NJAIRE Data Reporting A.Overview of Current Reporting Requirements B.Quality Reviews

Reporting Requirements 1.Call Forms  Form #3 – Accident Year 1998 – 2000, for policies issued or renewed before 7/1/1999  Form #4 – Accident Year 1999 – present, for policies issued or renewed on or after 7/1/1999

Reporting Requirements Sample Form:

Reporting Requirements Call Forms – Required Data  Earned Exposures by Threshold and Territory - Current Account Quarter Only, in Car Years

Reporting Requirements Earned Exposures by Threshold and Accident Year (Individual insurers may vary)

Reporting Requirements Exposure Thresholds for Accident Year 2006 (Individual insurers may vary)

Reporting Requirements Exposure Thresholds for Accident Year 2006 Individual Company (Actual Data: Minimum 10,000 Exposures)

Reporting Requirements Exposure Thresholds for Accident Year 2006 Individual Company (Actual Data: Minimum 10,000 Exposures)

Reporting Requirements Call Forms – Required Data  BI Paid Claimants by Insured Threshold by Territory and Accident Year

Reporting Requirements 2002 Exposures (Insurers may vary) BI Claimants (Insurers may vary)

Reporting Requirements Call Forms – Required Data (cont.)  Reportable Claim Loss Amounts and Claimants by Territory and Accident Year  Loss Adjustment Expenses for Reportable Claims, Allocated and Unallocated (separately or combined)

Reporting Requirements A Reportable Claim is... One that could not be made had the claimant selected the Verbal Threshold (Tort Limitation), and One where the claimant had the Zero Dollar Threshold (No Tort Limitation) and the insured selected the Verbal Threshold …the basis for establishing NJAIRE

Reporting Requirements How are Reportable Claims Identified? Via the proper Reportable Claim Determination Form: Policies issued or renewed before 7/1/1999* Policies issued or renewed on or after 7/1/1999* * This is when the definition of the Verbal Threshold changed.

Reporting Requirements Reportable Claims to Verbal BI by Accident Year (Individual insurers may vary)

Reporting Requirements Reportable Claims to Verbal BI Accident Year 2002 (Individual Insurers may vary)

Reporting Requirements Loss Severities by Year (Individual insurers may vary)

Reporting Requirements How are Reportable Claims Identified? Reportable Claimants should be reported consistent with the facts involved in the settling of the claim.

Reporting Requirements 2.Due Dates: to ISO (other than CAIP) or AIPSO (CAIP only) Account QuarterDue Date First QuarterMay 15 Second QuarterAugust 15 Third QuarterNovember 15 Fourth QuarterFebruary 15

Quality Reviews 1.Use of the Data 2.Financial Impact on Companies 3.Cost of Late, Erroneous Data 4.Detecting Errors at the Call Form Level

1. Use of the Data The Call Form data is used to calculate: –the “pot” of losses to be reimbursed –each company’s assessment –each company’s reimbursement, plus its share of investment income –each company’s share of the NJAIRE administrative expenses

2. Financial Impact on Companies The magnitude of the financial transactions: –$ 11 million every quarter via the monthly payments and quarterly disbursements (the provisional transactions) –$ 550 million every year via the Annual Cash Settlement true-up

3. Cost of Late, Erroneous Data The costs can be significant: Late Data - $ 50 per work day Resubmissions - $ 250 per quarter Undetected Data Errors – can be over $1,000,000!

3. Cost of Late, Erroneous Data (cont.) How can it be that much? The ultimate Annual Cash Settlement formula assesses and reimburses based on BI claims: by threshold, territory & accident year BI claims in the wrong place have a real financial impact

3. Cost of Late, Erroneous Data (cont.) Putting just 3 BI claims in the wrong threshold column can cost $ 60,000 Putting just 3 BI claims vs. zero threshold insureds in the wrong territory can cost $ 50,000

4. Detecting Errors at the Call Form Level What is done today? ISO performs high level data checks upon receipt and in the financial transaction process Companies are contacted regarding unusual data

4. Detecting Errors at the Call Form Level (cont.) AIPSO performs completeness checks and detailed checks on claim samples in the compliance audit process This covers about 10 companies per year

4. Detecting Errors at the Call Form Level (cont.) The ISO and AIPSO checks alone cannot catch everything What can companies do? What kind of reviews will be useful?

4. Detecting Errors at the Call Form Level (cont.) What types of errors are commonly made? How many can be caught by expending a reasonable amount of company resources?

4. Detecting Errors at the Call Form Level (cont.) Common errors:  Exposures: car months, written, cumulative, threshold  BI Claims: threshold, territory

4. Detecting Errors at the Call Form Level (cont.)

Common errors:  Reportables: claims included  ALAE, ULAE : reported separately and combined

4. Detecting Errors at the Call Form Level (cont.)

Review needs: “Spreadsheet”  Current & Previous Quarter’s Data  Knowledge about your company  About 15 minutes per quarter

Sample Spreadsheet (Exhibit C of handout)

4. Detecting Errors at the Call Form Level (cont.) Exposures by threshold  Data needed: Statewide totals  General expectation: Volume +/-5%  Zero Dollar Exposures as % of total +/-2%

4. Detecting Errors at the Call Form Level (cont.) Company A: Earned Exposures by Quarter

4. Detecting Errors at the Call Form Level (cont.) Company B: Earned Exposures by Quarter

4. Detecting Errors at the Call Form Level (cont.) BI Paid Claims by Threshold  Data needed: Statewide, all years  General expectation: Similar volume, allowing for credibility, yrs included  Claim Frequencies/Threshold similar, averaging per 100 car years

4. Detecting Errors at the Call Form Level (cont.) Company A: BI Claimants by Quarter

4. Detecting Errors at the Call Form Level (cont.) Company B: BI Claimants by Threshold and Quarter

4. Detecting Errors at the Call Form Level (cont.) Reportable Losses & Claims  Data needed: Statewide, all years  General expectations:  Pct. of Verbal: 4-28%, avg. 15%  Avg. Loss: $3-15,000, avg. $7,500

4. Detecting Errors at the Call Form Level (cont.) Company B: Verbal and Reportable Claimants by Threshold and Quarter

4. Detecting Errors at the Call Form Level (cont.) Loss Adjustment Expenses  Data needed: Statewide by year  General expectation: 5-35% of Reportable Losses, note: may lag  Company Methodology: Formula?

4. Detecting Errors at the Call Form Level (cont.) More difficult errors to detect:  Territory errors  Completeness

4. Detecting Errors at the Call Form Level (cont.) Checks that could help:  Territory:  Additional proofreading, if posting numbers  Visual checks

4. Detecting Errors at the Call Form Level (cont.) Visual Checks by Territory – Possible Problem areas:  Large change in Exposures by Quarter  Exposures in Other Than Current Accident Year for the Current Quarter

4. Detecting Errors at the Call Form Level (cont.) Visual Checks by Territory – Possible Problem areas:  Zero Exposures > Verbal Exposures  Claims vs. Zero > Claims vs. Verbal

4. Detecting Errors at the Call Form Level (cont.) Visual Checks by Territory – Possible Problem areas:  Reportable Claims > Claims vs. Verbal  Reportable Losses w/o Reportable Claims, and vice-versa

4. Detecting Errors at the Call Form Level (cont.)

Checks that could help:  Completeness  Other Existing Internal Data  Special Reports

Summary Poor data quality can have a large, hidden impact on your company’s bottom line With a reasonable effort you can help ensure that your company is properly assessed and reimbursed

REMEMBER, ISO is here to help make your reporting of NJAIRE data as easy and accurate as possible. If you have any questions, you can or contact: – Mike McAuley, ( ) – Pat Lloyd, ( ) – Aislinn Nichols, ( ) You can also visit the NJAIRE website at It contains a Frequently Asked Questions section, copies of all reporting forms, seminar information including “Review” spreadsheet and PowerPoint presentation, Plan of Operation, Procedure Manual, etc.