of the BCUC and Allwest to issue the transcript of the ICBC Informal Presentation, lots of Q & A, especially since I can not remember the full context of these next questions. Why is there a gap in the MCT levels between 145% and 150% ? To me ICBC has “squeaked in another 5% margin of capital”. How many margins did IOC 153 and 560 approve ? What is the Capital value of this 5% ? I do believe IOC 560 gave a clear directive: quote:

ICBC is directed to alter its Basic insurance Capital Management Plan to exclude any capital build provision in Basic insurance rates from February 1,2012 to January 31, 2015 provided that Basic capital remains above the regulatory minimum. This will have the effect of allowing ICBC to use more Basic capital above the regulatory minimum to

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reduce a portion of the actuarially indicated rate during these three years than would otherwise be permitted under ICBC's Capital Management Plan.”, end quote.

2014 C1-5.5 Will ICBC please explain why they are contravening this directive in 2014PY, see Figure 3.2 line 6, and in regard to this 5% differential referred to above.? Rate Smoothing based on increasing the MCT from 130% to 145% level is a “taxation” of $13.60 per Basic Insurance Policy holder. “Thank you BCUC ! for nothing …” The arithmetic : $50 million divided by 3.2 million Basic Policy holders is $13.63 for the 2014PY effective November 1st 2014. 2014 C1-5.6 Does ICBC dispute this representation in any fashion ? If so, please provide background, discussion and future perceived impacts of the MCT levels for Rate Smoothing looking forward ? I may be mistaken, I cannot find a clear statement from ICBC of it’s Corporate MCT levels, the percentages, and respective policy guidelines for administration of the Corporate MCT. Ok, we all understand OSFI guidelines, 100%, 130%, 145% and 160% (may not like it, but we understand), what I do not understand is the Annual reports and the Quarterly Reports, as they report the Corporate MCT levels. I have seen ICBC report MCT levels as high as 214%, a brief look in history. As reported in the 2013 Annual report Year 2010 2011 2012 2013 Incidentally the MCT levels reported here MCT 209% 189% 200% 204% are not consistent with Figure 11A.2 As Reported in Quarterly Reports Why is that ? 4th qtr 2012 200% 3rd qtr 2012 194% 2nd qtr 2013 202% 2nd qtr 2014 214% 2014 C1-5.7 Does ICBC dispute this representation in any fashion ? If so, please provide background, discussion and future perceived MCT levels ? It may be helpful for ICBC to explain why Basic Insurance carries the larger MCT burden at 145% verses a 50 – 50 split between Basic and Optional Insurance. 2014 C1-5.8 Will ICBC please explain why the MCT levels are not allocated on a 50 - 50 basis between Basic and Optional Insurance ? And why is the MCT ratios not shown in the Allocation Tables in Chapter 8 ? 2014 C1-5.9 Will ICBC please explain why are MCT Targets / levels segregated between Basic, Optional and Corporate ? And why are MCT levels reported in Quarterly and Annual Reports without qualification, such as Basic, Optional, Corporate ? Finally on MCT, I believe it behooves the BCUC and ICBC to respect Mr. Richard McCandless C4-2,-3,-4 submissions, and reply to them in great detail. Mr. McCandless is not writing his autobiography, he is providing very valuable information, with well researched facts and data. In my opinion the BCUC should take Mr. McCandless submissions in hand to ICBC, requiring ICBC answers with full disclosure, and for the record. I believe this would be a strong influence and substantive argument for changes to the way ICBC operates the Basic Insurance side of their business. The Customer Renewal Credit Chapter 4 It is beyond comprehension as to why the British Columbian Utilities Commission and Commissioners allowed themselves to be “Bamboozled” by ICBC in 2013 PY RRA. Where upon ICBC continues to bamboozle us all again with the mixture of the CRC and MCT rhetoric. Way betide the Commission you mess with ICBC. ICBC has managed to convince the BCUC there is a ceiling of 165% wherein the CRC could be refunded to eligible ICBC customers, so long as the CRC does not bring down the MCT below 150%. What… another level of money grabbing… Thank You BCUC …! 2014 C1-6.1 Will the BCUC and Commissioners please rethink the CRC framework by correcting the MCT ceiling to 145% Maximum? That a directive be issued to ICBC to refund all eligible customers the CRC regardless of the MCT. Hell… its our money in the first place..!

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Chapter 4 page 4-4 para 13 as follows: The issue that ICBC identified in the 2013 Revenue Requirements Application and about which it remains concerned is one in which Basic capital is released as a CRC in year one, and necessitates a capital build in the following year. This would be contrary to the requirement in Special Direction IC2 that Basic insurance rates will remain relatively stable and predictable despite the approval of the CRC. Under the Commission-approved Basic Capital Management Plan, capital must be rebuilt if the MCT ratio falls below 145%. Rates must recover one fifth of any shortfall below 130%, and one tenth of any shortfall between 130% and 145% MCT.

ICBC then gives a timeline process in Figure 4.2 – Illustrative CRC Timeline, that was never contemplated in 2013PY. There is no precedence for ICBC to grab a hold of our money over such a long timeline. Take another look by way of an example at Figure 4.4 – Illustrative calculation of the CRC per Customer. What right do they have to do such a thing ? Where did this “one fifth of any shortfall” come from ? This is manufactured tinkering by ICBC on BCUC approvals for the CRC. 2014 C1-6.1 Will the BCUC and Commissioners sort out this mess once and for all by giving us our money back in a timely fashion, not years later ? Turning attention to Actuarial Rate Level Indication Analysis – Chapter 3 In reflection to PY2013 and today PY2014 ICBC has done little to enlighten me with useful information… Well done ICBC..! Without a doubt I feel you are taking every British Columbian to the cleaners with the mumbo jumbo proliferating this chapter. 2014 C1-7.1 Looking at Figure 3.1 – PY 2014 Basic Insurance Deficiency ($000’s), can it reasonably be said $130,003,000 is equal to $25,000,576.92 or 1% ? Can it be said 3.2 million BC Basic Policy holders premiums will on average increase by $40.63 ? Does ICBC dispute this representation in any fashion ? If so, please provide background, and discussion, and even a table to represent exactly how many policy will be affected and by exactly how much on average. 2014 C1-7.2 Does ICBC think it appropriate to continue to outpace the abilities of Seniors in the Province of British Columbia ability to pay, when their CPP increased in January 2014 by 0.9% ? ICBC’s Basic premium increase of 5.2% is 5.777 times their CPP increase ! In my opinion the slides 12 to 26 inclusive are the mumbo jumbo I referred to above. Nothing that they pertain to can be independently verified by the Interveners. Also in my opinion by the BCUC Staff or the Commissioners. ICBC continues to place the Regulators and the citizens of British Columbia at a fait-accompli, or put another “At Gun Point” Mined you the BCUC did not help British Columbians by approving in April 2010 the “New Money Rate” (Chptr 2 page 2-10 para 31) and the “Accepted Actuarial Practice” ICBC continues to point out throughout the application text. As an example of independent verification: I consider myself as having a medium rated proficiency in using excel spreadsheet formulas. With that in mind I am unable to duplicate the formula listed on Exhibit page 2 para 6 as this formula is used in Exhibit A.1.1 to arrive at “Required Premium (RP) (1) Total $2,378,608,000”

EXHIBIT A.1.1 Present Value Factor 1.03933 Yr 1 - Q1 Column 11 Present Value Factor

L1+ U1+ G1+ R1+ ME1+ P1- MR1- IE1

RP13946.33601 12985.389 5371.2574 11539.681 23950.321 60470.298 16829.871 15998.407

1 26165 1.03933

1.0 t- v

RP1=59271.044

2014 C1-7.3 I would appreciate ICBC explaining my error during the upcoming Workshop on September 26th ?

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Moving on so to speak, Chapter 3 page 3-5 para 12 in reference to Figure 3-2 line 1 +6.6 PPT This paragraph is written in a fashion as to not be understood. Hmmm, what did I just write. A leaf from ICBC, it is impossible to understand. Putting it this way, Discontinuing Prior Year’s Rate Exclusion of +6.6 as representing the full amount of the loss cost forecast variance that year. Hmmm, I did it again. The rate exclusion represented a deployment of capital in support of Basic insurance rates in PY2013, which were set below the level required to cover costs. Ok, this sentence make some sense. But without a data table to support the assertion, it is impossible to connect the dots for the remainder of the paragraph. The remainder seems disconnected by rambling about; rate smoothing, not repeat offset costs, discontinuing

the negative capital provision, the first component of the required rate change to cover cost for PY2014…. What, I thought

the 6.6PPt was to be discontinued ? Somehow the confusion persists with; rate smoothing framework in the

approved Basic Capital Management Plan… What ? 2014 C1-7.4 The above was written to make the point of very poorly presented ICBC facts, information, argument, reason, data or a question. Will ICBC please provide a more comprehensive explanation of this paragraph with supporting data and table ? The remainder of this section follows the same vein in my opinion, and at least for this Intervener a “Loss Cost Variance Certainty” 2014 C1-7.5 Why does the BCUC and Commissioners allow ICBC to get away with this form of Revenue Requirement double talk ? And who can follow 250 pages of Actuarial Tables, excluding ICBC of course ? During the Information Presentation Mr. Dickenson indicated his budget expenditures were yelding a 5.5% return on investment, which prompted me to ask where was the money savings of around $2.4 million in the 5.2% Indicated Rate Change calculations ? Thank goodness I have a sense of humour, The response I got amounted to it’s not real money, it’s an accounting number, or something like that. Well that experience managed to make me feel quite stupid, thank you very much …! 2014 C1-8 Why does the BCUC and Commissioners allow ICBC to get away with making claims of return on investment, when ICBC does support such claims with figures for independent verification ? It seem a false representation of returns on investments. Well I’ve run out of time, again thank you BCUC for the adjunctive schedule…! I will take the moment to again thank those staff at ICBC responsible for Chapter 11 General Appendices and the List of Commonly used Acronyms Figure 11A.3 I unfortunately have not had enough time to review the ICBC 2014 Revenue Requirement Application in its entirety. So my silence on any part is not to be construed as endorsement or approval. I also apologize for any errors, as again I have not had the time to review my work comprehensively.

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APPENDIX A

2013 2014 2015 2016 2017 2018 2019 2020

LOW 0 3.7 5.2 6.7 8.2 9.7 11.2 12.7

HIGH 5.2 5.2 6.7 8.2 9.7 11.2 12.7 14.2

2013 2014 2015 2016 2017 2018 2019 2020

LOW 1141 1183 1245 1328 1437 1576 1753 1976

HIGH 1141 1217 1317 1445 1607 1811 2068 2393

SPAN 0 34 72 117 170 235 315 417

The first graphic shows the Hi/Lo rate increases in a rising linear fashion, whereas the second

graphic shows the Hi/Lo premium increases in a rising arc, this is due to the dollar

compounding effect from the preceding year over year.

The SPAN represents the year over year differential between Hi/Lo premium increases.

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