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Unisys faces $9M RACV claim

Unisys faces $9M RACV claim

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The Royal Automobile Club of Victoria is seeking $9 million in damages from Unisys claiming the services company failed to deliver on a system to improve the company's insurance claims handling process.

RACV took Unisys to the Victorian Supreme Court this month after nearly five years of negotiations failed to result in what the auto insurance and roadside assistance company felt was an adequate settlement.

The company is suing under the Trade Practices Act, claiming Unisys engaged in misleading and deceptive conduct, breach of contract and negligence. Unisys counsel Noel Magee QC in turn hit back last week saying RACV failed to read its own contract and that any loss suffered was not caused by Unisys.

Unisys won a tender in 1993 worth $3.7 million to provide RACV with a computerised workflow management system designed to store and retrieve scanned small-claims forms for multiple users.

RACV issued a request for proposal (RFP) that outlined the business and technical requirements including high-speed image access for online claims with a response time of two to four seconds. The system was delivered in April 1995 and, according to RACV, didn't work. The company reported retrieval times of up to 20-40 seconds.

In an internal memo sent to RACV's staff and obtained by ARN, managing director Ted Johnson claims "even after extensive re-engineering, the system did not meet or even come close to minimum file retrieval times set out in the RFP".

RACV terminated its contract in December 1996 and is now seeking damages in the order of $9 million for the added cost of correcting the system, accumulated interest and court fees, a spokesperson for the company said.

Both Unisys and RACV expect the case to continue for several weeks, with a verdict slated for later in the year.


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