Canadian Office & Professional Employees Union, Local 378 2 nd Fl., 4595 Canada Way, Burnaby, B.C. V5G 1J9 Phone: (604) 299-0378 Toll Free: 1-800-665-6838 Fax: (604) 299-8211 August 18, 2004 Via e-mail: commission.secretary@bcuc.ca Mr. Robert J. Pellatt Commission Secretary British Columbia Utilities Commission Sixth Floor, 900 Howe Street, Box 250 Vancouver, BC V6Z 2N3 Dear Mr. Pellatt: Re: Insurance Corporation of British Columbia Application 2005 Financial Allocation/Methodology Application Commission Order No. G-75-04 Our Request for Information (C10-2) With respect to the above noted application by the Insurance Corporation of British Columbia, The Canadian Office and Professional Employees Union (COPE), Local 378 hereby submits its requests for information to the Commission so they may issue our requests for information to ICBC. We file this request as per the Regulatory Agenda and Timetable Appendix A to order No. G-75-04. All correspondence with respect to the above application should be forwarded to the undersigned by e-mail at dmcpherson@cope378.ca; jnew@cope378.ca and sjtoomey@telus.net. Yours truly, Jerri New President JN:kc cc: Karen Rockwell, Vice-President, COPE Local 378 Dave McPherson, Senior Union Representative, COPE Local 378 Steve Toomey, Executive Councillor, COPE Local 378
Insurance Corporation of British Columbia Financial Allocation Methodology Exhibit No. C10-2 Financial Methodology 1. If the Corporation uses the Pro-Rata or the mixed methodology approach suggested by John Todd of Elenchus Research Associates, will Intervenors still be able to request specific information on allocations made to cost centres in future hearings or would these requests have to be made under The Freedom of Information Act? 2. i. What are the benefits to B.C. motorists and British Columbians in keeping ICBC intact as one company rather than having it broken into a number of smaller companies? i Would there be a cost savings for Basic Insurance in keeping ICBC as a fully integrated company while carrying out both the operations of Basic insurance and Optional insurance? What would be the financial savings in keeping ICBC as an integrated company? Could ICBC meet or exceed its financial goals as one company and using an allocation method approved by the Commission? v. Would there be significant costs to operations if the company were split? v vi Can ICBC present an argument as to the advantage of both an integrated business model and a split business model that divides the company into smaller companies? Also would ICBC, if it is split, retain or sell sections of the company? How would the financial methodology choice be impacted in each type of model for both types of companies? 3. Internal firewall restrictions on information sharing between Basic and Optional insurance will be imposed on ICBC. i. What are the projected increased costs? i How will those increased costs be allocated? What other increased costs will customers and British Columbians face from the break up of ICBC into Basic and Optional lines of business? Will there be increased costs or fees to brokers as a result of having to issue two separate policies- one for Basic, one for Optional? v. If there are increased costs, how does this benefit consumers? Is ICBC considering changing the Basic product so that many of the items such as Accident Benefits, Underinsured Motorist Protection etc, are no longer covered as a 1
v vi part of Basic, but rather shifted to the Optional side of business for the purpose of cost allocation and revenue? How would the two suggested financial allocation models be impacted and applied if any types of coverage currently in Basic are later removed under the direction of the Commission by Orders In Council from Basic and provided as Optional coverage? Would there be any substantial impacts or costs to British Columbians and the motoring public? 4. Currently in British Columbia, Basic insurance is a mandatory product provided by ICBC and clients can purchase own damage or other types of coverage from private insurers when they purchase their coverage. The coverage and carrier the client chooses can be discussed, advised and provided by a Broker. Private insurers can compete with ICBC on all products with the exception of the Basic product. Private companies complain that the playing field is not level and they don t want cross subsidizing of optional product rates from the Basic product. These private companies have other profit centres, which also help their bottom line. i. What type of like products does ICBC have in relation to the non-auto profit centres of private insurers? i If ICBC is forced to split their products and form the necessary structures to support separate lines of business, has ICBC considered offering the same types of products offered by private insurers in their other lines of business? For example, would ICBC be free to compete in other provinces and would it also be able to sell products like travel insurance, home insurance etc? How would these products impact any financial methodology model determined by the Commission? 5. i. What is MCT and how is it determined? i In IC2 does the same definition of MCT apply to private insurers operating in BC? What are the industry standards and how do the numbers stated in IC2 relate to ICBC s products service to cost ratio? Do Private Insurers also have to meet the same goals in relation to MCT? v. The government has chosen 100%, 110%, 170% and 200% in its references to MCT. How does ICBC see these goals impacting insurance premiums? Do either of the methodologies suggested have an advantage to ICBC in meeting the MCT goals? 6. One of the reasons that ICBC was placed under the direction of the BCUC was to remove political interference with rate setting in Basic premiums. The BCUC, which gets its authority from Provincial Legislation, has been provided Special Directions through Orders 2
in Council, although the public's impression is that the Provincial Government had removed itself from the process of rate setting. i. Why are special orders from Cabinet being provided that determine thresholds for ICBC to operate under rather than ICBC providing the information and having the Commission determine whether the rates are appropriate? The Orders in Council appear to be setting MCT rules which will impact the control of the Commission to set the premium rates for Basic. i Do MCT levels set by the Provincial Government impact the financial methodology the Corporation uses? How do Special Directives, and the choices of the Cabinet, effect decisions made by the Commission, and if the goals are set by both the Provincial Government and the Commission, how does this help ICBC to set the rates? Does this structure impact the Corporation's ability to be financially responsible for its own spending and does this set a level playing field for ICBC? 7. At the hearing on July 29,2004, ICBC Management suggested that the Customer Service Transition and a new technology infrastructure would impact the delivery of service. i. How and where does ICBC plan to allocate costs for this transition and, will this transition that is taking place impact the costs of Basic insurance? i How would either of the suggested methodologies place future technological change within the allocation of costs? Will this new technology enable ICBC to use one call centre for all lines of business? Will there be any benefits for retained earnings from this new technology and will these benefits be distributed throughout the Corporation or will the savings be directed to help keep the costs of basic insurance low? 8. i. If ICBC has been ordered to meet certain MCT levels by 2010 and 2014, how will this impact staffing levels? For example, if MCT levels are not being met, will this mean the Corporation will cuts costs through staffing reductions to meet the MCT levels? i Will customer services be maintained justly and adequately if the Corporation continues to have to meet the current MCT goals or will they be impacted? What financial methodology of the two provided by ICBC would best ensure that that Corporation has the financial flexibility to make decisions that allow for it to react to market conditions even if the Commission sets the rates based on orders from the Provincial Government? Road Safety and Loss Management 3
1. How does ICBC s approach to Traffic Safety differ from other jurisdictions in Canada both in funding and investment? Please provide detailed information and any specific studies that you may have that show a comparison. 2. Was there a model that ICBC used to model its approach to Traffic Safety and if so what model was it? i. What has been the success rate of that model and is it still being applied in that jurisdiction? 3. Does ICBC have any studies of the benefits of traffic safety program from other jurisdictions and do these studies show a benefit? i. Is there any correlation between the amount of money spent on a program and its success rate? 4. How do other jurisdictions deal with funding of Traffic Safety and do they do it in the same manner as ICBC? 5. Why does ICBC spend income on school programs and what studies have been done to show that such educational programs or speaker programs are of benefit when developing traffic safety? i. Does ICBC have any studies that show a correlation between the traffic safety programs and the affects on those programs on future driving habits? 6. Have any studies been done by ICBC, or private companies that ICBC may have studied, that prove Traffic Safety initiatives creates brand recognition in both public plans and private plans in Canada? i. Are there any studies that show with statistical information or documentation that branding is a result of Traffic Safety programs? Collection of Data Relating to Age, Sex and Marital Status 1. Does ICBC have a legal opinion on whether or not the collection of data on the basis of age, sex, and marital status for the purposes of rating insurance is a violation of the BC Human Rights Code and/or a violation of the Canadian Charter of Rights? Please provide a copy of the legal opinion. 2. If ICBC were to collect such information for the purposes of rating premiums for products would this be information that ICBC would be required to share with its competitors? 3. i. Would there be costs associated with the collection of this information and could it open the window to rating based on prohibited Human Rights or other grounds? 4
i. Would postal code information be released allowing for rating on the basis of location? i Does this type of rating violate the Canadian Charter of Rights or Human Rights legislation in British Columbia? Would postal code information allow a company to offer a greater discount to those people in a more affluent location as opposed to those people in a less affluent location? Could rating based on sex, age, marital status and postal code create a situation within a postal code location where two British Columbians could have the exact same vehicle and one being charged a higher premium regardless of a 100% claims free driving experience? 4. i. Does ICBC already aggregate such information for the purpose of research? v. Some of the Intervenors want access to this information. What would be the benefit for ICBC to collect this data for them? Would there be additional costs to basic insurance from the collection of this type of information? 5. Is rating on the basis of gender a violation of the Charter of Rights? 6. Does rating by postal code violate any Charter of Rights provisions, in particular rights to be treated equally when considering the issue of mobility within British Columbia and Canada? 7. i. Would an order from the BCUC to provide or collect Data on the basis of Age, Sex and Marital status put ICBC into a position of liability for any court or charter challenges that may arise from the collection, sale, release, or application of data to setting basic rates? If so, who would be responsible for the legal costs and awards for such challenges and would these costs affect the setting of basic premiums? Special Direction IC2 1. ICBC provided two volumes of information for their application of the Financial Allocation Methodology. It was unusual for ICBC to provide one manual and then to provide a second manual. Why did ICBC not provide all the information at one time? 2. The Provincial Government amended IC2. i. What were the differences between the two Orders in Council? What would have been implemented if IC2 had not been amended? 5
i What impacts did the amended IC2 have on the implementation of the first order? Was there any discussion with the Provincial Government on the issue of IC2? 3. i. Does ICBC have a legal opinion on whether IC2 orders the BCUC to order the break up of ICBC into smaller component companies? What is ICBC's position on the issue of the BCUC's jurisdiction in this matter? Performance Measures Call Centres Please note that the questions asked pertain to all call centres within ICBC, including internal queues for internal customers (i.e. Second Contact Call Centres). These call Centres will all fall within the Customer Care Division. (I.e.: TCD, BEU, Customer Contact 1 st Contact, 2 nd Contact, DVTI all queues for both road test bookings and vehicle record searches and any other call centre which we may have omitted.). 1. What were the statistics, per month, for 2002, 2003 and to date in 2004 for: Number of calls offered Number of calls accepted Number of calls abandoned Number of calls answered within 180 and 210 seconds Number of calls abandoned prior to 180 seconds Number of calls abandoned after 180 seconds The longest wait time The shortest wait time Call type average time for each line of business handled within each call centre 2. i. What is Customer Service Transition and how will it positively and/or negatively effect staffing at ICBC? i What will the cost savings be and how will the savings be allocated? Will the methodology selected affect this program? What is the total cost of this Customer Service Transition and what departments does it encompass? v. Is ICBC willing to prepare and host a presentation for the Commission so that we can better understand Customer Service Transition? Also, a presentation on how staffing can impact the service levels of calls centres would be appreciated. Additionally, it would be beneficial if ICBC could explain how they interpret 6
Number of calls offered Number of calls accepted Number of calls abandoned Number of calls answered with in 180 and 210 seconds Number of calls abandoned prior to 180 seconds Number of calls abandoned after 180 seconds The longest wait time. The shortest wait time Call type average time for each line of business handled within the each call centre. 3. i. What type of problems are you predicting that you will encounter from the new technology that ICBC is currently installing to replace its Nortel product? Will there be an impact to service levels and if so, please explain both the positive and negative impacts? 4. i. Would ICBC be willing to also include a presentation on how ICBC uses the Erlanger formula when it is calculating its staffing needs in its call centres? i Does ICBC agree with this statistical mathematical formula? Does its application demonstrate how staffing has a direct relationship to the level of service provided? Does it demonstrate any impact in forecasting staffing for call volumes? v. Also, can ICBC explain how its Workforce department uses this formula to determine the number of staff required to ensure staffing to cover high call volume times to meet pre-determined service levels? What happens when the call forecasts are out of line with actual call volumes? 5. ICBC has a department that is called Workforce that schedules for its call centres. Have there been any reports from this department that demonstrate whether ICBC is meeting its service levels? 6. i. Is staffing part-time employees beneficial to the Corporation and if so, does it currently have a policy of hiring only part-time staff in its call centres? i How does such a policy impact the prescribed service levels? Is staffing of full-time employees beneficial to the Corporation and if so, does it currently have a policy of hiring full-time employees or replacing full-time employees with other full-time employees to backfill vacant positions? 7
How does such a policy impact the prescribed service levels? 7. For each call centre please provide costs for the number of hours of overtime or extra hours that has been incurred for 2002, 2003 and 2004. Also please provide projected costs for extra hours or overtime for the Customer Care Division for each call centre. For each call centre please provide the number of hours of overtime for each job classification and the financial amount. Please calculate and advise how many people could be hired from the amounts of overtime spent and extra hours spent in each department. 8. i. In each call centre what is the average number of scheduled hours for each part-time employee? How many part-time employees time worked exceeds 75% of that of a full-time employee? 8