NJAIRE Seminar - Webinar for web site

NJAIRE is governed by a 12 member Board of Directors and the New Jersey Department of Banking and Insurance.. The current Board of Directors consists of two attorneys from prestigious

New Jersey Automobile Insurance

Risk Exchange

The New Jersey Automobile Insurance Risk

Exchange (NJAIRE) was created by a 1984

statute Its creation resulted from New Jersey’s dual liability threshold, which caused potential premium inequity to a carrier This occurs

when a limited threshold insured becomes

involved in a loss with an unlimited threshold insured It results in the limited threshold

carrier essentially paying an unlimited

threshold claim, usually with a higher payout, when they only received premium for less

expensive coverage.

Therefore, the purpose of NJAIRE is to restore premium equity to New Jersey carriers when their limited lawsuit

threshold policyholders incur losses with claimants who carry unlimited lawsuit

threshold liability coverage.

NJAIRE is governed by a 12 member Board of Directors and the New Jersey Department of

Banking and Insurance All members must be residents of New Jersey Nine members are

nominated by the Governor, including eight

members who are affiliated with New Jersey

insurers They must submit to legislative

disclosure, comply with senatorial courtesy and

be confirmed by the New Jersey Senate Three additional members are directly appointed by the Governor, the Senate President, and the

Assembly Speaker.

The NJAIRE Board represents many phases of public and insurer perspectives Board members come from actuarial, agency, claim, legal, operations,

regulatory, statistical and underwriting backgrounds, allowing for a diverse group of individuals The

current Board of Directors consists of two attorneys from prestigious New Jersey law firms, a licensed

New Jersey Insurance broker, and members from

AAA-Mid-Atlantic, Allstate, Highpoint, Hanover,

Liberty Mutual, New Jersey Manufacturers, State

Farm and Twenty First Century The New Jersey

Department of Banking and Insurance is an ex-officio member of the Board

It’s important to note that Board members from insurance companies do not represent their

company They represent all member

companies of their trade association New

Jersey carriers belong to either 2 trade groups; the Property Casualty Insurers Association

(PCI) or the American Insurance Association (AIA) or they may not belong to a trade group, and are considered affiliated

Non-affiliated members represent all New Jersey

non-affiliated insurers.

NJAIRE Board of Directors

NJAIRE also has several standing committees,

chaired by Board members who bring personal

and business related expertise to their committee

The Actuarial Committee is chaired by Tom

DeFalco, who is an Actuary and Officer with New Jersey Manufacturers Insurance Company This committee oversees assessment percentages for

each accident year, as well as establishing annual interest, closeout years and addressing other

actuarial issues.

The Audit committee is chaired by Larry Weiss from Palisades Safety and Insurance Management

Corporation This committee works closely with our external auditors to assure that audit guidelines are proper and current, and audit compliance is

achieved by carriers.

The Finance and Investment Committee is chaired by attorney Frank Coscia, assuring that NJAIRE funds receive safe and optimum yield through several

financial institutions.

The Insurance and Contracts Committee is chaired

by Mark Keenan from Allstate Insurance Company This committee oversees vendor and policy contracts.

M Paige Berry is NJAIRE General Counsel Ms Berry is an exceptional attorney associated with the law firm of Saul Ewing, located in Princeton.

The NJAIRE office is located in Franklin Boro

and is operated by General Manager Donald

Foth Don is a former long term Board member and officer, now retired from State Farm

Companies.

New Jersey statutes mandate NJAIRE

compliance by every auto insurer licensed to conduct business in New Jersey, and it’s been our experience that some carriers do not

meet NJAIRE standards This issue became sufficiently evident to the New Jersey

Department of Banking and Insurance, and resulted in the issuance of a compliance

reminder from Commissioner Bakke on

July 26, 2004.

The NJAIRE Plan of Operation and Procedure Manual contain specific reporting requirements that are not present in any other state This can result in a lack of understanding about NJAIRE requirements, possibly as a result of staff

turnover, or multi-state responsibilities.

The current NJAIRE Plan of Operations and the separate Procedure Manual are written in an

understandable format, and are available in both paper and on the NJAIRE website.

ISO serves as the Central processor for NJAIRE

ISO handles the complexities of :

ISO team busy 100% of the time.

NJAIRE maintains contracts with two external auditors Annually, the financial records of NJAIRE are reviewed

by Withum, Smith and Brown, a CPA firm that conducts financial audits

Through its statutory authority NJAIRE requires

compliance audits of every applicably licensed New

Jersey insurance company Compliance audits are

conducted by AIPSO, the parent organization of most

residual market mechanisms in the United States

AIPSO’s Residual Markets Audit Services (RMAS) has an exceptional history of conducting compliance audits

within the industry, using many industry retirees who are very competent in their audit specialty

NJAIRE audits encompass much more than the residual market, and AIPSO has tailored NJAIRE audits to fit

NJAIRE requisites Each year, the NJAIRE Board of

Directors selects 10 carriers to receive NJAIRE audits to ascertain compliance Each audit is conducted in a

formal atmosphere It requires advance data be

provided to enable the auditors to select specific claim records for review Audits are conducted at the carrier’s office, with five auditors present, usually for one week Subsequent to the audit, there is communication between AIPSO and the carrier before a final report is submitted

to the Board

The Board reviews every audit, in detail, taking action

as appropriate, including penalty assessment when

carriers fail to achieve NJAIRE compliance

Feedback from AIPSO and ISO has prompted

educational seminars that focus toward the actuarial, claim, statistical, or other areas in your companies that are responsible for maintaining and reporting NJAIRE information Two seminars were conducted in 2005

and single seminars were presented in 2006, 2007,

2008, 2009 & 2010 Beginning in 2011, seminars will

be replaced with Webinars Additional information

will be available on this site during early 2011, or by contacting Don Foth at gmanager@njaire.org

NJAIRE recommends that carriers maintain an

understanding of NJAIRE requirements, especially in areas where staff turnover occurs Self-audits are

also recommended to assure ongoing compliance.

Contact information is available on the NJAIRE

website ~ www.njaire.org ~ for anyone who needs

additional information The Board of Directors

meets four times annually, and carriers are welcome

to attend Board meetings as well as the annual

meeting which is held in conjunction with the

November Board of Directors meeting