To: All NJAIRE Member Companies

NJAIRE 2003 ANNUAL LETTER TO MEMBER COMPANIES

The purpose of this 2003 NJAIRE Annual Letter is to inform you of new developments in the New Jersey Automobile Insurance Risk Exchange (NJAIRE). Such developments may include any changes in the reporting requirements, territory rates, assessment percentages, financial transactions, or any other information pertinent to company data submissions or financial transactions. Also included are schedules of financial and statistical requirements (Exhibits 1 & 2) outlining your company's responsibilities for the upcoming year.

NJAIRE requirements are diverse and probably involve several persons in your company. Each one of these persons will need to know certain information in this letter to carry out his or her responsibilities. Please make an effort to ensure that the information contained in this letter reaches all of the necessary individuals. This letter is available online on the NJAIRE website at www.njaire.org.

As of October 1, 2002, the new mailing address for NJAIRE will be:

New Jersey Automobile Insurance Risk Exchange

Post Office Box 66065

Lawrenceville, New Jersey 08648

The mailing address for payments to NJAIRE will remain:

New Jersey Automobile Insurance Risk Exchange

P.O. Box 11374

Newark, New Jersey 07101-4374

Territory Rates

Beginning with 2003 data, the NJAIRE base rates will be made current with the Personal Automobile Insurance Plan (PAIP) territory rates and will be used as the premium base for NJAIRE assessments (see Exhibit 3).

NJAIRE is now equipped to receive payments by wire transfer. Should your company wish to make its payments via wire transfer, contact ISO for instruction.

The final reporting of claims for accident year 1992 will be the fourth quarter of 2002. The final evaluation of this year will take place in the Eighteenth Annual Cash Settlement, evaluated as of 3/2003.

In 2003, NJAIRE reporting information will continue to be available on the internet at www.njaire.org. The website includes NJAIRE related forms, the NJAIRE Plan of Operations, contact information, frequently asked questions, guidelines for reporting, and an updated news section.

I have attached a full set of the most current Reportable Claim Determination Forms to be used as follows (These forms have not changed since the last Annual Letter.):

Reportable Claim Determination Form (For accident dates prior to 12/31/94) Attachment 1.

Reportable Claim Determination Form (For accident dates 1/1/95 – 12/31/00, for policies in force prior to 7/1/99); Attachment 2.

The Reportable Claim Determination Forms can also be found in Adobe document format (.pdf) on the NJAIRE website.

For accident year 2003, the financial transactions based on the Form #4 experience will be carried out using a provisional assessment percentage that will be set by the NJAIRE Actuarial Committee and approved by the NJAIRE Board of Directors.

As in the past, you will receive your company's Compiled Figures Reports to help you calculate your monthly payment charges. In order to calculate the monthly payments, divide the calculated assessment charges from Form #4 by three and round to the nearest dollar (see Exhibit 1).

Separate form numbers (Form #2, Form #3 and Form #4) distinguish one call for statistics from another. For your convenience, this package includes copies of all call forms (Attachments 4, 5 & 6) for reference purposes, as well as extra copies that you can use for your submissions. Call forms are also available on the NJAIRE website in Excel format (.xls). Note that the first column for Form #2, Form #3 and Form #4 reads "earned exposures" -- earned exposures must be reported for accident years 1993 and subsequent. Should you need to resubmit Form #2 exposures for prior accident years, you should do so using written exposures if your company had NJAIRE convert its exposures to an earned basis for those years; however, if your company elected to do its own conversion, then your resubmissions must be on an earned basis. If you have any questions as to whether your resubmissions should include earned or written exposures, please get in touch with one of the NJAIRE contacts at the NJAIRE Central Processor -- Insurance Services Office, Inc. (ISO). The NJAIRE contacts are listed at the end of this letter.

If you plan to use facsimiles of the call forms rather than the forms we provide, it is crucial that we be able to distinguish which form is being submitted. Therefore, we require that your facsimiles be clearly labeled as either Form #2, Form #3 or Form #4. Completed call forms should be mailed or emailed to the NJAIRE Central Processor at this address:

James Gilmartin (17-8)

Insurance Services Office, Inc.

545 Washington Boulevard

Jersey City, NJ 07310

In 2003, audits will continue to be performed. Any company that has been audited and had reporting errors detected will be notified of the corrective procedure required in a separate letter.

A Statement of Compliance (Negative Assurance Report) must be completed and mailed to ISO by March 31, 2003 (see Exhibit 4). It must be filed by all companies licensed to write automobile insurance in New Jersey, whether or not quarterly statistics have been submitted to NJAIRE. It should be prepared on company letterhead. Please mail the Statement of Compliance to an NJAIRE contact at ISO.

You are required to send in a Statement of Compliance annually. Please refer to the Plan of Operations for more information.

It is important to keep ISO, as the NJAIRE Central Processor, informed of any changes in the contact person or address. As a result, we ask that you complete the attached Company Response Form (Exhibit 5) if your company's NJAIRE contact person or address changes. Please include the contact person’s e-mail address. The person identified on this form will receive all NJAIRE mailings, including both statistical information and financial transaction information.

The NJAIRE Response form (Exhibit 6) is for companies which are licensed in New Jersey but expect to have no data to report for Calendar Year 2003. If you continue to have no data to report, a copy of the form must be filed annually.

The form has two response boxes. Box 1 should be checked if your company expects to report no data for the 2003 account period. Box 2 should be used if during the year you find that you have data to report. If you already report data, you do not have to fill out this form.

If you have any questions or concerns about the above please contact:

James Gilmartin

Insurance Services Office, Inc.

545 Washington Boulevard (17-8)

Jersey City, NJ 07310

(201) 469-2327

OR

Joseph Sigona

Insurance Services Office, Inc.

545 Washington Boulevard (17-8)

Jersey City, NJ 07310

(201) 469-2317

for further contact information, visit the NJAIRE website at:

Sincerely,

William J. Clarke

General Manager

Gmanager@njaire.org