May 9, 2012 ISO – NJAIRE Central Processor Mike McAuley.
-
Upload
hannah-haynes -
Category
Documents
-
view
214 -
download
0
Transcript of May 9, 2012 ISO – NJAIRE Central Processor Mike McAuley.
May 9, 2012
ISO – NJAIRE Central ProcessorMike McAuley
NJAIRE DATA REPORTING REQUIREMENTS
Current Reporting Requirements• Call for Statistics Form #4 – Accident
Year 2003 – Present
Use and Financial Impact of Data
Detecting Errors
OVERVIEW
Form #4 – Due DatesTo 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
Form #4 – Territory Reporting Options
Accident Year 2008 & subsequent
Procedure Manual Exhibit 11a
1. Statewide totals only2. Standard ISO Territory Definitions (Exhibit 11)3. Company Defined Territories
Accident Year 2007 & prior
Standard ISO Territory Definitions
Form #4 – Required Data
Earned Exposures, in car years, by insured threshold
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2006 2007 2008 2009 2010 2011
Zero
Verbal
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
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
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?
Reportable Claimant Determination Form
Effective 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
Reportable Claimants to Verbal BI Accident Year 2006 (Individual insurers may vary)
10%
90%
Verbal/Reportable
Verbal
Loss Severities by Year (Individual insurers may vary)
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
2006 2007 2008 2009 2010
AVG NJAIRE Reportable Claim Loss Amt (By Accident Year)
AVG NJ BI Claim Loss Amt (By Calendar Year)
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
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 = $90Zero Dollar Exposures 1st Quarter 2011 = 100Quarterly Assessment = (100 * 90) = $9,000Monthly Payments = 1/3 of Quarterly
Assessment
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 = 500Industry Verbal 1st Quarter = 1,000,0003rd Quarter 2011 Monthly Payments Collected =
$9,000,000Investment Income Earned 3rd Quarter = $100,000Quarterly Reimbursement = (500/1,000,000) * $9,000,000
= $4,500Share of Investment Income = (500/1,000,000) * $100,000
= $50TOTAL Quarterly Reimbursement = $4,550
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 assessmentsRe-evaluate reimbursementsAccount for previous financial actionRe-distribute investment income
• Share of administrative expenses• All calculations account for time value of money
Magnitude of Financial Transactions
Approximately $6 million every quarter via provisional financial transactions
Approximately $400 million every year via the Annual Cash Settlement True-Up
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!
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
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
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
Common Errors
Exposures: Car months, Written, Cumulative, Threshold
BI Claimants: Threshold, Territory
Reportable Claimants: ALL BI paid claimants included
LAE: Reported separately and combined
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?
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
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
SUMMARY
ISO is here to help make your reporting of NJAIRE data as easy and accurate as possible
Any questions? Email [email protected] or you can contact me directly: Mike McAuley, [email protected] (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.
REMEMBER,