1. Claims Analytics ICBC Advanced Analytics May 2015

2. Overview Auto insurance market in British Columbia ICBC’s mandate Limits to pricing segmentation Increasing claims costs What kind of claims analytics 2

3. Auto insurance market in B.C. 3 3 rd Party Liability Accident Benefits Underinsured Motorist Coverages Limits / Deductibles Basic Insurance Monopoly Competitive Optional Insurance Market

4. ICBC’s mandate Our business is: Accessible and competitive auto insurance for all British Columbians. There are five core concepts included in this mandate: Everyone in B.C. has access to insurance; Our products and services are designed to have wide consumer appeal; Insurance rates are stable; Our road safety efforts contribute to reduced crashes and loss; We provide driver and vehicle licensing and registration services. 4

5. Limits of pricing segmentation 3.(1).d - “subject to subsection (2) of this section, ensure that universal compulsory automobile insurance rates are not based on age, gender or marital status;” –B.C. Reg. 307/2004 Special Direction IC2 to the British Columbia Utilities Commission 5

6. Profit is a function of price and costs 6 Increase policies in force Price accurately Manage claim costs Reduce fixed costs

7. Loss cost are increasing 7

8. More claimants are seeking lawyers 8

9. 9 Risk Assessment (Suggested Reserves) Fraud Analytics Litigation Management Understand Normal Claim Behaviour Measure Case Complexity Identify Risk Factors Improve value and service for customers Improve the quality, consistency and timeliness of claims handling. Maintain financial stability Managing increasing BI claims costs. ICBC’s claims analytics framework Strategic Decision Support Identify High Risk Providers Tactical Decision Support Analyze Implement Benefit Review and Revise

10. Fraud analytics to detect suspicious claims All Claims Potential Fraudulent Claims DETERRENCE ADJUSTER Fraud not suspected NO ACTION Fraud suspected and referred SIU Assign and Investigate Case not assigned NO ACTION Facts found ADJUSTER Fraud not pursued NO ACTION Adjuster determines: How facts are used Don’t pay claim Reduce claim payout Legal Refer to legal for assistance Fraud Detection Tools Fraud Case Management

11. Assessing outside counsel effectiveness is critical 11 Claimant Plaintiff Counsel Adjustor Claims legal services Mr. Vavrik, Esq. Mr. Yun, Esq. Mr. Menard, Esq. Ms. Fleming, Esq. Claim traits Who should defend the case?Defense counsel choices … How to evaluate the outcome and the defense counsel performance?

12. Assessing risk is at the core 12 Uncertain Certain Future Cost or Impact LowHigh Very low risk Costly but not risky Low riskHigh risk Creeping catastrophic injury claim Catastrophic injuryGlass repair Minor injury