Alabama Department of Insurance

Actuarial, CPA, Insurer Examination, Insurer Investments Examination, Insurer Market Conduct Examination, and Computer Audit Services

Notice issued May 31, 2011

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 Investments Examination Services
• Insurer Market Conduct Examination Services
• Computer Audit Services

Contracts will be for twelve (12) months. Services provided under the contract will be on an as-requested or as-needed basis. Responses to the RFP must be received not later than July 1, 2011, at 3:00 PM CDT.

A Disclosure Statement is required with a response to the RFP. The Required Disclosure Statement can be accessed from the Attorney General’s web site at the following address:  http://www.ago.state.al.us/ag_items.cfm?Item=70 

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://www.sos.alabama.gov/

Additional information on each RFP is set forth in the attached files, each accessible in either Word or Adobe format, as indicated:

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

Exhibit A is the Confidentiality Agreement which would be necessary should a contract be awarded. The sample contract is below as Exhibit B. Services to be provided under a contract will be based on the contract award.

Exhibit A, Confidentiality Agreement: Please note that this Confidentiality Agreement would not be required for Certified Public Accounting Services     Word | Adobe

Exhibit B, Form Contract for Services: Please note this is for informational purposes only and will be revised depending upon the services to be provided. Adobe

For additional information, please send an E-Mail request to: Kathleen Healey, Associate Counsel

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

Actuary (includes questions for both Life & Disability and Property & Casualty Actuarial Services)

 1.      Who performed the most recent study?
Services in the Requests for Proposals are not limited to “studies.”

 2.       What were the annual fees charged and the terms of the contract?
These contracts will vary depending upon the type of services to be performed and budgetary constraints.

 3.      Has the scope of work changed since the work was done?
The scope of work expected for this contract cycle is included in the Request for Proposal. You are encouraged to carefully review this current scope of work as the format for the Requests for Proposals has changed and may be different from previous years. The Department will not conduct an analysis on the differences between the current Request for Proposal and previous Requests for Proposals.

 4.       Can we get a copy of the most recent actuarial report?
It is unclear what you are requesting. Actuaries provide a host of services as listed in the Request for Proposal’s scope of work.

 5.       Can we get a copy of the proposal of the last successful bidder?
A written request for Request for Proposals from two years ago would need to be submitted with more clarification and specificity as to which Request for Proposal you are seeking. Please keep in mind that there may be differences in Requests for Proposal issued two years ago to the ones recently issued. Cost for copies (electronic or written) are $1 per page, payable in advance. The Department cannot guarantee that a requested copy will reach you prior to this current Request for Proposal deadline.

 6.       Do you want us to quote a best and final offer price now, or will you allow us or request us to modify our quote for our best and final offer later?
Prices subject to change will absolutely not be accepted and shall disqualify any response. Additionally, there can be no modifications to a Request for Proposal response after submission. These requirements are outlined in the RFP itself.

7.     Specifically referring to 1.3.2 and 1.3.5, is it the intent of the RFP that the actuaries conduct, rather than assist the financial examiners in conducting, the detail data testing using ACL?  This is typically not an actuarial examination function.
The Department would expect that actuaries provide expertise and assistance in the data that should be sampled. It is not necessary to have more than basic working knowledge of ACL. However, it is critical actuaries meet TeamMate® requirements as outlined in the Requests for Proposals.
 
8.    Is it possible to obtain a sample copy of Exhibit B, Consulting Contract for "Actuarial Services"?
No. The Exhibit B consulting contract includes boilerplate language. All contracts will be based from this Exhibit and modified to meet the scope of services to be provided under the contract.

9. How many P&C Rate and Form Filings reviews requiring external actuarial services were performed in each of the last three years?
The Department estimates approximately 25 per year.

10. How many P&C Financial Exams requiring actuarial services were performed in each of the last three years? 
All of them.

11. What firms are currently under contract with the DOI to provide the services covered by the P&C RFP and how long have they provided services to the DOI?
Merlinos and Associates, Inc. (over 15 years), Taylor Walker & Associates, Inc. (over 5 years), and AGI Services, Inc. (about two years).  

12. Please provide the most current contracted rates by category being paid to contractors providing P&C actuarial services. 
Contracts are public records. A written request for a contract from two years ago would need to be submitted with more clarification and specificity as to which contract you are seeking.  Cost for copies (electronic or written) are $1 per page, payable in advance. We cannot guarantee that a requested copy will reach you prior to this current Request for Proposal deadline.

13. During each of the last three fiscal years, how much did the DOI pay to each contractor for P&C actuarial services? 
These contracts vary depending upon the type of services to be performed and budgetary constraints. Some contractors provide other services in addition to actuarial services. In the time allotted, we cannot provide this information.
 
14.  Please provide a rough estimate of the anticipated split between rate filing review vs. financial examinations vs. other services.
The workload varies by the amount of rate reviews requested by the Department.

15. Can a firm be added to the list for some components and not others – such as for P&C Rate and Form Filings but not Financial Exams?
The Department determines the services it needs.   If the proposal does not include all services requested, the proposal will be rejected as nonresponsive. 

16. If it is possible to bid on only certain aspects of the requested P&C actuarial services, can you indicate which services would not require the use of the TeamMate software?
The service which would not require the use of TeamMate® software would be rates and forms reviews.

17. Roughly, what portion of the P&C actuarial services for financial examinations were performed at the DOI, at the examined company, and at the contractor’s own location?  Can you provide similar information for rate and form filing reviews.
Location depends on the firm and the company being examined.  Rate and form reviews are primarily conducted at the contractor’s location with a report filed on SERFF.

18. Is it acceptable for us to use a subcontractor who is a licensed user of TeamMate to provide our TeamMate interface?
No.

Certified Public Accounting Services

1. Section 2.3.6. TeamMate® license and experience: The last sentence indicates that we must complete the confidentiality agreement, which is Exhibit A. However, according to the Notice of Requests for Proposals Exhibit A is not required for Certified Public Accounting Services. Which is correct?
Exhibit A is not required for Certified Public Accounting Services. Please disregard Section 2.3.6. requirements for the Certified Public Accounting Services Request for Proposals.

2. Section 2.3.14. Financial disclosure: The Disclosure Statement requires notarization. Will a Florida notary be considered sufficient?
Yes.

Insurer Examination Services

1. Who are the vendors under contract with Alabama for the 2010 – 2011 period?
Bostick Crawford Consulting Group, Insurance Logic, Inc., and INS Regulatory Insurance Services, Inc.

2. How many years have they each been under contract?
The current contract is for a 24-month time period which expires September 30, 2011.

3. Did each of the vendors perform services under the existing contracts?
No.

4. Approximately how many engagements have been outsourced to contractors in each of the past 3 years?
The Examinations Division estimates it averages two each year.
 
5. How many examinations do you anticipate outsourcing during the 2011 – 2012 contract period?
The Department tentatively plans on outsourcing one or two.

6. Approximately how many hours have been outsourced to contractors in each of the past 3 years?
It is estimated by the Department’s Examinations Division to be 400.

7. How many hours do you anticipate outsourcing during the 2011 – 2012 contract period?
It is estimated by the Department’s Examinations Division to be 320.

8. Are the hourly rates for the previous contract period publicly available information? If so, what are the rates or how can they be obtained?
Contracts are considered public records. A written request for a contract from two years ago would need to be submitted with more clarification and specificity as to which contract you are seeking.  Cost for copies (electronic or written) are $1 per page, payable in advance. The Department cannot guarantee that a requested copy will reach you prior to this current Request for Proposal deadline.

9. How many contactors do you plan to select?
The Department plans to select one or two, however, the Department reserves the right to not select any at all.

10. Section 2.3.8 presents a fee schedule and various employee classifications. Must a respondent demonstrate that they are able to provide services in each category with their own employees to be considered for an award? For example, if a vendor proposing to provide only financial examination (as opposed to market conduct) services does not have staff actuarial examiners or computer audit specialists, would the vendor be disqualified?
Yes, unless the services are subcontracted with Department approval, to another qualified firm.

11. Could a firm without staff actuarial examiners and/or computer audit specialists and that is not permitted to subcontract those specialists nonetheless be approved to perform examinations with the Department contracting separately on a direct basis for supporting IT and /or actuarial support?
In limited circumstances, yes. The subcontracting firm must be qualified and approved by the Department.

Insurer Investments Examination Services

1. Who are the vendors under contract with Alabama for the 2010 – 2011 period?
AGI Services, Inc.
 
2. How many years have they each been under contract?
The current contract is for a 24-month time period which expires September 30, 2011.

3. Did each of the vendors perform services under the existing contracts?
No.

4. Approximately how many engagements have been outsourced to contractors in each of the past 3 years?
In the past three years, the Examinations Division estimates it has been 10 or more.

5. How many examinations do you anticipate outsourcing during the 2011 – 2012 contract period?
The Department does not have this information at this time.

6. Approximately how many hours have been outsourced to contractors in each of the past 3 years?
The Department does not have this information at this time. Contracts have spanned periods of 12-months and 24-months depending upon the year.

7. How many hours do you anticipate outsourcing during the 2011 – 2012 contract period?
The Department cannot answer this question at this time.

8. Are the hourly rates for the previous contract period publicly available information? If so, what are the rates or how can they be obtained?
Contracts are considered public records. A written request for a contract from two years ago would need to be submitted with more clarification and specificity as to which contract you are seeking.  Cost for copies (electronic or written) are $1 per page, payable in advance. The Department cannot guarantee that a requested copy will reach you prior to this current Request for Proposal deadline.

9. How many contactors do you plan to select?
The Department plans to select one or two, however, the Department reserves the right to not select any at all.

10. With reference to section 2.2 of the Investments RFP, is the use of subcontractors with specific subject matter experts for even very limited potions of the exam services absolutely not permitted? With reference to section 5 of the Investments RFP, we note that the evaluation criteria assigns a 30 point weight to cost. Is rate per hour the sole determinate factor in evaluating these criteria? Is there any consideration that demonstrated efficiency in conducting an engagement and targeted scope of procedures will directly influence total cost of any engagement?
No, however, rate is a large determinate factor. Subjective factors such as efficiency cannot be adequately measured to be useful.

11. Please provide examples of the general nature of past investment specialist projects and an indication of the possible nature of future projects. For example, have past assignments involved an evaluation of a company’s investment risk management programs, derivatives hedging programs, investment impairment issues, investment related internal control assessments and/or specific financial reporting issues?
Overall review of the investments and risks associated with the portfolio.