A&S Notice InstructionsJune 1, 2000

A&S Notice Sample

ACCOUNTING AND STATISTICAL NOTICE NO. 328

VIN Data Quality Issues

Since the addition of the VIN data element to the statistical record layout in 1995, CAR has instituted various data quality programs to ensure the accuracy of the data, so that it can be further utilized for other purposes (such a premium rating, fraud, etc). Over the previous five years, CAR has refined the private passenger and commercial VIN statistical edits (S49/V53), created the “Non-POLK” VIN file, enhanced the On-line POLK Edit application, and created the VIN Comparison program. To continue this progress, CAR will be implementing the following:

- Replace the VIN Comparison program with enhanced statistical edits

- Provide recommended methodologies for calculating “Cost New”

- Provide recommended timetables for updating POLK software

Outlined below is detailed information regarding each item:

Replace the VIN Comparison program with enhanced statistical edits

Presently, the VIN Comparison program (VN100) compares the data reported in the Model Year/Age, Symbol/Cost New, Passive Restraint, and High Theft fields to the encoded VIN data returned by POLK. Those records where the reported data does not match the encoded data are considered to have a discrepancy error. The comparison program is run on a quarterly basis, and only a sample listing of 500 discrepancy records is produced. The purpose of this approach was to allow companies to correct any systematic errors on a gradual basis without the concern of an immediate penalty. Furthermore, it also allowed CAR to make modifications to the program with minimal impact to the industry. Because the program has been in place for 3 years, it is time to apply this quality control check on a wholesale basis by moving the comparison into the statistical edits. This change will be effective January 1, 2001 and will affect the following edits:

  • The Model Year/Age comparison has always been part of the S49 VIN edit.
  • The Symbol comparison will be moved into the S21 Age/Symbol/Model Year edit. Note that only model years that are at least two years old (i.e. current year – 2) will be compared to the symbol in the VIN.
  • The Passive Restraint comparison will be moved into the S30 Passive Restraint Device Discount Code edit.
  • The High Theft comparison will be moved into the S47 High Theft Vehicle/Extra Risk Rating Codes edit.

Accounting & Statistical Notice No. 328-1-June 1, 2000

Companies should be advised that the records failing the comparisons within the statistical edits will now be subject to the error tolerances stated in the Statistical Plans. Accordingly, if a company experiences an error rate greater than the 15% tolerance, the shipment will be rejected for correction and reprocessing. Similarly, shipments with error rates greater than 5% must be lowered through corrections via CAR’s on-line correction system or be subject to penalties.

The VN100 program will continue to be run during 2001 in order to perform the “Cost New”/VIN comparison. Due to inconsistent methodologies used by companies to calculate and report “Cost New”, the movement to the S21 edit will be delayed for at least one year (i.e. till 2002). The next item provides more information relative to this issue.

Provide recommended methodologies for calculating “Cost New”

The Automobile Insurance Manual states:

“Original cost new is the retail cost the original purchaser paid for the automobile and its equipment. This includes the value of any trade-in automobile and any federal, state and local taxes or any other taxes charged in place of sales tax.

If the original cost new is not known, multiply the original cost new of the chassis by 1.33.”

In the fall of 1999, CAR performed a survey to gather information relative to the process by which “Cost New” was determined by the industry. Because the industry is using a variety of techniques, with various degrees of success (particularly with older (used) vehicles), CAR is recommending that the industry be encouraged to utilize a more “systematic” approach when calculating “Cost New”. Accordingly, the following techniques should provide a more accurate calculation of “Cost New”:

Verify the “Cost New” using an outside source, such as:

  • National Automobile Dealers Association (NADA) Book
  • Kelly Blue Book/Blue Book Valuation Software
  • Red Book
  • Registry of Motor Vehicles
  • POLK Software
  • Certified Collateral Corporation (CCC) Database

Request supporting documentation from the insured or agent, such as:

  • Dealership Window Sticker
  • RMV1

CAR does not recommend that companies rely solely upon the information provided by the agent or insured, especially with older (used) vehicles. This process is the one most prone to error and while CAR is delaying the movement of the “Cost New” comparison into the S21 – Age/Symbol/Model Year edit (probably until 2002), we will not postpone this change indefinitely. Accordingly, companies should utilize this grace period to improve their process for calculating “Cost New”. Those companies that continue to rely solely upon the information provided by the agent or insured should expect to have significant error volumes, which will probably result in the rejection of statistical submissions.

Provide recommended timetables for updating POLK software

CAR utilizes POLK’s software to verify VIN and the related vehicle data elements. Specifically, we use the following products:

  • VIS – to verify VIN, Model Year, Age, Symbol, and “Cost New” (note that our “yearly coverage” begins with 1978)
  • VINA – provides Gross Vehicle Weight
  • VISTHEFT – to verify High Theft (separate product, not included in the standard VIS package)
  • VISRAP – to verify Passive Restraint (separate product, not included in the standard VIS package)

POLK releases new versions of the VIS product 8 times a year. Upon receipt of a new update from POLK, CAR will test and implement the new version within a month. Once implemented, the new version is then used in the Front-End Statistical Edits as well as to verify on-line corrections. CAR recommends that companies that utilize POLK in their rating and statistical reporting processes use the new releases expediently in order to avoid errors caused by obsolete source data.

CAR would also like to remind companies that the reporting of the Model Year Century Date field is mandatory in 2001. Accordingly, if the field is not reported in 2001, the record will fail the S21 – Age/Symbol/Model Year edit. Furthermore, if the volume of invalid data is significant, the shipment could be rejected for excess error percents.

If you have any questions regarding the upcoming changes to the statistical edits or the other recommendations made in the notice, please address them to your Data Analyst, or the undersigned.

WENDY BROWNE

Operations Services Manager