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Welcome!
Residual Market Audit Services
NJ AIRE
Compliance Audit Program
Jack O’Keefe
AIPSOAutomobile
Insurance Plan Service
Organization
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: Planning (con’t) c. 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 (con’t)
e. Receipt of company detail
f. Verification of detail 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
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
Crunching the Numbers
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 - $10,219,824
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
• 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 (Accident Year 2007 and prior)
• Settlement Reported in an Incorrect Quarter or Year
• Over Reporting of the Dollar Amount
2003 – 2012 Audits104 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
• 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)• File not Settled in Reporting Year• Settlement reported in Incorrect Quarter
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
Jack O’Keefe