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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 website under the Documentation and Forms title.

Check out the training module on 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

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 –
  • 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