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NJAIRE Data Reporting: Requirements and Financial Impact

This report outlines the current reporting requirements for NJAIRE, including new developments in 2012. It covers the use and financial impact of data, error detection, required data for Form #4, reportable claimant information, and more. The financial transactions and quarterly assessments are detailed, emphasizing the importance of accurate reporting to avoid costly errors.

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NJAIRE Data Reporting: Requirements and Financial Impact

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  1. NJAIRE DATA REPORTING REQUIREMENTS December 6, 2012 ISO – NJAIRE Central Processor Mike McAuley

  2. OVERVIEW • Current Reporting Requirements • Call for Statistics Form #4 – Accident Year 2003 – Present • 2012 New Developments • Use and Financial Impact of Data • Detecting Errors

  3. Form #4 – Due DatesTo ISO (other than CAIP) or AIPSO (CAIP only)

  4. Form #4 – Territory Reporting Options • Accident Year 2008 & subsequent • Procedure Manual Exhibit 11a • Statewide totals only • Standard ISO Territory Definitions (Exhibit 11) • Company Defined Territories • Accident Year 2007 & prior • Standard ISO Territory Definitions

  5. Form #4 – Required Data • Bodily Injury Earned Exposures, in car years, by insured threshold

  6. Form #4 – Required Data • Paid Bodily Injury claimants against private passenger type autos subject to the No-Fault law • Accident Year 2008 & subsequent – by insured threshold and accident year • Accident Year 2007 & prior – by insured threshold, territory and accident year

  7. Form #4 – Required Data Reportable Claimant Information • Reportable Claimant Loss Amounts • Number of Reportable Claimants • Loss Adjustment Expenses for Reportable Claimants (separately as Allocated and Unallocated or Combined) • Accident Year 2008 & subsequent – by accident year • Accident Year 2007 & prior – by territory and accident year

  8. A Reportable Claimant is... • One that could not be made had the claimant selected the Verbal Threshold, AND • One where the claimant selected or defaulted to the Zero Dollar Threshold AND the insured selected the Verbal Threshold ...the basis for establishing NJAIRE

  9. How are Reportable Claimants identified?

  10. Reportable Claimant Determination FormEffective January 1, 2012 ALL member companies are required to utilize and maintain a copy of the form for ALL paid BI claimants, in paper or electronic form

  11. Reportable Claimants to Verbal BI Accident Year 2006 (Individual insurers may vary)

  12. Loss Severities by Year(Individual insurers may vary)

  13. 2012 New Developments • Reportable Claimant Determination Form • Required as of January 1, 2012 for ALL PAID BI CLAIMANTS • March 13, 2012 Version Effective January 1, 2013 • Out-of-State Claimants, Intra-Family Claimants and Claimants involving only Economic Losses • Consistent inclusion or exclusion • Same approach across both tort thresholds

  14. Use and Financial Impact of Data • Provisional Financial Transactions • Quarterly assessment (monthly payments) • Quarterly reimbursement, plus share of investment income • Annual Cash Settlement (ACS) • Magnitude of Financial Transactions • Cost of Late and Erroneous Data

  15. Quarterly Assessment Multiply number of Zero Dollar Exposures reported, from two quarters prior, by the Assessment per Exposure Example – 3rd Quarter 2011 Assessment: Assessment per Exposure = $90 Zero Dollar Exposures 1st Quarter 2011 = 100 Quarterly Assessment = (100 * 90) = $9,000 Monthly Payments = 1/3 of Quarterly Assessment

  16. Quarterly Reimbursement Multiply company’s share of industry Verbal Exposures, from two quarters prior, by total amount collected via monthly payments and investment income earned Example – 3rd Quarter 2011 Reimbursement: Verbal Exposures 1st Quarter 2011 = 500 Industry Verbal 1st Quarter = 1,000,000 3rd Quarter 2011 Monthly Payments Collected = $9,000,000 Investment Income Earned 3rd Quarter = $100,000 Quarterly Reimbursement = (500/1,000,000) * $9,000,000 = $4,500 Share of Investment Income = (500/1,000,000) * $100,000 = $50 TOTAL Quarterly Reimbursement = $4,550

  17. Annual Cash Settlement (ACS) • Purpose • Using latest accident year data: • True-up provisional financial transactions from previous calendar year • For all accident years: • Re-evaluate assessments • Re-evaluate reimbursements • Account for previous financial action • Re-distribute investment income • Share of administrative expenses • All calculations account for time value of money

  18. Magnitude of Financial Transactions • Approximately $6 million every quarter via provisional financial transactions • Approximately $385 million every year via the Annual Cash Settlement True-Up

  19. Cost of Late and Erroneous Data • Late Data - $50 per working day • Resubmissions - $250 per account quarter • Undetected Data Errors – can be over $1,000,000!

  20. How can it be that much??? • Ultimate ACS formula assesses and reimburses based on BI Claimants: by Threshold, Territory & Accident Year • BI Claimants reported incorrectly can have a significant financial impact

  21. EXHIBIT A • Scenario 1 – Three BI claimants reported under wrong Threshold can cost up to $409,000 • Scenario 2 – Three BI claimants vs. Zero Dollar insured’s reported under wrong Territory can cost up to $382,000

  22. Detecting Errors at the Call Form Level What is done today? • ISO - • High level data checks • Quarterly Submissions • Financial Transactions, including ACS • Company contact regarding questionable data • AIPSO – • Completeness/detailed checks on claim samples during compliance audit process

  23. Common Errors • Exposures: Car months, Written, Cumulative, Threshold • BI Claimants: Threshold, Territory • Reportable Claimants: ALL BI paid claimants included • LAE: Reported separately and combined

  24. General Expectations for Review Purposes • Exposures by Threshold - • Volume: +/- 5% • Zero Dollar Exposures as % of total: +/- 2% • BI Paid Claimants by Insured Threshold – • Similar volume per accident year, allow for development • Claim frequencies per threshold similar: 0.5 – 1.5 per 100 car years exposure • Reportable Claimants & Losses – • Percentage of Verbal BI: 4 – 28%, average 12% • Reportable Loss Severity: $3,000 - $15,000, average $7,700 • Loss Adjustment Expenses – • 5 – 35% of Reportable Losses (may lag) • Company Methodology: Formula?

  25. More difficult errors to detect: • Territory errors • Completeness Additional checks that could help: • Territory errors – Visual checks • Additional visual checks • Zero Dollar Exposures > Verbal Exposures?? • BI claimants vs. Zero Dollar > BI claimants vs. Verbal?? • Reportable Claimants > BI claimants vs. Verbal?? • Reportable Losses w/o Reportable Claimants, and vice versa • Completeness – Other existing internal data/special reports

  26. 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

  27. REMEMBER, • ISO is here to help make your reporting of NJAIRE data as easy and accurate as possible • Any questions? Email njairecentralprocessor@iso.com or you can contact me directly: • Mike McAuley, mmcauley@iso.com (201) 469-2323 • NJAIRE website, www.njaire.org – FAQ’s, copies of all reporting forms, webinar information including .PPT presentations, Procedure Manual, Plan of Operation, etc.

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