welcome ! residual market audit services nj aire compliance audit program deb silva

Welcome!

Residual Market Audit Services

NJ AIRE

Compliance Audit Program

Deb Silva

AIPSOAutomobile

Insurance Plan Service Office

Objective of NJAIRE AuditsTo 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: Planningc. 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 detailf. Verification of detail to call formsg. Obtain internal procedures for

reviewing data submissionsh. Confirmation Letter

Audit Process

Stage 2: Fieldworka. 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

2003 - 2014 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 Audits125 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