The Insurance Corporation of British Columbia (ICBC) is being audited after it incurred hundreds of thousands of billing errors over the last six years, amounting to a total of $110 million.
The Crown corporation estimates on average 1.8 per cent or 40,000 optional insurance customers had an incorrect vehicle description which resulted in an overpayment on their optional insurance per year. That means there are 240,000 cases where motorists were overcharged an average of $21 per year over a six year period; a total of $36 million plus $3 million interest will be returned to drivers who overpaid.
At the same time, it estimates on average 2.7 per cent or 58,000 optional insurance customers underpaid on their optional insurance per year. These drivers underpaid an average of $34 per year, totalling $71 million in lost revenues for ICBC.
However, ICBC has been ordered by the provincial government to not pursue those who underpaid their insurance. It is also not allowed to make up for lost revenue through raising premiums.
According to ICBC, the errors were the result of a ‘newly’ implemented computer system for the Crown corporation’s insurance business which caused 4.5 per cent of its insurance customers to have an incorrect description assigned to their vehicle. The erroneous data affects the amount a driver pays for their optional insurance.
Its computer records can only go back as far as six years to accurately recalculate historical premiums.
ICBC is working on the five principles outlined by B.C. Transportation Minister Todd Stone including:
- the error will not result in higher premiums;
- all overpayments will be repaid with interest;
- customers who were undercharged are not to be billed retroactively;
- the problem will be fixed; and
- the board will appoint an outside auditor to review this issue.
“We are going to ensure all of our customers who overpaid on their optional insurance over the last six years receive full refunds with interest,” said Mark Blucher, president and CEO of ICBC. “The modernization of our systems will ensure this doesn’t happen in the future and we sincerely apologize for any inconvenience this has caused our customers.”
Updates to vehicle descriptions will be made in the coming months. New technology will use the vehicle identification number (VIN) provided by the vehicle’s manufacturer to automatically capture the vehicle description (make/model/type). Today, this process is done manually.
What affected customers need to know
- The vast majority of ICBC customers (95.5 per cent or approximately 3 million) are not affected.
- Within 90 days, ICBC will inform affected customers if they’ve paid too much or too little.
- In July 2014, letters will be sent to optional insurance customers who have an incorrect vehicle description which resulted in a financial impact. Cheques, including interest, will be sent along with the letters if you paid too much for your optional insurance.
- If you have paid too little you will not be charged the difference for prior years.
- ICBC is looking back six years – to July 1, 2008 – to check vehicle descriptions, including the customer’s current insurance policy up until its expiration date. ICBC is going as far back as its legacy insurance computer system is able to accurately recalculate historical premiums for customers.
- Customers will receive their full entitled refund in July 2014.
- You do not need to visit your Autoplan Broker as your insurance remains valid. Vehicle descriptions for affected customers will automatically be updated when you renew your insurance, starting in July.
- Vehicle descriptions apply only to optional insurance and will have no impact on rates.
Featured Image: Driver right hand wheel via Shutterstock