BULLETIN NO. 585March 3, 1997

POLICY YEAR 1995 CESSIONINO PREMIUM WRITE-OFF

As described in the Manual of Administrative Procedures, the annual Cession/No Premium Penalties (Private Passenger, Commercial and Taxi*) will be based upon the average statewide premium for each cession. Accordingly, for policy effective year 1995, the write-off penalty amounts have been established as $1,200 for private passenger policies (risk indicator = 0), $3,600 for commercial policies (risk indicator = I or 2) and $5,800 for taxicab policies (risk indicator = 1). The values of the cession risk indicators are as follows:

“0” for private passenger

“1” for taxicab commercial risk

“2” for other than taxicab commercial risk

In order to maintain a consistent definition of private passenger and commercial business throughout the industry, each company should use the definitions C.A.R. uses for coding this data. These definitions are:

Private Passenqer Policies

A policy should be coded as a Private Passenger policy if all of the class codes are contained in the Private Passenger Statistical Plan. Note that policies containing both Private Passenger risks and Non-Taxicab All Other-Than-Private Passenger risks should be coded as Private Passenger policies.

Taxicab Policies

If one or more of the risks on the policy have class codes which are classified as Taxicabs, as indicated in the Commercial Statistical Plan, the policy should be coded as a Taxicab Policy.

Commercial (Non-Taxicab) Policies

A policy should be coded as an All Other-Than-Private Passenger (Non-Taxicab) policy if all the class codes are contained in the Commercial Statistical Plan (including Private Passenger Types).

*Policy year 1995 represents the first year Taxi Companies are eligible for this write-off program.

The risk indicator for policies with more than one vehicle, which are ceded to C.A.R. should pertain to the lead vehicle. (For example, a policy with a fleet of trucks and one automobile used for personal use would have a risk indicator = 2).

The 1995 cession/no premium write-off will take place after the processing of the December 1997 monthly accounting/statistical shipment, according to the schedule outlined below.

DATEDESCRIPTION OF EVENT

ApproximatelyThe December 1997 and January 1998 CA2500 warning and penalty

December 1, 1997listings will contain 1995 cession/no premium errors. These listings

& January 1, 1998must be returned to C.A.R. by February 1, 1998 in order for any corrections noted on the listings to be applied prior to the 1995 cession/no premium write-off.

ApproximatelyThe February 1998 CA2500 warning and penalty listings will also

February 1, 1998include 1995 cession/no premium errors. However, corrections to the 1995 records should not be returned to C.A.R., as 1995 policy effective year cessions and cession corrections received after February 1, 1998 will no longer be processed.

ApproximatelyCeded premium records for policy effective year 1991 will not be

February 15, 1998accepted after the December 1997 accounting/statistical shipment, which is due at C.A.R. on February 15, 1998. Ceded premium records for policy effective year 1995 reported during accounting year 1998 will be considered "fatal 11 errors and deleted from the submission.

ApproximatelyThe March 1998 CA2500 warning and penalty listings will include

March 1, 19981995 cession/no premium errors. However, corrections to the 1995 listings will not be processed, and should not be returned to C.A.R.

ApproximatelyThe April 1998 CA2500 warning and penalty listings will include 1995

April 1, 1998cession/no premium errors. Corrections to the 1995 listings will not be processed and should not be returned.

ApproximatelyThe May 1998 CA2500 warning and penalty listings will be the

May 1, 1998last to include 1995 cession/no premium errors. These listings will be forwarded to the Servicing Carrier's accounting listing liaison for informational purposes, with an accompanying cover letter to inform the company that:

1)a penalty of $1,200 per cession for private passenger policies (risk indicator = 0), $3,600 per cession for

commercial policies (risk indicator = 2) and $5,800 per cession for taxicab policies (risk indicator = 1) will be assessed for each 1995 effective year cession on the listings.

2)the penalty assessments will be a direct charge to the Servicing Carrier and will appear on line 3 of Section E of the Settlement of Balances report for the quarter ending March 31, 1998. Participation in these penalties will be based upon each Servicing Carrier's percentage of the total industry-wide Annual Statement Page 15 direct written premium for calendar year 1995.

If a Servicing Carrier discovers that a cession, cession correction, premium, or premium correction record needs to be submitted to cover a loss on a 1995 policy with a critical error condition after the cession and premium reporting for this policy effective year have been discontinued, the company may appeal to C.A.R. for reimbursement of the loss dollars. C.A.R. Staff will approve the appeal if the late detection of the incorrectly reported cession and/or premium record was outside the control of the company. If the appeal is approved, a bulk adjustment will be processed into the Servicing Carrier's quarterly participation reports. Companies must not report the detail loss record in a monthly accounting/statistical sl,17P-Ment, as the loss record would be flagged with a critical error and eventually be written-off.

Direct any questions relative to the 1995 cession/no premium write-off to your company's Data Analyst.

Tina Thibodeau

Data Analyst