Welcome ! Residual Market Audit Services NJ AIRE Compliance Audit Program Deb Silva

AIPSO Automobile Insurance Plan Service Office

Objective of NJAIRE Audits To ensure that companies are submitting complete and accurate data to the NJAIRE central processor - ISO. Operational – Company’s internal controls are effective in identifying and processing NJAIRE business. Compliance – Data reported meets specifications in the Plan of Operations.

Audit Process Three Stages 1. Planning 2.Fieldwork 3.Reporting

Audit Process Stage 1: Planning a. Company Selection b. Communication with ISO 1. Call Forms 2. Statement of Compliance 3. Concerns with Companies

Audit Process Stage 1: Planning c. Engagement Letter – Includes request for data 1. All private passenger BI claimants 2. All reportable claimants 3. All other claims d. Company contact information received

Audit Process Stage 1: Planning e.Receipt of company detail f.Verification of detail to call forms g. Obtain internal procedures for reviewing data submissions h.Confirmation Letter

Audit Process Stage 2: Fieldwork a.Opening meeting b. File review Determination Forms

 The purpose of the form is to assist the claims person when determining whether a settled BI claimant is Reportable or Non-Reportable.  The determination form can be found on the NJAIRE.org website under the Documentation and Forms title.  Check out the training module on NJAIRE.org under the Claims Training title. Reportable Claimant Determination Form

Determination Form IMPORTANT CHANGE Claim Determination Form is Mandatory! Effective 1/1/2012

Determination Form 8. 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?

Audit Process Stage 2: Fieldwork c. File review Work-papers

Audit Process Stage 2: Fieldwork d.Fieldwork summary e.Closing meeting

Audit Process Stage 3: Reporting 1.Draft Report 2.Company’s Response 3.Final Report

Pre-Audits  Instituted in 2011 for companies new to the NJ automobile market  ISO determines when a company is ready for a pre-audit  Pre-audit is similar to a regular audit but on a smaller scale  Determines if a company is reporting correctly prior to a full audit

Crunching the Numbers

2003 – 2014 Audits 125 Audits Completed Reportable Claims Total claimants reviewed – 5,204 Number of claimants over reported – 642 or 12% Dollar amount over reported – $10,524,089

Audits Reasons for Over Reporting: Claimant or Insured Incorrect Threshold Unverified Claimant Threshold These two reasons account for 52% of reporting errors

Additional Reasons for Over Reporting Economic Loss Payment Included Claimant had pierced the threshold Claimant was not a NJ Resident Claim Occurred outside of NJ Expense Payments Included in Reporting

Reporting Errors Incorrect Territory Codes (Accident Year 2007 and prior) Settlement Reported in an Incorrect Reporting Year Over Reporting of the Dollar Amount

2003 – 2014 Audits 125 Audits Completed All Bodily Injury Claims: Total claimants reviewed – 9,660 Number of claimants under reported – 255 or 3% Dollar amount under reported – $2,404,748 Number of claimants over reported as BI claims – 245 or 3 %

Reasons for Under Reporting Claimant had a Zero Dollar Threshold Insured had a Verbal Threshold Unverified Claimant Threshold

Reporting Errors Non Bodily Injury Paid Claims Bodily Injury Claims with No Payment Incorrect Territory Codes (Accident Year 2007 and prior) Settlement Reported in an Incorrect Reporting Year

NJAIRE Claim Handling TIPS Claims handlers should be familiar with the NJAIRE procedure manual – NJAIRE.org Know the requirements for verification of the claimant’s threshold (Pgs 31 – 32 of the procedure manual) Use the required NJAIRE Claim Determination Form Check the final determination after claim is settled and before it is submitted to IT

QUESTIONS?  What? Huh?  What does it all mean?

Thank you! Residual Market Audit Services NJAIRE Compliance Audit Program Deb Silva