New Jersey Automobile Insurance Risk Exchange

P.O. Box 66065, Lawrenceville, New Jersey 08648

(609) 890-3406

January 6, 2005

To: All NJAIRE Member Companies

NJAIRE 2005 ANNUAL LETTER TO MEMBER COMPANIES

The purpose of this 2005 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, 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 in the News Section at www.njaire.org.

New NJAIRE Assessment Percentage

Beginning with first quarter 2005 assessments, which are based on third quarter data reporting, the assessment percentage used to determine your company’s monthly payments will be lowered to 17%.

Territory Rates

The NJAIRE base rates will continue to be the Personal Automobile Insurance Plan (PAIP) territory rates as of April 1, 2002, and will be used as the premium base for NJAIRE assessments (see Exhibit 3).

Wire Transactions

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

Closing out of Accident Year 1995 (Form #2)

The final reporting of claims for accident year 1995 will be the fourth quarter of 2004. The final evaluation of these years will take place in the Twentieth Annual Cash Settlement, evaluated as of 3/2005. Resubmissions for accident year 1995 will be allowed until 8/15/2005. Please note: any submissions for accident year 1995 or prior for account quarters subsequent to the fourth quarter of 2004, and any resubmissions for accident year 1995 received after 8/15/2005 will not be processed.

NJAIRE Website

In 2005, 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, Procedures Manual, contact information, frequently asked questions, information regarding Board of Directors meetings and an updated news section.

Claim Determination Forms

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 1/1/95 – 12/31/00, for policies in force prior to 7/1/99); Attachment 1.

Reportable Claim Determination Form (For accident dates 7/1/99 and subsequent, for policies in force on or

after 7/1/99); Attachment 2.

The Reportable Claim Determination Form for accident dates prior to 1/1/95 is no longer in use.

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

Financial Transactions

For accident year 2005, the financial transactions based on the Form #4 experience will be carried out using a provisional assessment percentage of 17%, as 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). Each member company is required by statute to submit the appropriate monthly payments to NJAIRE in a timely manner. Failure to do so will result in a 10% per annum late penalty.

Call Forms

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) 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 all accident years.

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 Form #2, Form #3 or Form #4. Completed call forms should be mailed or emailed to the NJAIRE Central Processor at this address:

Kimberly Savino (17-8)

Insurance Services Office, Inc.

545 Washington Boulevard

Jersey City, NJ 07310

ksavino@iso.com

Audits

In 2005, 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.

Statement of Compliance

A Statement of Compliance must be completed by your company’s Chief Financial Officer (CFO), or an officer designated by the CFO, and mailed to ISO by March 31, 2005 (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 Procedures Manual for more information.

Company -- Person to Contact

It is important to provide ISO, as the NJAIRE Central Processor, the contact information for a person with an understanding of the workings of, and the company’s responsibilities to NJAIRE. As a result, we ask that you complete the attached Company Response Form (Exhibit 5) with the current contact information for the proper knowledgeable person with regards to NJAIRE. If there is more than one person involved with the various aspects of NJAIRE, please provide information for all relevant parties. Please include the e-mail addresses of all contacts. The people identified on this form will receive all relevant NJAIRE mailings, including both statistical information and financial transaction information.

Null Reporters

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 2005. 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 2005 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.

Please note that this form must be received by ISO by February 15, 2005. If this form is not submitted, quarterly statistics will be expected. Failure to submit quarterly statistics on schedule will result in late submission charges of $50 per working day.

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

jgilmartin@iso.com

Kimberly Savino

Insurance Services Office, Inc.

545 Washington Boulevard (17-8)

Jersey City, NJ 07310

(201) 469-2317

ksavino@iso.com

for further contact information, visit the NJAIRE website at:

www.njaire.org

Sincerely,

William J. Clarke

General Manager

gmanager@njaire.org

Exhibit 1

2005 NJAIRE COMPANY FINANCIAL TRANSACTION SCHEDULE

MONTHLY PAYMENT SCHEDULE

COMPILED FIGURES REPORTS FOR:	FACTOR TO MULTIPLY TIMES THE CALCULATED ASSESSMENT CHARGE	DATE DUE:

Second Quarter 2004	1/3	1/15/05

Third Quarter 2004	1/3	2/15/05
Third Quarter 2004	1/3	3/15/05
Third Quarter 2004	1/3	4/15/05

Fourth Quarter 2004	1/3	5/15/05
Fourth Quarter 2004	1/3	6/15/05
Fourth Quarter 2004	1/3	7/15/05

First Quarter 2005	1/3	8/15/05
First Quarter 2005	1/3	9/15/05
First Quarter 2005	1/3	10/15/05

Second Quarter 2005	1/3	11/15/05
Second Quarter 2005	1/3	12/15/05
Second Quarter 2005	1/3	1/15/06

Exhibit 2

2005 NJAIRE STATISTICAL REQUIREMENTS SCHEDULE

DATA FOR:	DUE:

Fourth Quarter 2004	2/15/05

First Quarter 2005	5/15/05

Second Quarter 2005	8/15/05

Third Quarter 2005	11/15/05

Fourth Quarter 2005	2/15/06

Exhibit 3

PERSONAL AUTOMOBILE INSURANCE PLAN

TERRITORY RATES THAT APPLY TO THE ZERO DOLLAR TORT THRESHOLD EXPOSURES

Territory	New Jersey -- BI Liability Zero Dollar Tort Threshold Territory Rate

001	1054
002	1054
003	760
004	773
005	832
006	674
007	1054
008	935
010	700
011	747
012	944
013	1036
014	768
015	573
016	859
017	825
019	1054
022	773
023	825
024	656
025	582
026	573
027	736
031	773
038	1054
039	629
040	768

Exhibit 4

NEW JERSEY AUTOMOBILE INSURANCE RISK EXCHANGE

STATEMENT OF COMPLIANCE

(To be completed by the company’s CFO or other officer designated by the CFO)

During the course of the (prior year) calendar/fiscal year, (Company’s Name) has conducted various financial and operational reviews. These reviews included the operations of (Company’s Name) as they relate to the New Jersey automobile Insurance Risk Exchange. Corrective action has been taken on any findings of a significant or material nature.

Based on the results of our reviews, and any corrective action taken, it is our opinion that (Company’s Name) operations are in substantial compliance with the Rules of Operations and the Accounting and Statistical Manual requirements of the New Jersey Automobile Risk Exchange.

Sincerely,

Date Signature

Title

Exhibit 5

NEW JERSEY AUTOMOBILE INSURANCE RISK EXCHANGE

COMPANY RESPONSE FORM

Company:

Company No:

Primary AIRE Contact Person:

Name:

Address:


E-Mail Address

Telephone:

Additional AIRE Contact Person:

Name:

Address:


E-Mail Address

Telephone:

Return to:	Kim Savino Business Analyst ISO 545 Washington Blvd. (17-8) Jersey City, NJ 07310

Exhibit 6

NJAIRE RESPONSE FORM

Indicate ( X ) which option you are choosing and provide the necessary information.

	1.	We anticipate having no data to report for the NJAIRE Call for Statistics for
		the year indicated below:

		First Quarter - Fourth Quarter 2005