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Internal army ordered to work on big ICBC billing blunder

ICBC deployed more than 100 people to fix its $110-million billing error, according to documents obtained via Freedom of Information.

The Crown corporation that insures vehicles and regulates driving in B.C. admitted in mid-April that it would have to refund $36 million plus $3-million interest to 240,000 optional vehicle insurance customers who were overcharged an average $21 per year over six years. Refunds are expected to be sent in July.

Another 350,000 customers inadvertently underpaid an average $34 per year, for a total $71 million, but they won't be asked to pay the difference. ICBC downplayed the problem, claiming 95.5 per cent of customers were unaffected.

"A dedicated team of more than 100 highly skilled technical resources are assigned full-time to complete this complex project," said the documents. "They are checking 24 million optional insurance transactions over the last six years and implementing system changes."

The internal documents say ICBC planned to spend more than $2 million on staffing, $600,000 on letters and postage to affected customers and $100,000 on technology expenses. Various other costs are "yet to be determined." A contingency, which wasn't disclosed, has been set aside. Reimbursements would be paid from the optional side of ICBC's business, and would not impact rates, said the documents. "A provision was made in ICBC's 2013 budget to cover costs."

ICBC spokesman Adam Grossman said June 16 that "letters and reimbursements, where applicable, are still on track for July. No change in estimates/numbers from what was previously reported on."

A confidential April 11 ICBC issues note for Transportation and Infrastructure Minister Todd Stone said the incorrect vehicle descriptions were identified as ICBC moved to a new computer system. Vehicle descriptions for three million customers dating back to July 1, 2008 were being re-examined. In 2010, ICBC licensed the so-called New Rating and Underwriting Engine (NRUE) from Duck Creek Technologies. Grossman said the project cost $8.9 million.

The documents do not indicate precisely when ICBC discovered the billing glitch. Internal plans to resolve the problem were kept under wraps and the program was given the code name "Project Insurance" or "PINS." A PowerPoint presentation from Feb. 6 titled "Vehicle Identification Codes" hinted that the billing problem could be worse than known. It said that when the NRUE was implemented in 2011, "we only built in data from July 1, 2008. This was because the data had to be re-engineered to fit into the new system.

"Three years was determined as the scope for the project because the frequency that we used the data dropped of (sic) substantially after three years. It was also very difficult (time and cost) to convert the algorithm and rating tables for the new system."

The ICBC 2010 annual report described NRUE, a key investment within its $400-million Transformation Program, as a "behind-the-scenes tool enabler that will use rates, rating variables, rules and the customer's risk profile to calculate customer premiums." The objective was "improving customer's price/value perception."

ICBC paid Duck Creek $423,012 in 2011, the same year that the Bolivar, Mo.-based company was acquired by Dublin-based Accenture. The 2012 ICBC statement of financial information didn't mention Duck Creek, but it did mention Accenture received $2,119,090. In 2003, another arm of Accenture privatized BC Hydro's back office functions, including customer services, payroll and purchasing.

In the wake of the billing scandal, ICBC's board hired law firm Borden Ladner Gervais on a no-bid assignment to probe ICBC handling of the vehicle identification code errors. BLG, in consultation with ICBC's audit committee, retained the accounting firm Deloitte. In ICBC's response to another FOI request, it said the terms of ICBC's standard arrangement with BLG would apply to this project "and there is no specific contract for this project."

Statements for 2012, the most recent year available, showed ICBC paid Deloitte and Touche almost $3.5 million and BLG almost $2.5 million.

When the story broke, ICBC CEO Mark Blucher held two-and-a-half-hours of unspecified meetings on Sunday morning, April 13, before a four-hour meeting with the ICBC board of directors. Top ICBC executives met April 14, the day before Blucher, interim chair Jatinder Rai, deputy minister Grant Main and assistant deputy minister Jacquie Dawes met with Stone on April 15.

Advertising agent Rai, a longtime loyalist of Premier Christy Clark, was installed as the interim ICBC chair on Jan. 22 when Paul Taylor departed. Clark ordered Stone in his June 10 mandate letter to "find efficiencies at the Insurance Corporation of B.C. and ensure ICBC returns to solid financial footing" over the next year. ICBC forecast a $257-million profit on $4.479-billion revenue in 2013.

Find the ICBC documents below.

Veteran political journalist Bob Mackin is a frequent contributor to The Tyee.

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