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Notice of Request for Proposals for Actuarial, Examination and CPA Services

Responses due no later than June 4, 2019 3:00PM CT

Contact: Reyn Norman, General Counsel

(334) 241-4116

5/1/2019

The Alabama Department of Insurance (DOI) hereby gives notice of the issuance of Requests for Proposals (RFP) for qualified respondents to provide the DOI with the following professional services:

·      Property and Casualty Insurance Actuarial Services

·      Life and Disability Insurance Actuarial Services

·      Certified Public Accountant Services

·      Insurer Examination Services

·      Insurer Market Conduct Examination Services

·      Insurer Investments Examination Services

·      Insurer Automated Examination Services

Contracts are contemplated to be awarded for the one-year of term October 1, 2019, through September 30, 2020.  Responses to the RFP must be received not later than June 4, 2019, at 3:00 PM CDT.  Each response must include one original unredacted response in printed form plus one identical electronic copy in PDF format on either Compact Disc (CD or DVD) or USB drive.

The RFPs are listed in the State of Alabama Accounting and Resource System (STAARS).  You may learn about STAARS at http://vendors.alabama.gov/, and can register as a Vendor at https://procurement.staars.alabama.gov/webapp/PRDVSS1X1/AltSelfService.

Additional information is set forth in the attached files, each accessible in Adobe format:

  • RFP for Professional Actuarial Services for Property and Casualty Insurance: Adobe
  • RFP for Professional Actuarial Services for Life and Disability Insurance: Adobe
  • RFP for Professional CPA Services: Adobe
  • RFP for Professional Insurer Examination Services: Adobe
  • RFP for Professional Insurer Market Conduct Examination Services: Adobe
  • RFP for Professional Insurer Investments Examination Services: Adobe
  • RFP for Professional Computer Audit Services: Adobe

Exhibit B, the TeamMate® Confidentiality Agreement, must be submitted with every proposal except for CPA.  A PDF copy is included above with each RFP.  An additional copy in Word format is accessible here: Word

State law requires a Disclosure Statement to be submitted with every proposal.  Instructions for completing the form can be accessed from the Attorney General’s Web site at https://ago.alabama.gov/Form.  The disclosure statement form can be accessed from the Web site of the Examiners of Public Accounts at https://examiners.alabama.gov/PDF/publications/Vendor-Disclosure-Statement.pdf.

For the procedures and forms for foreign corporations to qualify to do business in the State of Alabama, please visit the web page for the Alabama Secretary of State at http://sos.alabama.gov/

REVISIONS TO THIS NEWS RELEASE AND RESPONSES TO QUESTIONS WILL BE POSTED BELOW.

Question 1, regarding all services:

May we get a copy of the proposals of the current service providers?

Answer:  We respectfully decline to make the proposals available from last year and even if disclosed may not be indicative of proposals for the next fiscal year; however, here are the total amounts paid for Actuarial, CPA, Examiner, and MC Examiner services and expenses in the fiscal years indicated:


P&C Actuarial:

FY2016 (10/1/15 – 9/30/16)    $92,018

FY2017 (10/1/16 – 9/30/17)    $92,009

FY2018 (10/1/17 – 9/30/18)    $33,548

FY2019 (10/1/18 – 4/30/19)    $74,278

 

L&H Actuarial:

FY2016 (10/1/15 – 9/30/16)    $125,202

FY2017 (10/1/16 – 9/30/17)    $180,946

FY2018 (10/1/17 – 9/30/18)    $108,045

FY2019 (10/1/18 – 4/30/19)    $77,089

 

CPA:

FY2016 (10/1/15 – 9/30/16)    $-0-

FY2017 (10/1/16 – 9/30/17)    $-0-

FY2018 (10/1/17 – 9/30/18)    $-0-

FY2019 (10/1/18 – 4/30/19)    $-0-

 

Examiner (includes MC, Investment & Computer):

FY2016 (10/1/15 – 9/30/16)    $260,655

FY2017 (10/1/16 – 9/30/17)    $660,752

FY2018 (10/1/17 – 9/30/18)    $373,371

FY2019 (10/1/18 – 4/30/19)    $153,687

 

Question 2, regarding all services:

What happens if the contractor reaches the not-to-exceed limit due to underestimating the amount for the year?


Answer:  Typically, we are able to anticipate when a contract will exceed the amount in time to have the contract amended.  If not, a contractor must file a claim with the State Board of Adjustment for the amount exceeding the contract.  When this is for work authorized by the Department, we will recommend approval by the Board of Adjustment. 

Question 3, regarding all services:

 

Section 4.1 includes the following statement:

 

If, during the Term, the amount available for funding of this Contract in any one fiscal year is reduced by legislative action, proration, or other action of State government beyond the control of the Department, the maximum amount payable under this Contract in the fiscal year will be adjusted accordingly. 

 

Has this ever happened during the history of signing contracts like this with contractors?

 

Answer:  Not for a contract with the Department of Insurance.  This is “boilerplate” language required in every state contract due to a provision in the state constitution prohibiting the state to be in debt.  These services are typically paid through the Special Examination Revolving Fund, and immediately refunded by the insurer being examined, thus it is unlikely such an event would ever happen with one of our contracts.

 

Question 4, regarding all services:

 

Have there been any instances where you have required the contractor to provide testimony and evidence in any administrative or court hearing or proceeding arising from the services performed by the contracts?

 

Answer:  Yes.  Insurers being examined have the right to file an objection to a finding in the examination report.  Usually, these objections are resolved without the need for a formal hearing, but there have been cases over the years resulting in an administrative hearing.  Ordinarily, an appeal from the administrative order is “on the record,” thus additional testimony is not expected; however, if an examination results in a receivership proceeding, it is possible expert testimony could be needed in support of the action.  In such a case, a budget for the contractor would be determined and, if necessary, the contract amount would be amended to cover the time and expenses involved in providing the testimony.

 

Question 5, regarding all services:

 

The section in the RFP entitled “Pricing - personnel rates” (Section 2.3.7 in all but CPA, where it is Section 2.3.6) states “Personnel rate pricing must exclude ‘travel time.’”  Does this mean the contractor cannot work on any assignment for the State of Alabama while traveling?

 

Answer:  No.  Contactors are permitted to bill for their work.  If they are able to work while traveling, then they can bill for it.  A contractor cannot simply bill the department at their hourly rate for the time they are in a car, plane, etc., in transit to a job.

 

Question 6, regarding all services:

 

Is there any specific time of year that these services are usually needed or requested?

 

Answer:  No.  The contract work will be scheduled as needed for examinations.

 

Question 7, regarding all services:

 

When engaged to complete an examination, what is the average due date for the final report?  Are due dates flexible in the event of scheduling conflicts?

 

Answer:  Based on the size of the insurer and the scope of the examination, an examination budget is developed prior to an examination.  The examiner is expected to complete the examination within the time projected unless unforeseen issues arise.

 

Question 8, regarding Property & Casualty Actuarial services:

 

Who are the current service providers for property and casualty actuarial services and for how many years have they been providing services for the Alabama DOI?

 

Answer:  For Fiscal Year 2018-2019 we have contracts for Property and Casualty Actuarial services with Merlinos & Associates, Inc. (and for many years prior to this year), with INS Consultants, Inc. (first time contract for P&C actuarial services), and with Taylor Walker Consulting, LLC (and for many years prior to this year).

 

Question 9, regarding Property & Casualty Actuarial services:

 

How many contracts is the DOI planning to issue under this RFP?

 

Answer:  Historically we usually try to have contracts with about three firms for Property & Casualty Actuarial services.

 

Question 10, regarding Property & Casualty Actuarial services:

 

May we receive a copy of the last actuarial report provided by the current actuary?

 

Answer:  We respectfully decline to provide copies of actuarial reports.

 

Question 11, regarding Property & Casualty Actuarial services:

 

In what format (PDF, Excel, Database application, etc.) will the data be provided to the firm awarded this contract?

 

Answer:  The data will be provided in whatever format is requested by the examiners, but it is unlikely this would be PDF.

 

Question 12, regarding Property & Casualty Actuarial services:

 

To what extent will ACL be used for this project?  Is this elemental to the extraction of the data or data manipulation?  Please describe the capacity in which ACL will be used.

 

Answer:  ACL is used for data sampling.

 

Question 13, regarding Property & Casualty Actuarial services:

 

How many rate filing reviews have been conducted in the past 3 y ears that would fall under this contract?

 

Answer:  We do not have records to easily respond to this question; however, during fiscal year 2020 we anticipate as many as 8 rate filings will involve the use of a contract P&C actuary. 

 

Question 14, regarding Life & Disability Actuarial services:

 

Who are the current service providers for life and health actuarial services?

 

Answer:  For Fiscal Year 2018-2019 we have contracts for Life and Disability Actuarial services with Harland A. Dyer, d/b/a Latta, Langston & Dyer (and for many years prior to this year), with INS Consultants, Inc.(third year for L&D actuarial services), and with Merlinos & Associates, Inc. (first time for L&D actuarial services).

 

Question 15, regarding Life & Disability Actuarial services:

 

How many instances required travel by the contractor to the DOI or to any other location?

 

Answer:  For simply reviewing a rate filing, typically no travel is needed, as the filing is submitted electronically and can be reviewed by the contractor wherever the contractor happens to have an internet connection.  It may be necessary from time to time during a full-scale examination of an insurer that the actuary actually travel to the location of the insurer.  Additionally, travel to the department may be necessary should there be an administrative hearing requiring the testimony of the actuary.

 

Question 16, regarding Life & Disability Actuarial services:

 

What type of “other services” were requested from your contractor since October 1, 2018?

 

Answer:  None, as is the case in most years.  Occasionally there are special projects, such as auditing a company for a rating violation.  As these special projects arise, a budget is determined and, if necessary, the contract amount is amended to cover the new project.

 

Question 17, regarding Life & Disability Actuarial services:

 

How many policy form filings, rate filing and rating system filings were reviewed for the period October 1, 2017, to September 30, 2018?

 

Answer:  During fiscal year 2018, our contracted actuaries conducted 8 rate reviews of Affordable Care Act filings.

 

Question 18, regarding Life & Disability Actuarial services:

 

How many policy form filings, rate filing and rating system filings have been reviewed since October 1, 2018?

 

Answer:  During fiscal year 2019, our contracted actuaries have conducted 6 rate reviews of Affordable Care Act filings.

 

Question 19, regarding Property & Casualty and Life & Disability Actuarial services:

 

How many examinations are you planning or scheduling for the period October 1, 2019, to September 30, 2020?

 

Answer:  We anticipate conducting examinations during fiscal year 2020 of 3 life and health insurers, 3 health maintenance organizations, and 4 property and casualty insurers.

 

Question 20, regarding CPA services:

 

What type of CPA services are being requested?

 

Answer:  The services requested for CPAs are listed in Section 2 of the RFP for CPA services. 

 

Question 21, regarding Market Conduct Examination services:

 

How many market conduct examinations will be performed during the contract period?

 

Answer:  Market conduct examinations are ordered as often as needed.  Some years there may be two or more per year, some years there may be none at all.

 

Question 22, regarding Insurer Investment Examination services:

 

How many insurer investment examinations will be performed during the contract period?

 

Answer:  Typically, insurer investment examination services would be used in conjunction other examiners conducting a full-scale examination of an insurer.  A separate contract is needed only when the staff examiners or contracted examination firm does not have staff qualified to conduct the insurer investment examination part of the full-scale examination, thus, most years this contract goes unused.

 

Question 23, regarding Insurer Investment Automated Examination services:

 

As to Section 1.2.1.5, what software packages will be utilized and is this related to the exchange of information between the two systems?

 

Answer:  TeamMate is used by the examiners.  ACL is used for sampling.

 

Question 24, regarding Insurer Investment Examination services:

 

As to Section 1.2.1.6, what are the usual needs of the examiners related to system printouts, transaction details, reconciliations, sampling populations, etc.?

 

Answer:  Whatever the examiner request.

 

Question 25, regarding Insurer Investment Examination services:

 

As to Section 1.3.2, is ACL the only data extraction and analysis software to be used?

 

Answer:  ACL is the only data extraction software used by the examiners.

 

Question 26, regarding Insurer Investment Examination services:

 

How many insurer investment examinations will be performed during the contract period?

 

Answer:  Typically, insurer investment examination services would be used in conjunction other examiners conducting a full-scale examination of an insurer.  A separate contract is needed only when the staff examiners or contracted examination firm does not have staff qualified to conduct the insurer investment examination part of the full-scale examination, thus, most years this contract goes unused.