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Welcome !. Residual Market Audit Services. NJ AIRE Compliance Audit Program Jack O’Keefe. AIPSO Automobile Insurance Plan Service Organization. Objective of NJAIRE Audits. To ensure that companies are submitting complete and accurate data to the NJAIRE central processor - ISO.

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Residual Market Audit Services


Compliance Audit Program

Jack O’Keefe



Automobile Insurance Plan Service Organization

Objective of njaire audits

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.


Audit Process

Three Stages

  • Planning

  • Fieldwork

  • Reporting

Audit process

Audit Process

Stage 1: Planning

  • Company Selection

  • Communication with ISO

    • Call Forms

    • Statement of Compliance

    • Concerns with Companies

Audit process1

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

Audit process2

Audit Process

Stage 1: Planning (con’t)

  • Receipt of company detail

  • Verification of detail to call forms

  • Complete sample selections

    h.Confirmation Letter

Audit process3

Audit Process

Stage 2: Fieldwork

  • Opening meeting

    b. Obtain internal procedures for reviewing data submissions

    c.File review

    Determination Forms

Reportable claimant determination form

Reportable Claimant Determination Form

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.


Determination Form


Effective 1/1/2012

Claim Determination Form is



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 process4

Audit Process

Stage 2: Fieldwork

  • File review

    • Work-papers

Audit process5

Audit Process

Stage 2: Fieldwork

  • Fieldwork summary

  • Closing meeting

Audit process6

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

Crunching the Numbers

2003 2012 audits 104 audits completed

2003 - 2012 Audits 104 Audits Completed

Reportable Claims

  • Total claimants reviewed – 4,527

  • Number of claimants over reported – 603 or 13%

  • Dollar amount over reported - $10,245,255

2003 2012 audits

2003 - 2012 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

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

Reporting errors

Reporting Errors

  • Incorrect Territory Codes (Accident Year 2007 and prior)

  • Settlement Reported in an Incorrect Quarter or Year

  • Over Reporting of the Dollar Amount

2003 2012 audits 94 audits completed

2003 – 2012 Audits94 Audits Completed

All Bodily Injury Claims:

  • Total claimants reviewed – 8,034

  • Number of claimants under reported – 249 or 3%

  • Dollar amount under reported - $2,359,098

  • Number of claimants over reported as BI claims - 244 or 3 %

Reasons for under reporting

Reasons for Under Reporting

  • Claimant had a Zero Dollar Threshold

  • Insured had a Verbal Threshold

  • Unverified Claimant Threshold

Reporting errors1

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

Njaire claim handling tips

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



  • What? Huh?

  • What does it all mean?


Thank you!

Residual Market Audit Services


Compliance Audit Program

Jack O’Keefe

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