NJAIRE Data Reporting

A. Overview of Current Reporting Requirements

B. Quality Reviews

Reporting Requirements

1. Call Forms

Form #3 – Accident Year 1997 – 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 RequirementsEarned Exposures by Threshold and Accident Year (Individual insurers may vary)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

2001 2002 2003 2004 2005

Zero

Verbal

Reporting RequirementsExposure Thresholds for Accident Year 2005

(Individual insurers may vary)

7%

93%Zero

Verbal

Reporting Requirements

Call Forms – Required Data

BI Paid Claimants by Insured Threshold by Territory and Accident Year

Reporting Requirements

2001

• Exposures(Insurers may vary)

• BI Claimants(Insurers may vary)

8%92%

Zero

Verbal

7%93%

ZeroVerbal

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 RequirementsA 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

How are Reportable Claims Identified?

Reportable Claimants should be reported consistent with the settling of the claim.

• “Moving Day”

• “Grandma”

Reporting Requirements

2. Due Dates: to ISO (other than CAIP) or AIPSO (CAIP only)

Account Quarter Due Date

First Quarter May 15

Second Quarter August 15

Third Quarter November 15

Fourth Quarter February 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

Quality Reviews

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

Quality Reviews

2. Financial Impact on Companies - The magnitude of the financial transactions:

– $ 13 million every quarter via the monthly payments and quarterly disbursements (the provisional transactions)

– $ 650 million every year via the Annual Cash Settlement true-up

Quality Reviews

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!

Quality Reviews

3. Cost of Errors, Late 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

Quality Reviews

3. Cost of Errors, Late Data (cont.)

• Putting just 3 BI claims in the wrong threshold column can cost $ 70,000

• Putting just 3 BI claims vs. zero threshold insureds in the wrong territory can cost $ 50,000

Quality Reviews

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

Quality Reviews

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

Quality Reviews

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?

Quality Reviews

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?

Quality Reviews

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

• Common errors:

Exposures: car months, written, cumulative, threshold

BI Claims: threshold, territory

Quality Reviews

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

• Common errors:

Reportables: claims included

ALAE, ULAE: reported separately and combined

Quality Reviews

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

Quality Reviews

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%

Quality ReviewsCompany A:Earned Exposures by Quarter

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

200503 200506 200509 200512 200603

Exposures

Quality Reviews

Company B:Earned Exposures by Quarter

0

10,000

20,000

30,000

40,000

50,000

60,000

200503 200506 200509 200512

Exposures

Quality Reviews

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 0.5-1.5 per 100 car years

Quality ReviewsCompany A:BI Claimants by Quarter

0

50

100

150

200

250

300

350

200603 200606 200609 200612 200703

BI Claimants

Quality Reviews

Company B:

BI Claimants by Threshold and Quarter

01020304050

200503 200506 200509 200512

Zero

Verbal

Quality Reviews

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

Quality Reviews

Company B:

Verbal and Reportable Claimants by Threshold and Quarter

01020304050

200503 200506 200509 200512

Reportable

Verbal

Quality Reviews

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?

Quality Reviews

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

• More difficult errors to detect:

Territory errors

Completeness

Quality Reviews

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

• Checks that could help:

Territory:

Additional proofreading, if posting numbers

Visual checks

Quality Reviews

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

• Visual Checks by Territory – Possible Problem areas:

Large change in Exposures by Qtr.

Exposures in Other Than Current Qtr.

Quality Reviews

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

Quality Reviews

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

Quality Reviews

COMPANY/GROUP NAME:Company B NJAIRE CALL FOR STATISTICS: FORM # 4COMPANY/GROUP NUMBER: #CONTACT PERSON: Please check one: ( X ) Voluntary (incl. A.R.) ( ) CAIPADDRESS: NOTE: Separate forms must be completed for voluntary (including assigned risks) and

CAIP business. Completed forms for voluntary business must be returned to theTELEPHONE NUMBER: address at right. CAIP forms must be sent to the applicable association.

ACCIDENT YEAR 2006TOTAL NUM OF BI LIAB. TOTAL NUM OF BI LIAB. REPORTABLE CLAIM INFORMATIONEARNED EXPOSURES PAID CLAIMANTS* PAID BI LIAB. TOTAL NUMBER

(CAR YEARS) AGAINST POLICIES IN WHICH REPORTABLE OF BI LIAB.TERR. BY TORT THRESHOLD: INSURED CHOSE THRESHOLD: LOSS AMOUNT REPORTABLECODE ZERO DOLLAR VERBAL ZERO DOLLAR VERBAL (DOLLARS ONLY) CLAIMANTS001 0 0002 0 0 1003 0 0004 1 0 150,000005 0 0006 1 1,071007 39 5008 0 77010 0 126 11 0011 1 116012 0 36

Quality Reviews

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