An operational error at ICBC has overcharged thousands of drivers on optional insurance in the last six years, a blunder totaling $36-million, the Crown corporation has admitted.

In a statement issued Sunday, ICBC said that about 40,000 customers per year were charged based on an incorrect vehicle description since at least 2008. Each customer overpaid on optional insurance by about $21 per year, on average.

The same error also caused 58,000 customers per year to underpay on optional insurance – amounting to about $71-million in lost fees.

ICBC CEO and President Mark Blucher apologized for the mistake, which was first discovered in mid-2013.

“One of the things we’ve been very focused on is being able to not create too much concern and anxiety for our customers,” Blucher said. “We felt, on balance, it was better we had this issue right at the time we’re able to tell them precisely what the differences are for them, and give them a cheque and a letter outlining that for them.”

The company has promised affected customers a full refund by July. ICBC will pay back an additional $3-million in interest to those who overpaid. Those who underpaid will not be charged retroactively.

It’s a combined loss of nearly $110-million for ICBC.

“In the scheme of ICBC, we collect around $4-billion a year in premiums from customers and we pay out more than $3-billion a year in claims for customers,” Blucher said. “So we’re in the position that we’re able to absorb those costs into the company, importantly without having any impact on premiums or rates for customers.”

Transportation minister Todd Stone said he was furious about the error, and has ordered ICBC to refund everybody who overpaid.

“I am as angry as I expect British Columbians to be over this operational error,” Stone said in a statement. “This is not acceptable, and British Columbians expect more from their public auto insurer.”

Stone has also given ICBC five conditions to follow when rectifying the mistake, 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.

Canadian Taxpayers Federation spokesman Jordan Bateman called the mistake another reason why B.C.’s public insurance model is out of date.

“ICBC has a lot of explaining to do, but more importantly, taxpayers should really be taking another hard look at this corporation saying ‘We trust you with our money and resources, we’ve given you a monopoly, the least you can do is run it efficiently,’” Bateman said.

He also questioned why the error occurred over a six-year period without going noticed by anybody in the company.

“It’s a damning indictment of ICBC’s leadership, first of all that this has been going on for months, no tip-off to the public,” he said. “We don’t even know if they’ve actually stopped collecting the mistaken funds.”

The corporation said it expects to have the issue completely resolved within the next three months.

ICBC said it will switch to new technology that will automatically capture vehicle information based on a car’s identification number sometime in 2015.

Just 4.5 per cent of ICBC customers were affected by the mistake. It impacted optional insurance products including collision coverage, comprehensive coverage, specified perils, New Vehicle Replacement Plus, Replacement Cost Endorsement and Limited Depreciation Policy.

With a report from CTV Vancouver's Penny Daflos