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 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 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 It’s important to note that Board members from insurance companies not represent their company They represent all member companies of their trade association New Jersey carriers belong to either trade groups; the Property Casualty Insurers Association (PCI) or the American Insurance Association (AIA) or they may not belong to a trade group, NJAIRE Board of Directors • • • • • • • • • • • • Mary Bernadette Corrigan (Hanover) Frank Coscia, Esq (Schenck, Price, Smith & King, LLP) Kevin Curry (Travelers) Thomas DeFalco, Treasurer (New Jersey Manufacturers) Stephen Doyle (Farmers/21st Century) Thomas Gorecki, (Public Member) Richard Hubschman, Esq (Hubschman and Roman) Mark Keenan (Allstate) Thomas Myers, Chairperson (High Point) Sam Sackey, (NJ Department of Banking & Insurance) John McBride, (AAA/Mid-Atlantic) David Ziemer, Vice-Chairperson (State Farm) 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 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 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 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 not meet NJAIRE standards This issue became sufficiently evident to the New Jersey 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 ISO serves as the Central processor for NJAIRE ISO handles the complexities of :  Reported data from each carrier  Assessments collected from applicable carriers  Reimbursements paid to appropriate carriers  Annual cash settlement to all carriers  Website creation and maintenance  NJAIRE expense payments and a myriad of other tasks that keeps ISO team busy 100% of the time an 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 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 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 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 ... 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 ... 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... lack of understanding about NJAIRE requirements, possibly as a result of staff turnover, or multi-state responsibilities ISO serves as the Central processor for NJAIRE ISO handles the complexities