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Welcome!
Residual Market Audit Services
NJ AIRE
Compliance Audit Program
Mark LoVuolo, AIS, API
Jack O’Keefe
What is AIPSO?
AIPSO is…
A management organization and service provider for the residual market with a home office in Johnston, RI
A non-profit organizationA national organization of about 400
employeesAn organization with 10 regional offices
located throughout the countryAn organization that uses a team management
approach
AIPSO’s MissionAIPSO’s mission is to provide high quality services for the automobile insurance residual market at the lowest possible cost.
AIPSO will build on its successes as a leader in helping manage the automobile insurance residual market. We will continually rise to the challenge of being a national organization that serves local customer needs. We will remain flexible and will proactively meet the needs of our divergent customer groups at both national and state levels.
1 – Certified Internal Auditor (CIA)
1 – CIA candidate
2 – Certified Property & Casualty Underwriters (CPCU)
2 – pursuing INS or CPCU designations
1 – 30+ years of Claims Experience
30 – Independent Consultants
14 Members of our RMAS staff‘
“Who is Residual Market Audit Services” (RMAS)
Provide on-site audits of companies for automobile insurance market mechanisms.
What Does RMAS Do?
Purpose of RMAS
To support Board of Directors (Governing Boards) in their management of Residual Market Automobile Programs
Audits are a management tool to ensure companies are handling and reporting policies and claims in compliance with a mechanism’s plan of operations.
Purpose of Audits
Objective of NJAIRE AuditsTo ensure that companies are submitting complete and accurate data to the NJAIRE.
Operational – Company’s internal controls are effective in processing and identifying NJAIRE business.
Compliance - Data reported meets specifications in the Plan of Operations.
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: Planning (con’t) c. Engagement Letter – Includes
request for data
1. All private passenger BI claims
2. All reportable claims
3. All other claims
d. Company contact information received
Audit Process
Stage 1: Planning (con’t)
e. Receipt of company data
f. Verification of data to call forms
g. Complete sample selections
h. Confirmation Letter
Audit Process
Stage 2: Fieldwork
a. Opening meeting
b. Obtain internal procedures for reviewing data submissions
c. File review• Determination Forms
Audit Process
Stage 2: Fieldwork
c. File review (con’t)• Workpapers
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
2003 - 2005 Audits (32 Companies Reviewed)
Reportable Claims
Total files reviewed – 1,749
Number of Claimants Over Reported – 323 or 18.5%
Dollar Amount Over Reported - $4,627,210
2003 - 2005 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 Insured Vehicle was Commercial
Reporting Errors
Incorrect Territory Codes Settlement Reported in an Incorrect Quarter or
Year Over Reporting of the Dollar Amount
2003 – 2005 Audits(32 Companies Reviewed)
All Bodily Injury Claims:
Total files reviewed – 2,562
Number of Claimants Under Reported – 107 or 4%
Dollar Amount Under Reported - $958,012
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 File not Settled in Reporting Year Settlement reported in Incorrect Quarter Incorrect Insured Threshold Commercial Bodily Injury Claims Paid
TIPS
Plant your corn early “Easy Sleazy” in the third race at Monmouth Park Don’t say “Hi Jack” if you see me at the airport
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 29 –30 of the procedure manual)
Use the NJAIRE recommended 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
Mark LoVuolo, AIS, API
Jack O’Keefe