ADDENDUM NO.: 2 INVITATION TO NEGOTIATE NO.: ACTUARIAL CONSULTING SERVICES AUGUST 28, 2015

Transcription

1 ADDENDUM NO.: 2 INVITATION TO NEGOTIATE NO.: ACTUARIAL CONSULTING SERVICES AUGUST 28, 2015 The purpose of this addendum is to advise of any changes to the solicitation and answer questions received prior to the deadline on Page 1, Calendar of Events. SOLICITATION CHANGES: Section 3.8, Tab 1. Forms and Documents deleted item #4 A copy of Vendor s license demonstrating that it is an independent actuarial firm authorized to practice and do business in Florida. Removed 08/28/15 Attachment H, Vendor Travel Reimbursement Guidelines - Added 08/28/15 Exhibit A, Citizens SB408 Sinkhole Analysis.pdf. - Added 08/28/15 ANSWERS TO QUESTIONS: 1. [Section 1.1] In the Statement of Purpose you indicate that the intent is to partner with one or more vendors. In the last 5 year period how many have you partnered with? Please disclose the names of those firms. Answer: One firm: ISO Actuarial Services. 2. [1.1] If partnering with more than one firm what will determine the projects each will work on? Answer: TBD. Citizens has always worked with one firm in the past. 3. [1.3] Are the items listed in this section the criteria for selection, or just information you hope to gain from this Invitation to Negotiate? Answer: The questions listed in Section 1.3 of the ITN will be explored as part of negotiations. 4. [1.9] What is the difference between a Subject Matter Expert and a Vendor? Answer: The Subject Matter Expert is a non-voting member of the evaluation or negotiation teams. The Vendor is the respondent to the solicitation. (See Section 2.2 Definitions, last bullet). 5. [2.4] Will the peer review consist of any independent testing or is it just reviewing the work the Citizens actuaries have performed? Answer: It will definitely involve reviewing of Citizens work. In the past we have requested a complete and independent reserve study for sinkhole. Results of the external and internal sinkhole reserve studies were combined to determine the carried reserve. (See Section 2.4 A., Reserve Peer Review). 6. [2.4] What is the format of the opinion provided to the external auditors? Is it similar to that required by the NAIC? Answer: Our external auditors require an external actuary examine our methods and selections and confirm for them that they are reasonable. There has never been a request from the external auditor that the actuary s review of the opinion to be in any particular format. ITN No, , Addendum 2 Page 1 of 6

2 7. [2.5] Is the report mentioned in this section considered to be the report that supports the actuarial opinion in [2.4A]? Answer: Yes. Section 2.4 provides a list of the types of actuarial support that could possibly be needed. Section 2.5 lists what we know for sure will be needed. 8. [3.9] Are there any quality criteria used in assigning the lowest total cost or is it literally the lowest of cost of all proposals submitted? Answer: The lowest total cost will be derived as described in Section 3.9 Pricing Points Allocation. 9. [No particular section] Are there any restrictions on using resources for these services that are not located in the United States? Answer: No. Citizens is open to considering off shore resources. 10. What are the typical actuarial services provided in the last 12 months? Answer: A review of annual reserve report; an independent sinkhole reserve study; CRW a-rate indication (these are advisory rates that are not required to be filed with the Office of Insurance Regulation). 11. Do we anticipate similar actuarial services for the next 5 years? Answer: Yes, similar but other than the annual reserve report, not necessarily the same. 12. What were the hours of work or fees charged by the previous actuarial firm per project in the last 12 months? Answer: This would be considered a public records request. Citizens Public Records Department can be contacted directly via at: RecordsRequest@citizensfla.com. See answer to question Is a copy of the reports on the most recent actuarial services available for our review? If so, please provide a copy. Answer: The most recent actuarial report includes the peer review work product produced by the current vendor. That work product was provided with a confidentiality agreement regarding to whom that report can be released. Without written permission, it is not available for a general release. See answer to questions 12 and What is the expected amount of travel required? Are travel expenses reimbursed separately or part of the pricing? Answer: Not much. Last year the external actuary did not travel at all. In prior years he traveled once perhaps twice a year to a Rate Hearing. Travel expenses will be reimbursed separately in accordance with Citizens Vendor Travel Reimbursement Guidelines. See Attachment H. 15. On attachment D, should rate total (years 1-3) and rate total renewal period be multiplied by estimated # of hours to get total cost? Answer: Citizens has formulas already populated in the excel spreadsheet to come up with total cost. Vendors should populate: Staff Member/Title, Hourly Rate for Years 1-3 and Hourly Rate for Renewal only. 16. Where can I obtain a copy of Vendor s license demonstrating that it is an independent actuarial firm authorized to practice and do business in Florida on page12 of this RFP? Answer: This requirement has been deleted. Please see Changes to Solicitation above. 17. Who is the incumbent currently providing these services for Citizens? Answer: ISO s Actuarial Services. 18. How many years has the incumbent Actuary provided the requested services? Answer: ISO has had the contract from the last five (5) years and provided services intermittently to Citizens prior to that. ITN No, , Addendum 2 Page 2 of 6

3 19. Why is Citizens bidding for these services? (e.g. Required by law? Unhappy with existing provider?, etc.) Answer: The current contract will expire in March Citizens is governed by Section , Florida Statutes which requires that all contracts in excess of $35,000 are procured through a competitive solicitation process. 20. Is it possible to get a copy of the previous report(s) and other work performed by the incumbent Actuary? Answer: Most work products provided by the incumbent Actuary contain a confidentiality agreement regarding to whom that report can be released. Without written permission, they are not available for general release. There are some work products that have been filed with the OIR and are now public record. Examples of this would be the CRW condo and non-condo rate indication filed in 2014 for 2015 rates. Those reports can be found on the OIR portal. Also, the incumbent actuary provided a study related to the impact of SB 408 on expected sinkhole losses. See Exhibit A, Citizens SB408 Sinkhole Analysis.pdf. This has been part of many rate filings 21. What was the annual cost to Citizens for the most recent actuarial report? (If you are unable to share the specific cost, is it possible to get a price range?) Answer: The annual cost varies depending on exactly what was provided in a given year. Typically final cost would comfortably fall in a range of $5K to $35K. 22. What is the hourly rate(s) being paid to the incumbent to perform this work? Answer: Please see answer to question 12 above. 23. What was Citizens impetus for disseminating this RFP? Answer: See answer to question 19 above. 24. Is there more than one actuarial firm currently providing the services listed in the RFP? Answer: No. 25. Which services are currently provided by which actuarial firms? Answer: All services are currently provided by ISO. See answer to question 17 above. 26. How long has(have) the firm(s) been providing said services to Citizens? Answer: ISO has had the contract for the last five (5) years. See answer to question 18 above. 27. Is Citizens permitted to divulge the annual fees charged for these services? a. If so, what have the fees been per year for the prior three years for each of the services? Answer: See answer to questions 12 and 47. b. If not, how many hours were billed for the last three years for each of the services? Answer: Citizens estimates it to be in the range of 80 to 400 or so per year. 28. For the reserve peer review, how many segments (lines of business, etc.) are separately analyzed in the reserve analysis? Answer: Nine (9) for non-catastrophe losses. The non-cat losses are further divided into sinkhole versus non-sinkhole for some lines of business. Large CAT events are examined and reserved separately by account (PLA, CLA, versus Coastal). 29. For the rate filings, how many filings per year are outsourced on average? Answer: Last year two rate filings were outsourced. Prior years ranged in the neighborhood of four to six. The anticipation is that going forward the majority of basic rate filings would be handled internally. ITN No, , Addendum 2 Page 3 of 6

4 30. For the rate filings, are the outsourced filings typically of a certain kind (homeowners, personal lines, commercial lines, broad/narrow scope, etc.), or does it vary year to year? Answer: In the recent past, it has been Commercial Residential Wind-only Condo and Commercial Residential Wind-only Non- Condo. However, all lines are subject to being outsourced. Responding vendor should be able to handle all lines of business that Citizens writes. 31. If the incumbent firm(s) is(are) replaced, will the new firm(s) have access to the prior actuarial reports and analyses? Answer: All work products provided by current firm do have a requirement that permission be granted prior to sharing with other parties. Any report generated by Citizens in the past would be provided. 32. Is it possible to receive the proposal scoring from the previous RFP process? Answer: Please see answer to question 12 above. 33. Will data provided for the analyses be in an electronic format (e.g. MS Excel, MS Access, etc.)? Answer: Any Citizens data needed for requested work will be provided in an electronic format. 34. Citizens requires flexible and scalable actuarial support for their actuarial team. What is the current size of Citizen s actuarial team? Historically, what is the percentage of shortfall for your team? Answer: Citizens has three accredited actuaries in the role of actuary (there is another FCAS who is Chief Risk Officer) and three actuarial analysts. In addition to the reserve peer review, I would expect three or so other projects (give or take) to be outsourced. 35. Citizens requires additional capacity at their disposal. Can you describe what at your disposal means to Citizen s? Would this be similar to service a request SLA (i.e. within 24 hours of receipt of e- mail/phone call by the vendor), or different for scale-up and scale-down requests (i.e. 1/2/4/8 weeks)? Answer: At this point there are no strictly defined requirements as to response time. The expectation is that once it is decided to outsource a project, we would lay out reasonable timelines with the vendor. 36. Must additional resources support Citizens actuarial team from your office premises, or vendor s onshore offices? Can it be done from a vendor s off-shore location? If from Citizens office, will Citizen s hardware and software infrastructure (including licenses to use actuarial software used by Citizens) be provided, or made accessible by Citizens? Answer: See answer to question 9 above. Citizens has never had to make its hardware or software infrastructure available in the past. If the potential need ever arises, it will be determined on a case-by-case basis. 37. Based on ITN specifications, we assume the timelines to provide Reserve Analysis Report is 12 weeks between January to March - is that correct? Aside from the Annual Reserve Review (i.e. January-March) does Citizen s actuarial team perform quarterly analysis as well? Answer: All reserve work will be finalized by the end of February. The final work product from the Vendor would be due by the end of March. Quarterly reserving analysis is performed. 38. What experience level is required for the scalable actuarial support required? That is, would support need FCAS/ACAS, or be an actuarial professional with 5+ years of experience, or both? Likewise, will the vendor have the prerogative to decide on the mix based on the task at hand? Answer: Both. Yes as long as a FCAS/ACAS signs off on any final work product. 39. What is the name of pricing and reserving software used by Citizens? Must the additional support staff be trained on that particular software? Otherwise, will the functional know-how of the software be shared by Citizens? Is the vendor free to choose its own software? Answer: Internally we use Emblem, R, Rate Assessor, SQL and Excel for Pricing. Reserving is primarily handled through SQL, Excel, and VBA. There is no anticipation of requiring a ITN No, , Addendum 2 Page 4 of 6

5 vendor to use any of Citizens software. It is assumed all vendors are proficient in Excel and can provide work products in that format when required. 40. Pricing in the state of Florida extensively uses Cat Risk Modeling software for the analysis of risk/exposure. Will Citizen s share the cat modelling software it uses with the vendor? Answer: Certainly we would share the output of the Hurricane models when required for a project. 41. Will additional vendor support include Cat Risk Modelers? If yes, we assume they should be trained on more popular software such as Risklink, Risk Manager, Risk browser (from RMS), or Touchstone, Clasic2, Catrader (from AIR), or EQECAT. If Citizens uses any other software, will the Citizen s team pass the knowledge of the other software to vendor s resources while deployed at Citizens? Answer: Citizens has AIR licensed for in-house use. Results from the Florida Public Model are provided by FIU. RMS and EQE results are provided by our reinsurance brokers. It is not likely that additional Cat Modelers would be required. But it is not an impossibility that that need would arise. 42. Citizen requires a year-end peer review report of its reserve analysis to comment on appropriateness of carried reserve. For an informed actuarial opinion we would need last years (preferable last 3 years) reports. Will Citizen s provide these reports? Answer: Yes. 43. As indicated in the ITN, rate filing support for Homeowner s Multi-Peril Rate Indication may be requested from the vendor. Will Citizen s provide previous years rate fillings for this business? Answer: Yes. Currently all Florida Rate Filings are available from the OIR portal. 44. We assume the cost of attending meetings in support of Reserving, Pricing Report, Analysis Outcome with auditors, regulators or public in general are vendor paid - unreimbursed. Is this correct? If so, what is the frequency and duration of such meetings during a calendar year? Answer: Please see Section 5.4 of Attachment G, Standard Contract Terms and Conditions for Travel - related expenses. Last year there was no travel required. It is not expected that travel will be necessary in the future. But there is always a chance that will be necessary. It should never be more than once or twice a year. 45. Who was the last consulting firm that performed the work? Answer: See answer to question 1 above. 46. How long have the current actuaries been providing their service? Answer: Five (5) plus years. See answer to question 18 above. 47. What were the annual fees charged and the terms of the contract? Answer: There were no set annual fees. It varied each year based on tasks outsourced. All fees charged were based on hourly fees which varied by staff member. 48. Has the scope of the work changed since the work was done? Answer: Yes, Citizens does all annual rate filings in-house at this time. 49. Can we get a copy of the most recent actuarial report? Answer: The most recent actuarial report includes the peer review work product produced by the current vendor. That work product was provided with a confidentiality agreement regarding to whom that report can be released. Without written permission, it is not available for a general release. 50. Can we get a copy of the proposal of the last successful bidder? Answer: Please see answer to question 12 above. ITN No, , Addendum 2 Page 5 of 6

6 51. Will you share the Evaluation Sheet and perform a debriefing if requested at the end of the process? Answer: The Evaluation Sheet can be obtained through a Public Records request after the contract award has been made. 52. Does Citizens currently have vendor(s) providing any or all of the services outlined in 2.4? If so, please provide the response(s) of the winning vendor to the prior invitation to negotiate and negotiated pricing information for the current vendor(s). Answer: ISO is the current vendor for these services. A request for responses from a prior solicitation, including any pricing information, would be considered a public records request. Citizens Public Records Department can be contacted directly via at: RecordsRequest@citizensfla.com. 53. Please provide a copy of the full actuarial report and peer review report for the reserves as of December 31, 2014 mentioned in 2.4A. Answer: Please see answer to question 49 above. 54. Please provide the OIR file number of the latest filing that includes the Homeowners Multi-Peril Rate Indication mentioned in 2.4C. Answer: OIR File Number: FCP Attachment D Price Sheet includes a section for Homeowners Multi-Peril Rate Indication Pricing. Are we to provide pricing assuming that we will be preparing only this indication? If so, in determining the estimated number of hours, should we also assume that we will be presenting the analysis at a public rate hearing? Answer: Yes, assume that you are only preparing this indication. Exclude hours from presenting at a public rate hearing. 56. For the services described in 2.4B and 2.4D, should we provide the hourly rates with no estimate of hours? Answer: Pricing is only being requested for the items listed on Attachment D, Price Sheet. 2.4B and 2.4D are just a list of Services that may be asked of the vendor that is awarded the contract. ITN No, , Addendum 2 Page 6 of 6