Transcript NJAIRE Data Reporting

A. Overview of Current Reporting
Requirements
B. Quality Reviews
A. Reporting Requirements
Call Forms:
 Form # 4 – Accident Year 2001-present
Sample Form
Call Forms – Required Data
 Accident Year 2008 & subsequent –
Earned Exposures by threshold – current
account quarter only, in car years
Earned Exposures by Threshold and Accident Year
(Individual insurers may vary)
5,000,000
4,000,000
3,000,000
Zero
2,000,000
Verbal
1,000,000
0
2004
2005
2006
2007
2008
2009
Exposure Thresholds for Accident Year 2009
(Individual insurers may vary)
95%
Zero
Verbal
5%
Exposure Thresholds for Accident Year 2009
Individual Company (Actual Data: Minimum 10,000 Exposures)
86%
Zero
Verbal
14%
Exposure Thresholds for Accident Year 2009
Individual Company (Actual Data: Minimum 10,000 Exposures)
99%
Zero
1%
Verbal
Call Forms – Required Data (cont.)
 Accident Year 2008 & subsequent – BI Paid
Claimants against private passenger type
autos subject to the No-Fault law by insured
threshold and accident year
 Accident Year 2007 & prior – BI Paid
Claimants against private passenger type
autos subject to the No-Fault law by insured
threshold, territory and accident year
Report:
 Intra-Family claimants
 Claimants involving only economic losses
 A BI claimant for a claim that is not yet closed may
be reported once initial payment is made for that
particular claimant. These claimants are not to be
reported again even if additional payments are
made to that claimant.
2004
 Exposures
(Insurers may vary)
93%
7%
Zero
Verbal
 BI Paid Claimants
(Insurers may vary)
94%
6%
Zero
Verbal
Call Forms – Required Data (cont.)
Accident Year 2008 & subsequent:

Reportable Claimant loss amounts and
number of Reportable Claimants by
accident year

Loss Adjustment Expenses for
Reportable Claimants, allocated and
unallocated (separately or combined)
Call Forms – Required Data (cont.)
Accident Year 2007 & prior:

Reportable Claimant loss amounts and
number of Reportable Claimants by
territory and accident year

Loss Adjustment Expenses for
Reportable Claimants, allocated and
unallocated (separately or combined)
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
How are Reportable Claimants identified?
NJAIRE REPORTABLE CLAIMANT DETERMINATION FORM
(For Accident Years 1999 and subsequent for policies issued or renewed on or after 7/1/99)
Claimant's Name
Claim Number
1.
Date of Closure (if claim is not yet closed for this claimant, do not fill out form.)
/
/
2a.
Date of Accident
(if prior to 1/ 1/ 99, STOP
/
/
2b.
Policy effective date
(if prior to (7/ 1/ 99), STOP - this form does not apply)
/
/
3.
Was the insured automobile a PRIVATE PASSENGER AUTOMOBILE as defined in the New Jersey
No-Fault Bill?
" Automobile" means a private passenger automobile of a private passenger or station wagon type
that is owned or hired and is neither used as a public or livery conveyance for passengers nor
rented to others with a driver; and a motor vehicle with a pickup body, a delivery sedan, a van, or a
panel truck or a camper type vehicle used for recreational purposes owned by an individual or by a
husband and wife who are residents of the same household, not customarily used in the
occupation, profession or business of the insured other than farming or ranching.
- this form does not apply.)
YES
NO
(If " NO" , check " NO" on Line 11 and STOP)
**PRIVATE PASSENGER AUTO ALSO INCLUDES A COMMERCIAL VEHICLE THAT MEETS THE
DEFINITION OF A PRIVATE PASSENGER AUTO AS DEFINED IN THE NEW JERSEY NO-FAULT
BILL.
4.
Is this an Uninsured Motorists (UM) or an Underinsured Motorists (UIM) claimant?
(If " YES" , check " NO" on line 11 and stop)
YES
NO
5.
Is the claimant a New Jersey resident?
(If " NO" , check " NO" on line 11 and stop)
YES
NO
6.
Is the claimant a person who is required to maintain PIP insurance
(i.e., does he own a private passenger auto registered in New Jersey),
or is he eligible to collect PIP benefits as a result of the accident?
(If " NO" , check " NO" on line 11 and stop)
YES
NO
7.
Is the accident state New Jersey?
(If " NO" , check " NO" on line 11 and stop)
YES
NO
8.
Did the
insured
choose the New Jersey verbal tort threshold?
(If " NO" , check " NO" on line 11 and stop)
YES
NO
9.
Did the
claimant
choose the New Jersey zero tort threshold or did the the zero tort threshold
apply due to the default provided by law (i.e., for people not owning an automobile)?
(If " NO" , check " NO" on line 11 and stop)
YES
NO
10.
Do any of the following characterize this injury?
a.
death
b.
dismemberment
c.
significant disfigurement or significant scarring
d.
displaced fractures
e.
loss of a fetus
f.
permanent injury within a reasonable degree of medical probability
other than scarring or disfigurement
YES
NO
YES
NO
(If the answer to # 10 is " YES" , check " NO" on line 11 and stop)
11.
Is this a REPORTABLE CLAIMANT?
(If " NO" has not already been checked here, this is a REPORTABLE CLAIMANT.)
12.
If the answer on line 11 is " YES" , this is a REPORTABLE CLAIMANT. Fill in the dollar amount
of that portion of the BI Liability settlement which reimbursed noneconomic losses.
11/ 99
$
How are Reportable Claimants identified?
(cont.)
Reportable Claimants should be reported
consistent with the facts involved in the
settling of the claim.
Reportable Claimants to Verbal BI by Accident Year
(Individual insurers may vary)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Reportable
Verbal
2004
2005
2006
2007
2008
2009
Reportable Claimants to Verbal BI Accident Year 2005
(Individual insurers may vary)
90%
Verbal/Reportable
Verbal
10%
Loss Severities by Year
(Individual insurers may vary)
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
AVG NJAIRE Reportable
Claim Loss Amt (By Accident
Year)
AVG NJ BI Claim Loss Amt
(By Calendar Year)
2005 2006 2007 2008 2009
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
B. Quality Reviews
1. Use of the Data
a.
b.
Provisional Financial Transactions
Annual Cash Settlement (ACS)
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:

Provisional Financial Transactions

Each company’s quarterly assessment
(monthly payments)

Each company’s quarterly reimbursement,
plus share of investment income
 Provisional Financial Transactions:
 Quarterly Assessment - The quarterly assessment is
determined by multiplying the number of Zero Dollar
Exposures reported by your company, from two quarters
prior, by the Assessment per Exposure determined by
the Actuarial Committee for that Accident Year.
Example (Exhibit A) – 3rd Quarter 2010 Assessment:
Assessment per Exposure = $90
Zero Dollar Exposures reported for 1st Quarter 2010 = 100
Quarterly Assessment = $9,000
Monthly Payments = $3,000
 Provisional Financial Transactions (cont.):
 Quarterly Disbursement – The quarterly
disbursement is determined by multiplying your
company’s share of the Industry-wide Verbal
Exposures, from two quarters prior, by the total
amount collected via the monthly payments.
Note: Your company’s share of Investment
Income is calculated similar to above except it is
multiplied by the amount of Investment Income
earned on those funds collected via the monthly
payments instead.
Example – 3rd quarter 2010 Reimbursement:
Company Verbal Exposures reported for 1st Quarter 2010 = 500
Industry Verbal Exposures reported for 1st Quarter 2010 =
1,000,000
Total amount collected via the 3rd Quarter 2010 monthly
payments = $9,000,000
Investment Income earned on 3rd Quarter 2010 monthly
payments = $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
The Call Form data is also used in:
 Annual Cash Settlement (ACS):


Purpose
Using the latest available accident year data:



Evaluates provisional financial transactions performed
in previous calendar year
Re-evaluates assessment and reimbursement
calculations for all other prior years (typically 10 accident
years included in each ACS)
Accounts for all previous financial transactions for each
member company as well as the time value of money
 Annual Cash Settlement (ACS):
 The “Pot” of losses to be reimbursed for each accident year
being evaluated

Determined by NJAIRE Actuarial Committee using
Reportable Loss and Loss Adjustment Expense data
reported by all member companies
 Each company’s Assessment* per accident year , accounting
for the time value of money – based on zero dollar
threshold data
* Calculated at the territory level for accident years 2007 and prior. For accident
years 2008 and subsequent, this is calculated at the statewide level.
 Annual Cash Settlement (ACS) (cont.):
 Each company’s Reimbursement* per accident year,
accounting for the time value of money – based on
verbal threshold data
 Re-distribution of investment income per accident year
– based on verbal threshold data
 Each company’s share of the NJAIRE administrative
expenses – based on zero dollar threshold data
* Calculated at the territory level for accident years 2007 & prior. For accident years
2008 and subsequent, this is calculated at the statewide level.
2. Financial Impact on Companies
The magnitude of the financial transactions:
 Approximately $6.5 million every quarter via
the monthly payments and quarterly
disbursements (the provisional financial
transactions)
 Approximately $412 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 account quarter
 Undetected Data Errors – can be over
$1,000,000!
How can it be that much?
 The ultimate Annual Cash Settlement formula
assesses and reimburses based on BI Claimants: by
Threshold, Territory* & Accident Year
 BI Claimants reported incorrectly can potentially
have a real financial impact
*For accident years 2007 and prior
Exhibit B
 Scenario 1 - Putting just 3 BI Claimants
in the wrong Threshold column can cost
up to
 Scenario 2 - Putting just 3 BI Claimants
vs. Zero Dollar Threshold insured's in
the wrong Territory can cost up to
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
 AIPSO performs completeness checks and
detailed checks on claim samples in the
compliance audit process
 This covers about 10 companies per year
 The ISO and AIPSO checks alone can not
detect everything
Common errors:
 Exposures: Car months, Written,
Cumulative, Threshold
 BI Claimants: Threshold, Territory *
* Territory errors apply to accident year 2007 & prior
Common errors:
 Reportable Claimants: All BI Paid Claimants
included
 ALAE, ULAE: Reported separately and
combined
Review needs:
 Current & previous quarter’s data
 Knowledge about your company
 About 15 minutes per quarter
Exposures by Threshold:
 Data needed: Statewide totals
 General expectation: Volume +/- 5%
 Zero Dollar Exposures as % of total: +/- 2%
BI Paid Claimants by Insured Threshold:
 Data needed: Statewide totals, all Accident
Years
 General expectation: Similar volume per
Accident Year, allowing for development
 Claim Frequencies per Threshold similar,
averaging 0.5 – 1.5 per 100 Car Years
Reportable Claimants & Losses:
 Data needed: Statewide totals, all Accident
Years
 General expectations:

Percentage of Verbal: 4 - 28%, average 12%

Reportable Losses: $3,000 - $15,000,
average $ 7,900
Loss Adjustment Expenses:
 Data needed: Statewide totals, all Accident
Years
 General expectation: 5 – 35% of Reportable
Losses (Note: may lag)
 Company Methodology: Formula?
More difficult errors to detect:
 Territory errors *
 Completeness
Checks that could help:
 Territory errors *

Visual Checks
* Territory errors apply to accident year 2007 & prior
Visual Checks by Territory *:
Possible problem areas –
 Large change in Exposures by Quarter
 Exposures in Other than Current Accident Year for the
Current Quarter
 Zero Dollar Exposures > Verbal Exposures
* Territory applies to accident year 2007 & prior. Same checks can be performed at
Statewide or Territory level for accident year 2008 & subsequent depending on
how each company opts to report their data.
Visual Checks by Territory *:
Possible problem areas –
 BI Paid Claimants vs. Zero Dollar > BI Paid Claimants vs.
Verbal
 Reportable Claimants > BI Paid Claimants vs. Verbal
 Reportable Losses w/o Reportable Claimants, and vice-versa
* Territory applies to accident year 2007 & prior. Same checks can be performed at
Statewide or Territory level for accident year 2008 & subsequent depending on
how each company opts to report their data.
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 email
[email protected] or contact:
 Mike McAuley, [email protected] (201-469-2323)
 Pat Lloyd, [email protected] (201-469-2326)
 You can also visit the NJAIRE website at www.njaire.org. It
contains a Frequently Asked Questions section, copies of
all reporting forms, seminar information including the
PowerPoint presentations, Plan of Operation, Procedure
Manual, etc.