February 21, 2008 British Columbia Utilities Commission Sixth Floor - PDF document

building trust. driving confidence. B-6 ICBC 2007 A LLOCATION R EVIEW P ROCESS E XHIBIT February 21, 2008 British Columbia Utilities Commission Sixth Floor 900 Howe Street Vancouver, BC V6Z 2N3 Ms. Erica M. Hamilton, Commission Secretary Attention: Re: ICBC's Februarv 20. 2008 Worksho~ Presentation on ICBC's 2007 Reaional Claim Centres Allocation Filinq Dear Ms. Hamilton: Please find attached a copy of ICBC's presentation on ICBC's 2007 Regional Claim Centres Allocation Filing presented at the BCUC public workshop on February 20, 2008. Yours truly, June Elder Manager, Regulatory Affairs CC: Doug Chong, Senior Financial Analyst Philip Nakoneshny, Director Bill Grant, Consultant Registered Intervenors Attachment West Esplanade I North Vancouver British Columbia I V7M 3H9 1 604-661-2800 151

Regional Claim Centres Allocation Presentation to British Columbia Utilities Commission Staff and Intervenors February 20, 2008 Presented by: Darcy Gorchynski Director Claim s Field Services Anw ar Chaudhry Corporate Controller

Introduction Purpose of Workshop – Overview of Regional Claim Centres and changes since 2005 – Review updated work effort study – Provide Background information for Negotiated Settlement Process commencing February 20, 2008 – Answer any questions regarding the Regional Claim Centres and the allocation of the costs of these centres 2

Agenda • Regional Claim Centres • How I CBC Handles Claim s • Transaction Costing • Allocation Model Review 2 0 0 6 • Updating W ork Effort 2 0 0 7 • Allocating betw een Basic and Optional I nsurance • Conclusion 3

ICBC Claims Handling Specialized Claims Focus of the filing and this workshop/ NSP Handling is the Regional Claim Centres 11,645 1% Total Paid $657,050,846 Telephone Claims Regional Claim Centres Department 533,649 446,816 54% 45% Total Paid Total Paid $1,496,601,508 $402,344,863 2 0 0 7 4

Regional Claim Centres Regional Claim Centres consist of: • 38 claim centres • 4 claims handling departments • Organized into 4 Regions (Appendix A of Filing) 5

Regional Claim Centres Basic insurance includes compulsory coverages: – Accident Benefits – Third Party Legal Liability coverage ($200,000) – Unidentified/ Uninsured motorist protection Optional insurance includes: – Collision coverage – Comprehensive coverage – Extension Third Party Legal Liability coverage (> $200,000) – Other optional purchased coverages Claims handled by Regional Claim Centres: – Bodily Injury (BI) claims less than the $200,000 compulsory insurance limit – Material Damage (MD) claims; comprehensive and collision, including contentious liability 6

Regional Claim Centres Operating costs to be allocated: 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 Com pensation $ 1 1 0 ,2 3 0 $ 1 1 0 ,8 6 4 $ 1 1 2 ,5 7 2 $ 1 1 5 ,6 6 7 ($000) Facilities Costs $ 1 2 ,9 3 2 $ 1 3 ,4 4 3 $ 1 3 ,0 6 3 $ 1 4 ,5 1 1 ($000) Other Operating $ 5 ,0 5 3 $ 4 ,8 4 3 $ 4 ,9 8 9 $ 5 ,0 0 0 Costs ($000) Total Operating $ 1 2 8 ,2 1 5 $ 1 2 9 ,1 5 0 $ 1 3 0 ,6 2 4 $ 1 3 5 ,1 7 8 Costs ($000) FTEs 1 ,7 2 5 1 ,7 4 0 1 ,7 2 5 1 ,7 3 6 7

Regional Claim Centres Full Tim e Equivalents Job Category 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 204 217 217 223 Manager / Supervisor Office Assistant / 402 397 398 404 Claim s Support Assistant 284 283 276 267 Estim ator Bodily I njury Adjuster / 545 550 548 555 Exam iner 290 293 286 287 Material Dam age Adjuster 1,725 1,740 1,725 1,736 Total 8

Overall Regional Claim Centres Allocation Key impacts to Regional Claim Centres Allocation since the 2005 review: – Success of programs directed at handling of Material Damage claims – Focus on handling Bodily Injury claims – Changes to staff mix Allocation is impacted by work effort as well as changes to staffing mix and compensation 9

Agenda • Regional Claim Centres • How I CBC Handles Claim s • Transaction Costing • Allocation Model Review 2 0 0 6 • Updating W ork Effort 2 0 0 7 • Allocating betw een Basic and Optional I nsurance • Conclusion 10

How ICBC Handles Claims Telephone Claims Dept Express Repair Estimate or Customer reports by Claim Centre Estimate Phone or Web Regional Claim Centres Customer Appointment Material Damage Bodily Injury Adjuster Adjuster Specialized Claims Handling Estimator Claim Transfers 11

How ICBC Handles Claims Job Categories Manager / Supervisor • Office Assistant / Claims Support Assistant • Estimator • Bodily Injury Adjuster / Examiner • Material Damage Adjuster • 12

How ICBC Handles Claims Managers Claim Centre Manager / Claims Managers / Administration • Manager / Material Damage Manager / Supervisors Oversees Administration, Training / Development and • Performance of staff Technical experts who develop claims handling strategies • and ensure compliance to claims handling policies Reviews files and authorizes settlement authority • Chairs Risk Assessment and Low Velocity Impact committees • Deals with customer issues and supplier relations • 13

How ICBC Handles Claims Office Assistants / Claims Support Assistants Customer Appointments / Glass Claims / General enquiries • Telephone Claims Department tasks / enquiries • Arranges towing of vehicles and documents for total loss • vehicles Responds to medical service provider enquiries on treatment • dates and payments Arranges Independent Medical appointments and notifies • claimants Prepares bodily injury correspondence • Completes data entry / General office support • 14

How ICBC Handles Claims Estimators Completes all types of vehicle damage estimates • Approves Express Repair estimates • Negotiates and settles total loss vehicles • Assists with liability assessments through damage review and • vehicle match-ups Completes Low Velocity Impact damage protocols • Attends body shops for quality reviews and repair issues • Authorizes payments to body shops and subrogation claims • 15

How ICBC Handles Claims Material Damage Adjusters Verifies coverage and investigates loss • Takes statements, contacts witnesses and police • Investigates and approves total theft claims • Researches legislation, case law and other precedents • Negotiates and resolves liability • Documents Low Velocity Impact claims • Handles Accident Benefits claims and some minor bodily injury • claims Instructs defence counsel on Small Claims Court actions • 16

How ICBC Handles Claims Bodily Injury Adjusters Verifies coverage and investigates loss • Takes statements, contacts witnesses and police • Obtains wage and medical information for defence of injury • claims Researches legislation, case law and other legal precedents • Evaluates facts and theories of defence to assess liability and • injury settlements Negotiates and settles injury claims with claimants and • plaintiff counsel Instructs defence counsel on legal actions • 17

How ICBC Handles Claims Material Damage vs. Bodily Injury Claims Material Damage • 50 new claims per month per adjuster • On average MD claims take 52 days to settle Bodily Injury • 10 new claims per month per adjuster • On average BI claims take 416 days to settle 18

Coquitlam Claim Centre 19

Coquitlam Claim Centre Managers / Office Total Staff Estim ators BI Adjusters MD Adjusters Supervisors Assistants 86 10 21 10 30 15 Claim Centre Manager (1) Administrative Material Damage Manager (1) Manager (1) Claims Managers (5) Administrative Material Damage Supervisor (1) Supervisor (1) Bodily Injury Office Assistants (21) Estimators (10) Adjusters (30) Material Damage Adjusters (15) 20

Coquitlam Claim Centre Claim Centre Manager Claims Claims Claims Claims Claims Manager Manager Manager Manager Manager Bodily Injury Bodily Injury Bodily Injury Bodily Injury Material Damage Adjuster Adjuster Adjuster Adjuster Adjuster (8) (8) (8) (6) (12) Material Damage Adjuster (3) 21

Agenda • Regional Claim Centres • How I CBC Handles Claim s • Transaction Costing • Allocation Model Review 2 0 0 6 • Updating W ork Effort 2 0 0 7 • Allocating betw een Basic and Optional I nsurance • Conclusion 22

Transaction Costing The allocation of Regional Claim Centres costs must recognize: 1. Different types of claims handled in Regional Claim Centres 2. Different types of claims require different skill levels 3. Different types of claims require different amounts of staff time (work effort) to resolve them 4. Different numbers of staff in different job categories 5. Different levels of compensation in different job categories Transaction costing is the methodology used for Regional Claim Centres 23

Transaction Costing Work Effort is the time spent by the: • 5 categories of employees on • 10 types of claims transactions handled in Regional Claim Centres (6 MD / 4 BI) Work effort percentages are established by experienced claims handling personnel 24