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NJAIRE Data Reporting. Overview of Current Reporting Requirements Quality Reviews. Reporting Requirements. Call Forms: Form # 4 – Accident Year 2001-present. Sample Form. Call Forms – Required Data

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NJAIRE Data Reporting

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NJAIRE Data Reporting

Overview of Current Reporting Requirements

Quality Reviews


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


Reporting Requirements


Reporting Requirements


Earned Exposures by Threshold and Accident Year (Individual insurers may vary)


Exposure Thresholds for Accident Year 2009 (Individual insurers may vary)


Exposure Thresholds for Accident Year 2009 Individual Company (Actual Data: Minimum 10,000 Exposures)


Exposure Thresholds for Accident Year 2009 Individual Company (Actual Data: Minimum 10,000 Exposures)


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:

  • Out of state claimants against NJ insured autos subject to the No-Fault law

  • 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)

  • BI Paid Claimants

    (Insurers may vary)


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?


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)


Reportable Claimants to Verbal BI Accident Year 2005 (Individual insurers may vary)


Loss Severities by Year

(Individual insurers may vary)


Due Dates: to ISO (other than CAIP) or AIPSO (CAIP only):


Quality Reviews

  • Use of the Data

    • Provisional Financial Transactions

    • Annual Cash Settlement (ACS)

  • Financial Impact on Companies

  • Cost of Late, Erroneous Data

  • Detecting Errors at the Call Form Level


  • 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.


    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


    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 $409,000

    • Scenario 2 - Putting just 3 BI Claimants vs. Zero Dollar Threshold insured's in the wrong Territory can cost up to $382,000


    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 catch everything


    • What can companies do? What kind of reviews will be useful?

    • What types of errors are commonly made?

    • How many can be caught by expending a reasonable amount of company resources?


    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 separatelyandcombined


    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%


    Company A:

    Earned Exposures by Quarter


    Company B:

    Earned Exposures by Quarter


    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


    Company A:

    BI Paid Claimants by Quarter


    Company B:

    BI Paid Claimants by Threshold and Quarter


    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


    Company A:

    Verbal and Reportable Claimants by Quarter


    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)

      • Katrine Pertsovski, [email protected] (201-469-3841)

    • 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.


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