1 UDS “D” Record Training History and Overview. 2 Credits Project Manager – Julie Snyder UDS “D” Record Training Subcommittee James Hamilton (Home Ins

11

UDS “D” RecordUDS “D” RecordTrainingTraining

History and OverviewHistory and Overview

22

CreditsCreditsProject Manager – Julie SnyderProject Manager – Julie Snyder

UDS “D” Record Training SubcommitteeUDS “D” Record Training SubcommitteeJames Hamilton (Home Ins. Co., in Liquidation) – James Hamilton (Home Ins. Co., in Liquidation) – co-chairco-chairKathy Lavin (GFMS)Kathy Lavin (GFMS)Mark Might (Ohio & West Virginia IGA’s) – co-chairMark Might (Ohio & West Virginia IGA’s) – co-chairDarin Miller (Ohio & West Virginia IGA’s)Darin Miller (Ohio & West Virginia IGA’s)Paul Radel (Reliance Ins. Co., in Liquidation)Paul Radel (Reliance Ins. Co., in Liquidation)Dale Stephenson (DFS Consulting)Dale Stephenson (DFS Consulting)

NCIGF Support StaffNCIGF Support StaffNick CrewsNick CrewsMaureen SciameMaureen SciameAndrew HolladayAndrew Holladay

33

Mission StatementMission Statement

Simplify Reporting in a Standardized Simplify Reporting in a Standardized Format versus Multiple Formats Currently Format versus Multiple Formats Currently UtilizedUtilized Standardize financial reportingStandardize financial reporting Reduce the number of report formatsReduce the number of report formats Simplify the reporting processSimplify the reporting process

Move to an Electronic Filing (preferred) Move to an Electronic Filing (preferred) versus Hard Copyversus Hard Copy Ease of creating reportsEase of creating reports Speed in creating reportsSpeed in creating reports Reduction of calculation errorsReduction of calculation errors

44

““D” Record OverviewD” Record OverviewHistory/BackgroundHistory/Background

The formation of property/casualty guaranty funds began The formation of property/casualty guaranty funds began in the early 70’s.in the early 70’s.

By the mid 80’s, when guaranty funds were becoming a By the mid 80’s, when guaranty funds were becoming a factor in the insolvency process, most still maintained factor in the insolvency process, most still maintained books and records which were largely manual. As books and records which were largely manual. As insolvencies became larger and encompassed multiple insolvencies became larger and encompassed multiple states, guaranty funds started to automate their systems.states, guaranty funds started to automate their systems.

After implementation of the UDS claim format (April 1, After implementation of the UDS claim format (April 1, 1995), it was also recognized that the financial reporting 1995), it was also recognized that the financial reporting by guaranty funds to receivers should be matched to the by guaranty funds to receivers should be matched to the standardized claim reports, with the added elements of standardized claim reports, with the added elements of expense that were administrative in nature and therefore expense that were administrative in nature and therefore not included in the transaction based claim reports.not included in the transaction based claim reports.

55

““D” Record OverviewD” Record Overview

History/Background (cont’d)History/Background (cont’d)

The “D” Record was designed to standardize the The “D” Record was designed to standardize the claims-related and administrative expense data claims-related and administrative expense data requested, providing for efficiency, reconcilability requested, providing for efficiency, reconcilability and ease of use by both guaranty funds and and ease of use by both guaranty funds and receivers.receivers.

In December 2007, the new “D” Record for In December 2007, the new “D” Record for financial reporting was approved by the NAIC with financial reporting was approved by the NAIC with reconciliation capabilities for historical, non-reconciliation capabilities for historical, non-detailed segments and with new features for future detailed segments and with new features for future reporting.reporting.

66


BenefitsBenefits Guaranty FundsGuaranty Funds

Standardized reporting reduces the variety of formats Standardized reporting reduces the variety of formats required to be completedrequired to be completed

Increases the opportunity to automate the processIncreases the opportunity to automate the process

Reduces manpower needs to compile the reportReduces manpower needs to compile the report

Speeds up the preparation and issuance of the financial Speeds up the preparation and issuance of the financial reportreport

ReceivershipsReceivershipsFacilitates the compilation of financial data from multiple GFs.Facilitates the compilation of financial data from multiple GFs.

Speeds up reconciliation with the “C” Record and Revenue Speeds up reconciliation with the “C” Record and Revenue sectionssections

Allows for review and analysis of claim costsAllows for review and analysis of claim costs

Allows for review and analysis of individual GF Proofs of Allows for review and analysis of individual GF Proofs of ClaimsClaims

77


CostsCosts

Review and changes to general ledger accountsReview and changes to general ledger accounts Initial costs for the change over and time to Initial costs for the change over and time to

reconcile between prior reporting formats and the reconcile between prior reporting formats and the new “D” recordnew “D” record

88


ReconciliationReconciliation Guaranty FundsGuaranty Funds

Prior to submitting the “D” Record to the Prior to submitting the “D” Record to the receiver:receiver:

• The guaranty fund should reconcile the “D” The guaranty fund should reconcile the “D” Record, Section 1 to the “C” Record. Any Record, Section 1 to the “C” Record. Any differences found during this reconciliation differences found during this reconciliation need to be corrected and an itemized report need to be corrected and an itemized report should be sent to the receiver. This will should be sent to the receiver. This will assist the receiver in expediting their assist the receiver in expediting their reconciliation.reconciliation.

• The guaranty fund should reconcile Year-to-The guaranty fund should reconcile Year-to-Date and Inception-to-Date amounts in Date and Inception-to-Date amounts in Section 2 and the Revenue Section to the Section 2 and the Revenue Section to the prior quarter report.prior quarter report.

99


ReconciliationReconciliation ReceivershipsReceiverships

The receiver should reconcile the “D” The receiver should reconcile the “D” Record, Section 1 to the “C” Record. Record, Section 1 to the “C” Record.

The receiver should reconcile Year-to-Date The receiver should reconcile Year-to-Date and Inception-to-Date amounts in Section 2 and Inception-to-Date amounts in Section 2 and the Revenue Section to prior quarter and the Revenue Section to prior quarter report.report.

If any differences are found during this If any differences are found during this reconciliation, the receiver should contact reconciliation, the receiver should contact the guaranty fund.the guaranty fund.

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Guaranty Fund Financial/Liquidation Guaranty Fund Financial/Liquidation

Reporting StaffReporting Staff

1111

UDS Financial ReportUDS Financial Report

1212

UDS Financial Report UDS Financial Report (cont’d)(cont’d)

1313


1414


1515


1616

Cash Disbursements and Receipts Cash Disbursements and Receipts Reporting to ReceiversReporting to Receivers

DISBURSEMENTSReported in UDS “C”Record

See Claim Disbursements Flow Chart

ADMINISTRATIVEEXPENSE DISBURSEMENTS

See Administrative Expense Disbursements Flow Chart

CLAIM RECOVERIES

See Claim Recoveries Flow Chart

CASH RECEIPTS

See Cash Receipts Flow Chart

UDS “D” REPORT SECTION 2



UDS “D” REPORT SECTION 1CLAIM RESERVES

See Claim Reserves Flow Chart

LUMP SUM RESERVES

See Lump Sum Reserves Flowchart

GUARANTY FUNDCash Disbursements,Reserves and Cash

Receipts

1717

Claim Disbursements Flow Chart Claim Disbursements Flow Chart Reported in UDS “C” RecordReported in UDS “C” Record

Claim Loss and Expense Transaction Totals from UDS “C” Record reconcile to

UDS “D” Record Section 1

Unearned Premium expense (Code 870)

Unearned Premium Expense

UDS “C” Transaction codes Line items on UDS “D” Record Form

If a Guaranty Fund is moving transactions from Section 1 to Section 2, then the accounting entry is placed in the Reclassifications to Section 2 line.

Loss Claim Payments (Code 310, 320)

Unearned Premium payments (Code 820, 825)

Defense & Cost Containment / DCC expense (Code 410, 420)

Adjusting & Other/AO expense (Code 450, 470)

Loss Claim Payments

Unearned Premium Claim Payments

Defense & Cost Containment (DCC) Expenses

Adjusting & Other (AO) Expenses

LAE Expense (Prior to the implementation of v2.1)

Total LAE (Prior) – Inception-to-date Only

1818

Claim Reserves Flow Chart Claim Reserves Flow Chart Reported in UDS “C” RecordReported in UDS “C” Record

Claim Loss and Expense Reserve Totals from UDS “C” Record reconcile

to UDS “D” Record Section 1

UDS “C” Transaction codes Line items on UDS “D” Record Form

Loss Claim Reserve Snapshots (Code 130)

Defense & Cost Containment (DCC) Expense/ Adjusting & Other Expense (AO) Expense Reserve Snapshots (Code 230)

Loss Claim Reserves

Defense & Cost Containment (DCC) Reserves

Adjusting & Other (AO) Reserves

1919

Claim Recoveries Flow Chart Claim Recoveries Flow Chart Reported in UDS “C” RecordReported in UDS “C” Record

Claim Recovery TransactionsTotals from UDS “C” Record reconcile

to UDS “D” Record Section 1

Adjusting & Other/AO recovery (Code 550) * # @

AO Expense Recovery

UDS “C” Transaction codes Line item on UDS “D” Record Form

* Includes Liquidator Large Deductible Recoveries.# Use Recovery Code 9 for Liquidator Large Deductible Recoveries.@ Includes Pre-liquidation and excess recovery amounts that have not been reimbursed to the Receiver, Insured or other party.

Loss Recoveries (Code 530 + Recovery Code) * @

Defense & Cost Containment / DCC expense recovery (Code 540) * # @

Loss Recoveries by Recovery Type Code (1 – 9)

DCC Expense Recovery

Loss Recoveries (Prior to the implementation of UDS v2.1)

Total Loss Recoveries (Prior) - Inception-to-date Only

2020

Administrative Expense Disbursements Administrative Expense Disbursements Flow ChartFlow Chart

Reported in UDS “D” RecordReported in UDS “D” RecordGeneral Ledger Administrative Expense

mapping to UDS “D” Record

1. Unallocated LAE (prior to the implementation of v2.1)

2. TPA Fees and Expense3. Medical Bill Review4. Salaries, Temp Help, Benefits, Payroll

Taxes5. Legal6. Auditing, Consultants7. Travel8. Rent, Utilities9. Telephone, Repairs/maintenance, Equip

rentals, bank charges, printing, stationery, office supplies, computer supplies, postage/express mail, dues, subscriptions, taxes other than payroll, NCIGF Dues, insurance, depreciation, etc.

10. Interest on Borrowed Funds11. Investment Manager Fees12. Other Expenses (not defined above)13. DCC & AO Expense Reserves (not in

UDS “C”)14. Administrative Exp Reserves (not in UDS

“C”)

1. Total LAE (Prior)2. Claims/adjusting expense paid for NON-

Employee adjusting personnel, such as TPA fees.

3. Medical Bill Review4. Employee/Contractor Expenses5. Legal6. Professional Expenses (other than legal)7. Travel & Meetings Expenses8. Office Rent & Utilities9. General Office Expense10.Interest on Borrowed Funds11.Investment Manager Fees12.Other Expenses (not defined above)13.Lump Sum DCC & AO Expense Reserves

(not in UDS “C”)14.Lump Sum Administrative Expense

Reserve (not in UDS “C”)

General Ledger Accounts Line item on UDS “D” Record Form In SECTION 2

If a Guaranty Fund is moving transactions from Section 1 to Section 2, then the accounting entry is placed in the Reclassifications to Section 2 line.

2121

Lump Sum Reserves Flow Chart Lump Sum Reserves Flow Chart Not Reported in UDS “C” RecordNot Reported in UDS “C” Record

General Ledger Accounts Line items on UDS “D” Record Form

Unearned Premium Reserve

Lump Sum Defense & Cost Containment (DCC)/Adjusting & Other (AO) Reserves

Lump Sum Administrative Expense Reserve

Unearned Premium Reserve

Lump Sum DCC & AO Expense Reserve

Lump Sum Administrative Expense Reserve

2222

Cash Receipts Flow Chart Cash Receipts Flow Chart Reported in UDS “D” RecordReported in UDS “D” Record

General Ledger mapping to UDS “D” Record

General Ledger Accounts Line item on UDS “D” Record Form

Distribution from Receiver

Liquidator Large Deductible Recovery (prior to 01/01/05)

Other recoveries (not reported as Claims recoveries in UDS “C”). Include Liquidator Large Deductible Recoveries (after 01/01/05) not charged to the claim file.

Special Deposit / Funds Held

Special Deposits received from Department of Insurance/, Ancillary or Receiver.

Receiver Distributions

Large Deductible Reimbursements (prior to 01/01/05) not charged to the claim file.

Other Receipts (Description)

2323

Mapping, Balancing and Mapping, Balancing and ReconcilingReconciling

UDS “C” RECORDS (Guaranty fund’s claim system)Match: Loss, ALAE, DCC, AO

GUARANTY FUND’S GENERAL LEDGER (G/L)

UDS “D” RECORD SECTION 1 DATA ELEMENTS

UDS “D” RECORD SECTION 2 DATA ELEMENTS

UDS “D” RECORD REVENUE SECTION DATA ELEMENTS

BALANCE AND RECONCILE

1. Match Section 1 to UDS “C” Records.

2. Confirm data is in correct fields and not duplicated.

3. Reconciliation with prior quarter report.

4. Correct item or create variance report.

2424

New Report Line ItemsNew Report Line ItemsOther ConsiderationsOther Considerations

Cut-off DatesCut-off Dates Selection of cut off dates for Section 1 of the Report Selection of cut off dates for Section 1 of the Report

should agree to the cut off dates for the “C” Record. should agree to the cut off dates for the “C” Record. Totals of Section 1, before reclassifications to Section 2, Totals of Section 1, before reclassifications to Section 2,

should reconcile to the “C” Record for the corresponding should reconcile to the “C” Record for the corresponding period(s).period(s).

2525

New Report Line ItemsNew Report Line ItemsOther Considerations (cont’d)Other Considerations (cont’d)

Cut-off Date Problem ScenariosCut-off Date Problem Scenarios ““C” Record extract date is last day of month but prior to C” Record extract date is last day of month but prior to

completion of entry of all transaction activity for the completion of entry of all transaction activity for the particular month. Solution – submit a revised “C” particular month. Solution – submit a revised “C” Record extract to the receiver. Record extract to the receiver.

““C” Record extract date is prior to last day of month and C” Record extract date is prior to last day of month and quarter-end G/L closing date does not match extract date. quarter-end G/L closing date does not match extract date. Solution – submit a revised “C” Record extract to the Solution – submit a revised “C” Record extract to the receiver.receiver.

Quarter-end G/L closing date is prior to last day of quarter Quarter-end G/L closing date is prior to last day of quarter and “C” Record extract date does not match G/L closing and “C” Record extract date does not match G/L closing date. Solution - a reconciliation of the quarter end closing date. Solution - a reconciliation of the quarter end closing date to the last day of the quarter must be done. date to the last day of the quarter must be done. Adjustments must be made to the “D” Record reporting Adjustments must be made to the “D” Record reporting system to properly reflect the additional transactions. system to properly reflect the additional transactions. When the next quarter is prepared, the prior quarter’s When the next quarter is prepared, the prior quarter’s transactions must be reversed out.transactions must be reversed out.

2626


Receivership Financial/LiquidationReceivership Financial/Liquidation

Reporting StaffReporting Staff

2727

Current Reporting to Current Reporting to Receiverships by Guaranty Receiverships by Guaranty

FundsFundsGuaranty

Fund POC filed Format 1

Guaranty Fund POC filed Format 2

Guaranty Fund

POC filed Format 3

Guaranty Fund

POC filed Format 6

Guaranty Fund

POC filed Format 5

Guaranty Fund

POC filed Format 8

Guaranty Fund

POC filed Format 4

RECEIVERSHIP????????

GuarantyFund

POC filedFormat 7

2828

UDS “D” Record Reporting UDS “D” Record Reporting to Receiverships by to Receiverships by

Guaranty FundsGuaranty FundsGuaranty

Fund POC filed with

the Estate (“C” and “D”

Records)

Guaranty Fund

POC filed with the Estate

(“C” and “D” Records)

Guaranty Fund



Guaranty Fund



Guaranty Fund



Guaranty Fund



Guaranty Fund



Guaranty Fund



RECEIVERSHIP

2929

Map the Guaranty Fund Map the Guaranty Fund InformationInformation

UDS “D” REPORT SECTION 1 DATA ELEMENTS1. Loss claim2. Unearned Premium3. Defense & Cost Containment expense4. Adjusting & Other Expenses5. Unearned Premium Expenses6. Loss Recoveries by Recovery type (Codes 1 – 9).7. DCC Expense Recovery8. AO Expense Recovery

UDS “D” REPORT SECTION 2 DATA ELEMENTS1. Claims/adjusting expense paid for non-employee such as TPA.2. Medical Bill Review3. Employee/Contractor Expense4. Legal5. Professional exp (other than legal)6. Travel & Meetings Expenses7. Office Rent & Utilities8. General Office Expense9. Interest on Borrowed Funds10. Investment Manager Fees11. Other Expenses (not defined above)12. Lump Sum DCC & AO Expense Reserve13. Lump Sum Administrative Expense Reserve

UDS “D” REPORT REVENUE SECTION DATA ELEMENTS

1. Special Deposits received from Department, Ancillary or Receiver.

2. Receiver Distributions 3. Large Deductible Reimbursement (prior to 1/1/05)4. Other Receipts5. Interest on Special Deposit

3030

Mapping, Balancing and Mapping, Balancing and ReconcilingReconciling

UDS “C” REPORT (Receivership’s claim system)Match: Loss, ALAE, DCC, AO

RECEIVERSHIP’S ADMINISTRATION DATABASE

Analysis :Trend AnalysisRatio AnalysisReclassified exp.ClassificationNon-Allowed

UDS “D” REPORT SECTION 1 DATA ELEMENTS

UDS “D” REPORT SECTION 2 DATA ELEMENTS

UDS “D” REPORT REVENUE SECTION DATA ELEMENTS

Review and Analyze

MAPPING AND RECONCILIATION• Map to

Receivership’s Account Categories.

• Confirm data is in correct fields and not duplicated.

• Reconciliation with prior reports and periods reported.

• Contact GF if there are variances or need for further information.

• Correct item or request new report.

BALANCE AND RECONCILE

• Match Section 1 toxUDS “C” Report.

• Contact GF if there are variances.

• Correct item or request new report.

3131

Review and AnalysisReview and Analysis

The Receivership will define their own General The Receivership will define their own General Ledger Accounts and their own requirement for Ledger Accounts and their own requirement for review and classification of the reported review and classification of the reported expenses. The data reported is part of the expenses. The data reported is part of the Guaranty Fund’s POC filed with the Receivership.Guaranty Fund’s POC filed with the Receivership.

Data is captured in Receivership’s Administration database

Data is Reviewed and Analyzed

3232

Review and Analysis Review and Analysis (cont’d)(cont’d)

Trend Analysis: Monitoring of expenses within a category of expenses from quarter to quarter for the purpose of identifying spikes or unusual conditions that might warrant follow up with the fund or for comparison of an expense category from one fund to the average for the entire GF Community.

Ratio Analysis: Calculation and monitoring of key ratios such as UDS D total SECTION 2 expenses compared to paid losses and alae or percentage of salary & benefit expenses to total section 2 expenses.

Identification of Expenses to be Reclassified: Identification and quantification of a specific type of expense that may be reported within SECTION 1 which the receiver does not

permit as a claim loss or claim expense or within section 2 that the receiver does not

permit as an administrative expense or an expense that is non allowed for reimbursement purposes by the receiver.

Classification: The classification refers to the eventual order of distribution on claims from the Receivership. The order of distribution is defined by statute in the receivership’s domiciliary state.

Identification of Non-Allowed Transactions: Identification and quantification of a specific type of expense that may be reported, that the receiver does not permit as an

administrative expense or an expense that is non allowed for reimbursement purposes by the receiver.

3333

Receivership’s Use of the Receivership’s Use of the DataData

Support the Proof of Claim (POC) filed with the Support the Proof of Claim (POC) filed with the ReceivershipReceivershipThe Guaranty Fund claim against the Receivership is normally The Guaranty Fund claim against the Receivership is normally comprised of the claim loss and expense payments plus the comprised of the claim loss and expense payments plus the administrative expenses incurred to handle the Receivership’s administrative expenses incurred to handle the Receivership’s claims. Supporting detail for the claim loss and expense claims. Supporting detail for the claim loss and expense portion of the POC is contained in the UDS “C” Records. The portion of the POC is contained in the UDS “C” Records. The remainder of the POC is supported by information contained in remainder of the POC is supported by information contained in the UDS “D” Recordsthe UDS “D” Records

Data is reviewed and analyzed for classification and Data is reviewed and analyzed for classification and reasonableness.reasonableness.

Further material may be requested or reviewed.Further material may be requested or reviewed. Communication should be ongoing between the GF and the Communication should be ongoing between the GF and the

Receivership, and while there can be disagreements there should Receivership, and while there can be disagreements there should not be any surprises.not be any surprises.

The Receivership makes determination of classification and the The Receivership makes determination of classification and the amount.amount.

3434

Receivership’s Use of the Receivership’s Use of the Data (cont’d)Data (cont’d)

Support the Receivership’s Notice of Support the Receivership’s Notice of Determination to the Guaranty Fund and Determination to the Guaranty Fund and eventual distribution from the Receivershipeventual distribution from the Receivership

The Notice of Determination is issued.The Notice of Determination is issued. A Receivership may have specific process and time frames A Receivership may have specific process and time frames

established to dispute a determination. Each Notice of established to dispute a determination. Each Notice of Determination should be reviewed carefully.Determination should be reviewed carefully.

Once any dispute has been resolved or the determination Once any dispute has been resolved or the determination accepted the amount is held pending the Receivership’s accepted the amount is held pending the Receivership’s process for issuing distribution.process for issuing distribution.

3535

Questions?Questions?

[email protected]@udstsg.com

Documents

1 UDS “D” Record Training History and Overview. 2 Credits Project Manager – Julie Snyder UDS “D” Record Training Subcommittee James Hamilton (Home Ins