Introduction of Nebraska Personal Automobile Insurance Procedure (PAIP)
Effective January 1, 2020, the Personal Automobile Insurance Procedure (PAIP), a pooling mechanism, replaces direct assignment of private passenger applications. Direct assignment of private passenger risks and the Limited Assignment Distribution Procedure (LAD) will terminate on December 31, 2019. Quotas will no longer be calculated. The implementation of PAIP has been approved by the Nebraska Governing Committee and the Nebraska Insurance Department.
What is PAIP?
Under PAIP, a servicing carrier or service provider will issue and service Plan personal auto policies on behalf of Plan subscribers. In Nebraska, AIPSO will act as a service provider and issue Plan personal auto policies through an arrangement with National Specialty Insurance Company. The service provider will issue policies, provide policyholder service, and handle claims. Policies will be issued in the name of National Specialty Insurance Company on behalf of the Plan. Operating results will be shared among companies (“member companies”) writing voluntary private passenger automobile liability insurance in the state.
Participation in PAIP
Each company is liable for their share of the fiscal year assessment based on their proportion of Automobile Liability Written Premium for the first prior calendar year to the statewide total of Private Passenger Automobile Liability Written Premiums of all companies in the state. “Private Passenger Automobile Liability Written Premium” means the automobile premiums shown on the Exhibit of Premiums and Losses (Statutory Page 14 Data) of each company’s Annual Statement for Private Passenger No-Fault and Other Private Passenger Auto Liability, Lines 19.1 and 19.2, excluding business written on a non-admitted surplus basis. Annual statement premium acquired from the NAIC will not be subject to adjustments or corrections.
The Plan may periodically, but not less than annually, settle the operating results and fund the procedure. Assessment shares will be determined based on participation ratios developed using the NAIC data described above.
An initial assessment will be issued in December 2019 and a true-up of calendar year 2020 results will be issued in September 2021.
Recording of PAIP Results
All member companies must record their share of PAIP operating results on their books as a Boards and Bureaus Expense. Member companies should not book their share of PAIP operating results as direct business.
Nebraska Private Passenger and Commercial Plan Assessments
The Nebraska private passenger Plan assessment will continue to be based on Voluntary Private Passenger Nonfleet Net Direct Written Car Years while the commercial Plan assessment will continue to be based on Voluntary All Other Automobile Liability Net Direct Written premium reported to statistical agents.
In-Force Policies prior to December 31, 2019
Companies with in-force Nebraska Plan personal auto policies with effective dates of December 31, 2019 or prior will non-renew those policies on the first anniversary following the January 1, 2020 effective date.
At least 30 days prior to the expiration date of each in-force Plan policy, the assigned company shall notify the insured and producer that the Plan policy will not be renewed. The notice will advise the insured to contact their producer to determine whether they may be eligible for coverage in the voluntary market. If the insured is unable to obtain coverage in the voluntary market, the insured may re-apply to the Plan for coverage provided they are eligible.
For further information regarding PAIP, please refer to the Nebraska Automobile Insurance Plan Manual located on www.aipso.com/manuals.
Any questions regarding the implementation of PAIP may be directed to Nancy Banaczuk, Nebraska Plan Manager, at 1-401-528-1371
or via email at Nancy.Banaczuk@aipso.com.