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Reconciliation (make sure report is correct based on request - reasonability check on the report - NOT financial reconciliation)

  • PA - from AAIS Andy can share
  • KS - business perspective then fill in gaps
  • SC - only think of the financial reconciliation? Does Andy (AAIS) do another? Reconciling statistical to financial by annual statement line and state basis
  • Andy - company, line state, matching what get from NAIC, what AAIS does on their side
  • KS - mix? req to do all of stat reporting through AAIS thru particularl line/state combo?
  • PA - 2 part:
    • 1 lot of ambiguity, first look at stuff and give reasons for why #s vary, adjustment things
    • 2. doing recon, doing company/line, expect with data from them they get line/state combo, do not partially report
  • SC - correct, stat agent gen reports ALL of data except where it is statutorially required - MASS says all commercial / auto must for through CAR, AAIS would not have biz from TRV for MASS, when reconciliing would not have lines for state of MASS - no data from TX goes to AAIS, Commercial data to ISO, Personal goes to TICO, surety to SFAA - from that perspective, nothing missing, b/c going to another stat agent, as PA alluded to, always going to be differences - why diff if are diff - ex: homeowners is very close w/o lot of differences
  • KS - what causes Diffs?
  • SC - so many: journal entries (made to books, journal entry made to books and records), you have big cust that renews at end of year, all the data hasn't gone thru rate-quote-issue-system, SC has nothing, but b/c you know its 12/31, rev has to be booked to that cal year, NAIC financials have $1MM more than stat records - smaller insurers, subsidiary reports to other stat agent, small # of biz, that stat agent doesn't ask TRV to provide anything, Page 14 against what you receive statistically: very off, small %, 1% or 10k (under that) - always historially done reconciliation on their own - 2020, andy could pull page 14 and statistical and SC could provide file, w/ diff by line and by state - state of KY, premium tax booked to premium (statistically they dont report premium tax), so page 14 in KY would have prem included - in NY, Free trade zone, not stat reported BUT IS on the finanicals - international business, coverage of someone abroad but by US company - # of known differences, can identify those and provide this so that AAIS can be comfortable in the reconciliations - waiting, look at it, have questions, wouldn't be phys possible (would gen too many)
  • KS - proactively provide reasons why numbers wont match
  • AM - not all members do that today
  • SC not all need it - smaller and diffs aren't there
  • AM - other challenges - TRV stat agent for everying, use AAIS for some and ISO for others, harder to reconcile to NAIC, trying to balance against property annual statements - do stat reports by AAIS stat plan line of business but all reconciliation is byt NAIC stat plan line of business
  • KS - why do we have our own?
  • AM - do get annual state/line business historically w/ exception of auto, believe are programming to do reconciliation - typically homeowners doesn't matter, sometimes little chunk booked under earthquake, lets look at homeowners, need to look at little things as well
  • SC - endorsement? homeowners or dwelling, go to diff line that the base - can get messy (esp fire allied?)
  • AM - historically struggled with reconciliation, feed from NAIC is annual, when TRV sends data and AAIS gets feed, can't reconcile  - trying to get faster, sooner, get quarterly data but 1/4 is broken out by company and line or company and state but not company-line-state - struggle in the past: 

<SEAN CHECK RECORDING>

  • DH - accrued accounting vs cash accounting
  • JB - policy 2 years ago, no claims or adjustments, how know years worth of premium due?
  • DH - recorded premium a year ago
  • AM - field of month covered
  • SC - reconciling: premium stat records to prem financial records / not reconciling in stat reporting  - only recording paying claim if travelers recognized loss
  • JB - policy in effect w/ natural premium, couldn't reco collecting if payments intermittent, etrc - policies with committments is there
  • SC - if policy cancels, change comes through, offset records, etc.
  • JB - if not actually in transaction record
  • KS - when do we do, against what data do we do recon
  • PA - when first then how?
  • PA - when doing right now, is that we get all fin info from NAIC, final form avail 1 year after (
  • AM - typtically year after, may/june 2022 we get final of 
  • SC - when publish? 2021 -
  • AM - april and may get feeds, may/june is final for prev year, to reconcile 2021 data can't recon until May/June 2022 today - first 1/4 2021, due no later than end of may 2021 but can't reconcile until at least a year later
  • KS - if recon is a part of our process, how speed it up? shorter than a year?
  • DH - wait till end of calendar year for data to be avail - publishing now 2022 data, but books dont close until Mar 2023, when you can do the reconciliation
  • JB - pub quarterly to NAIC?
  • SC pubbed quarterly, but can reconcile from own systems but what gets pubbed by NAIC is by company/line and by company/state but not company/line/state (per 1/4)
  • JB - ask NAIC if they can provide
  • giggles
  • SC not pubbed that way
  • AM - have asked - hard to say realistically which was more valuable
  • KS - is after a year pubbed that way?
  • SC - is pubbed that way so they have to get it published, get data in files to stat agents takes another month or two
  • KS -when can we do Recon
  • SC - cannot start until May/June of the following year
  • AM - Q1 its been 15 months, 
  • DH - what Eric was saying, less concerned about recon, just wants speed of data quicker
  • JB - Eric cares when reconciled, wants more info on ongoing basis re: changes in policies/coverage
  • SC - interesing when AM said "having to accept the data" - int b/c kind of seperate, stat records are in format, meeting edits and checks, from that perspective these are valid records, but cannot validate its reconciled for almost a year - imp to make distinction ,if you had a customer for a couple years, get stat records, going back to last years recon, if you have a small issue and something missing due to volume but 1/4 homeowners was big change - something not right?
  • AM - refer to rules engine, only thing rules engine does "does ea ind record represent itself" - internally making sure before a year, ability to say "member gave us $1mm in premium by 1/2 this quarter - should question it if it drtastically drops or increases
  • SC - high level checks can be done - industry isn't AAIS - it is INDUSTRY
  • KS - sev months ago, AAIS is by law supposed to do Reconciliation (in the handbook) - WHY?
  • PA - annual reports supposed to be reconcileds
  • KS - what requires Reconciliation to occur? stat reports, reg reports? data calls?
  • JB - once a year check on prev year sanity, their sys of record, draw conclusions,
  • SC - believes idea is you have reconciled before  - andy gets 2021 data 3 months ago, reconciliation should be done before annual reports go to states in march - state of CO, could come by and want to know data, will reconcile to own state/lines - data call, doing recon on the data call and sometimes when they get data - not same as process to reconcile all Stat data, recon back to financials only real control any state of bureau has
  • KS - expect recon for stat reporting due to timeing, if you try to recon against data call, 2 years ago say "yes been reconciled" but 2 months...
  • DH - dont do any recon on data calls, do internally but REGs aren't coming back
  • SC - state of CO in Feb asks for 7 pieces of data, they get it, make sure internally matches, big discrepancy theyd come back
  • DH - in some calls would have to provide Page 14 and 15
  • KS - talking about reqs for openIDL - allow to provide page 14 to respond to data call for a line of business? 
  • DH - no its anonymized, wont' know TRV, Hartford, Hanover
  • PA - depending on whats going on, situation where state earned Prem, could potentially und that someone was wrongf
  • KS - state want AAIS on their node, each one of the results is first reconciled and then returned, if not some error or exception handling
  • JB -only certain cases
  • KS - support all cases, deal with those too
  • JB -report to REG outside of openIDL, or require addl data
  • PA - main focus for this group, RR the annual reconciled, goal using this sys that current infras
  • KS - have to have reconciliation for part ofd the process for stat reporting, can discuss for data calls - will need funct for some kind of recon, just to do stat reporting
  • JB - stat report yes, not for data call
  • AM - NAIC, CSV files, 
  • KS - NAIC provides data, AAIS subscribes to it - sounds like diff process for data calls vs stat reporting
  • PA - both coming from same HDS ideally, both reconciling and validation
  • JB - dont use "reconcile", cant happen on every data call
  • PA - every year reconcile, every year find bugs
  • JB - within tolerance you dont, not adhoc data call
  • PA - find out something failed ETL and only have x of earned prem for auto
  • KS - dont have financial records yet
  • JB - heuristic, "this doesn't look right" but a sanity check
  • KS - only biz people like susan know its a bad #
  • JB - threshold, something changes by 50% vs 10% questionable
  • SC - need to put in reasonability checks, go back and ask
  • KS - premium capture when change premium recording by certain amount requires explanations (hit or miss)
  • PA - once a year reconciling auto records, same data source making calls from
  • KS - exception: when the data calls are happening before
  • PA - every year shoring up most recent year
  • KS - not going after data call reconciliation right now
  • PA - data loaded best of ability trailed by 1/4, a year later "we feel reasonable we got all the data in there"
  • KS - some doesn't work, do have to tell thats good (REG can do it, etc.) - tabling that
  • DH when providing pg 14 or 15, doing calls now for EOY 2021 data, reconciled to financials, 
  • KS - would be covered?
  • DH - stat reporting is 2 years lagging
  • DH - for data calls today, some are for EOY 2021 data, could reconcile right now as financials published for 2021 - OTHER calls are "what do you have today", we can't provide proof of reconciliation b/c dont have reconciled financials
  • <SEAN CHECKS RECORDING>
  • PA - missing premium, less data than where supposed to be
  • KS - fatfingered extra zero, data misalignment, has to be dealt with, exception path for data to let TRV know their data doesn't match NAIC data and then deal with it
  • DH - SC? DOes that happen really? DOing it internally  but dont know what reported back to AAIS
  • SC - given to AAIS like ISO, both - built in excel, does have page 14 and transmittal, using either and not the same with AAIS should match, b/c of volume instead of providing x lines of business x 50 states you have mult explanations w/in any one of those - give excel with col for global, col for journal entries, col for NY, col for KY - for any state-line you can see instead of words
  • JB - reconciliation matrix
  • KS - for TRV, doing it in such a way not too slow a process
  • SC - AAIS doing it at the same time, here's pg 14, stats, diffs
  • AM - SC is saving AAIS time from AAIS having to reach out "why are there these diffs?" - her excel sheet is proactive
  • SC - we have subsidiary reporitng to diff stat agent, dong give anything, do review, they come back "why are these 7 different"
  • KS - raises exception, above threshold, provide what they provide AAIS: Line x state accounting of difference
  • SC - making AM comfortable w/ differences, know why, here's how - yes they dont match perfectly but you are comfortable w/ reasons they dont match
  • KS - put rationale somewhere for audit purposes?
  • AM yes - need to see where they are - some companies send 2 files: premium and losses - ask "where are they" get them, recheck -some scenarios rechecking  - proactive or "we forgot to send you this"
  • KS - at point in time where NAIC data is avail, grab data, reconcile, transactions should match record to record
  • AM - not record count - earned prem, written prem, paid losses, etc. 
  • KS - by line by state throw differences against threshold
  • AM -  more than 1% of $10k it is questioned, if someone not reconciling you can't inc data to the states at recording time
  • KS - what visibility does NAIC have to which companies have for stat reporting? 
  • PA - trusts AAIS - AAIS turns in list of reporters and non reporters, on AAIS to 
  • AM - misinterpreted "reporters and non preporters"
    • reporters: companies included in reports sent
    • non reporters - added to DB, if no match put on the list, non-report list lists companies not included in the report - companies they did not get data from OR didn't reconcile, low quality data, etc. BY LINE AND STATE
    • ind company could be under both reporters and non reporters
  • KS - by NAIC line - yes

9/13/2022

  • PA - yesterday going over financial reconicilation, when and why important, typicalluy what you expect to see due to financials, carrier has spreadsheet to report adjustments acknowledge "whys", talked about the timeline on that, AAIS gets public financial data from NAIC shows up 5 months from close of YEAR
  • SC - idea of annual reconciliation cant be started until end year financials, dont get till may timeframe, talked ongoing reporting and making reporting more timely, talked about checks and balances (prior year/ 1/4) to feel comfortable - aais or other stat agent verifying validity of records, barring financial info the record counts and $ amounts were reasonable 
  • PA - for SC, not in terms of data AAIS gets from NAIC, when carrier does internal review how long for them to get idea of what financials should be?
  • SC - 30-45 days before can get a file (safe to say)
  • PA - level of precision? rough and then get updated six months later (ANSWER: thats it) - 45 days after business, Carrier gets financial to compare it to, already have business records - once they have financial and biz records do they have what they need to do reconciliation?
  • SC - by end of april, sent 1st 1/4 stat records to AAIS
  • PA - by time sent already dont internal check, buit NOT compared to financials
  • SC - geting stat records from systems, focused on validity of ind records, getting to AAIS< fixing errors over tolerance - perfect world, 60 days of 1/4 ending, differences need to be reconciled but most part could see overall w/in or very close (not worried they have missed something) - diff between MISSING and TWEAKING
  • KS - Hartford process? 
  • JM - Mike Nurse and Kevin - know it cold
  • KS - similar as Regulators, hoping to get diff perspectives on this (Carriers, Regs, AAIS), good to get that if possible on 
  • SC - goal to build reconciliation into openIDL?
  • KS - goal is to see if we HAVE TO, sounds like have to for reporting 
  • DH - AAIS does, openIDL doesn't seem to
  • SC - AAIS does March for year (if year of reporting is year 0 AAIS by march of year 2), but also record and dollar amts per quarter or per year - basic checks and balances numbers are reasonable
  • PA - could see a dashboard lets you see that, take human interaction , lots of reasons stuff can change
  • KS - if stat agent is going to build reconciliation via openIDL, needs to be some way to get data from openIDL to do reconciliation, dont hold data in openIDL like AAIS does now, need method to reach in+ get it+ process 
  • PA - will want to get something, make it easier to put it into openIDL
  • KS - agrees
  • PA - otherwise give up more granular data MORE regularly, if we can have mutl tables (stat records, financial summary data_ never leaves - have internal diff to compare if HDS is in synch with financials, and then an EP to return T/F if in bounds or not) - will have NAIC #s by time to make the report but if situation where as soon as financials are available and can evaluate if they are correct
  • KS - pipeline - clean syntax, reconcile, declare ready for extract - def have to have reconcilation one way or another as part of openIDL process
  • PA - auto coverage report, limited to auto stat plan, do stuff like General Liability, any of those use Multiple stat plans? weird caveats to reconcilation? mult stat plans to single report?
  • SC - homeowner policy with personal liability endorsement
  • RS - opposite
  • SC - personal liability endorwsement on homeowner polciy reported under homeowner stat plan but prem $ not booked to 040 (where homeowners gets booked) - homeowner module might have $1100 but 040 has $1000 and 171 would have $100 (040 and 171 are ASLs)
  • KS - that record would have annual statement line, dont capture right now? we do capture homeowners, what would ASL be on that record
  • SC - homeowners go to 040 but liability endorsement AAIS wants LE included under HOMEOWNERS Stat plan but when comparing to 040 only $1000 in 040 because rest to 171
  • KS - clarify to record level, specific record endorsing, have ASL for liability
  • SC - we report ASL for homeowner
  • AM - stat record as it is booked
  • KS - dont need to account for it, use direct reconiliation instead of our codes - do we know true across board?
  • AM - not sure did it that way in past, only other line in issue is auto until recently when added statement to auto stat plan, AUTO easy to und but anything going to "all other" easy to ID, aligned with coverage codes
  • AM - not required field yet, not everyone provides yet, TRV giving it
  • PA -  reserve sections?
  • AM - took place of reserve field
  • KS - req for openIDL? 
  • PA - def want (discussed mult times)
  • PA - right now carrier using reserve section, rollout plan for all carriers? (Mike Puchner and Padma)
  • KS - haven't discussed re: reconciliation?
  • PA - looking at SQL queries, ask better question about
  • KS - felt almost done yesterday, get perspective from others (Hartford and Hanover and REGs) - hijack Friday meeting for that purpose
  • PA - add to agenda items - may have to come back with another question, all making sense now
  • KS - talked about 2 types:
    1. reconcile whole year  - NAIC #s against prior data could be done as part of process or ahead of process (does that count for true reconciliation?)
    2. REASONABILITY CHECK 
  • SC - asking carriers to do it on 1/4 basis?
  • AM - not in place of AAIS doing it - still doing it, still matches, THEY are explaining why differences (fat finger, missing file), still want to know if they are off more than what they are telling us they should be off
  • KS - not in lieu of
  • SC - incumbent on AAIS to do reconcilkiation, carriers can support

Financial Reconciliation (Oracle? Source of truth to tie against those #s?)

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