1. Welcome! Residual Market Audit Services NJ AIRE
Compliance Audit Program
Jack O’Keefe

2. Ape - So
We are not the proverbial “Gorilla in the Room”

3. Automobile Insurance Plan Service Organization
AIPSO
Automobile Insurance Plan Service Organization
We conduct audits not trying to find things wrong but rather to identify where you might improve
NJAIRE is a pretty straightforward reporting mechanism – It’s either there or not there
It’

4. What Does RMAS Do?
Provide on-site audits of companies for automobile insurance market mechanisms.
CAIP NJSAIP MAIPF
NJCAIP CALC NJAIRE
Clarify that NJAIRE is not a residual market mechanism
We use independent consultants who are retired claims people

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

6. Audit Process
Three Stages
Planning
Fieldwork
Reporting

7. Audit Process Stage 1: Planning Company Selection
Communication with ISO
Call Forms
Statement of Compliance
Concerns with Companies

8. Audit Process Stage 1: Planning (con’t)
c. Engagement Letter – Includes request for data
All private passenger BI claimants
All reportable claimants
All other claims
d. Company contact information received

9. Audit Process Stage 1: Planning (con’t) Receipt of company data
Verification of data to call forms
Complete sample selections
h. Confirmation Letter

10. Audit Process Stage 2: Fieldwork Opening meeting
b. Obtain internal procedures for reviewing data submissions
c. File review
Determination Forms

12. Determination Form
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?

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

14. Audit Process
Stage 2: Fieldwork
Fieldwork summary
Closing meeting

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

16. 2003 - 2009 Audits 74 Audits Completed
Reportable Claims
Total claimants reviewed – 3,451
Number of claimants over reported – 537 or 16%
Dollar amount over reported - $9,558,650

17. 2003 - 2009 Audits Reasons for Over Reporting:
Claimant or Insured Incorrect Threshold
Unverified Claimant Threshold
These two reasons account for 52% of reporting errors

18. 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
Insured Vehicle was Commercial

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

20. 2003 – 2009 Audits 74 Audits Completed
All Bodily Injury Claims:
Total claimants reviewed – 6,111
Number of claimants under reported – 232 or 4%
Dollar amount under reported - $2,154,398
Number of claimants over reported as BI claims or 4 %

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

22. Reporting Errors Non Bodily Injury Paid Claims
Bodily Injury Claims with No Payment
Incorrect Territory Codes (Accident Year 2007 and prior)
File not Settled in Reporting Year
Settlement reported in Incorrect Quarter

23. TIPS Plant your corn early
“Easy Sleazy” in the third race at Monmouth Park
Don’t say “Hi Jack” if you see me at the airport

24. 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 NJAIRE recommended Claim Determination Form
Check the final determination after claim is settled and before it is submitted to IT

25. QUESTIONS?
What? Huh?
What does it all mean?

26. Thank you! Residual Market Audit Services NJAIRE
Compliance Audit Program
Jack O’Keefe