Opportunity Detail

Questions and Answers

ACTUARIAL CONSULTING SERVICES
Document #:  BWCB21002


Question:   What were the hourly rates charged by the prior firm(s) for each of the past 5 years for each of the following services? a. Rates, Assessments, and Special Studies b. Actuarial Reserves c. Enterprise Risk Management

Answer:   Hourly rates are not readily presentable in the format requested as they vary according to the experience of any contractors assigned to the projects. Please see response to inquiry #83396 for total hours and the following information for total costs charged to BWC: Rates: Sep 2017=$524,351, Sep 2018=$408,918, Sep 2019=$302,320, Sep 2020=$170,436 Reserves: Sep 2017=$608,773, Sep 2018=$608,612, Sep 2019=$638,651, Sep 2020=$739,373 ERM: Sep 2017=$3,734, Sep 2018=$247,112, Sep 2019=$75,109, Sep 2020=$260,243 Special Studies: Sep 2017=$232,380, Sep 2018=$0, Sep 2019=$0, Sep 2020=$7,398 Other items (meetings, project management, etc): Sep 2017=$32,871, Sep 2018=$50,327, Sep 2019=$27,068, Sep 2020=$29,402

Date: 3/18/2021

Inquiry: 83395


Question:   What were the total hours needed by the prior firm(s) for each of the past 5 years for each of the following services? a. Rates, Assessments, and Special Studies b. Actuarial Reserves c. Enterprise Risk Management

Answer:   Contract year begins October 1 and ends September 30. Hours charged to BWC are as follows: Rates: Sep 2017=1,266, Sep 2018=1,037, Sep 2019=811, Sep 2020=452 Reserves: Sep 2017=1,424, Sep 2018=1,355, Sep 2019=1,413, Sep 2020=1,548 ERM: Sep 2017=7, Sep 2018=514, Sep 2019=155, Sep 2020=581 Special Studies: Sep 2017=602, Sep 2018=0, Sep 2019=0, Sep 2020=18 Other items (meetings, project management, etc): Sep 2017=66, Sep 2018=105, Sep 2019=58, Sep 2020=65

Date: 3/18/2021

Inquiry: 83396


Question:   In what format (Excel, PDF, Other Database, etc.) will the data be provided to the selected actuarial firm?

Answer:   Data will be provided to the actuarial consultant in a format mutually agreed upon between the actuarial consultant and BWC. Typical options will be csv or txt files but may also be Excel, Access, pdf files or similar formats.

Date: 3/17/2021

Inquiry: 83400


Question:   Can we receive a copy of the most recent actuarial report for each of the services described in this RFP? If not, would it be possible to get a report with the text included but the numbers redacted?

Answer:   They can be provided by making a formal public records request to the following email address: publicrecords@bwc.state.oh.us

Date: 3/17/2021

Inquiry: 83399


Question:   Is it possible to receive a copy of the incumbent actuarial firm’s proposal for the last time this contract went out to bid?

Answer:   This can be provided by making a formal public records request to the following email address: publicrecords@bwc.state.oh.us

Date: 3/17/2021

Inquiry: 83398


Question:   Are there any improvements or additional services that the state of Ohio is seeking in its relationship with the actuarial consultant?

Answer:   The full scope of requested actuarial services are outlined in the RFP.

Date: 3/17/2021

Inquiry: 83397


Question:   How long has Oliver Wyman (the incumbent actuarial firm) been performing the services outlined in this RFP?

Answer:   Oliver Wyman has continuously provided actuarial consulting services to BWC since July of 2013.

Date: 3/17/2021

Inquiry: 83394


Question:   Section 3.3 of the RFP, ‘Proposal Submission’ section beginning on page 10, indicates “One (1) complete, sealed and signed original Proposal, one (1) electronic PDF version on USB compatible storage device and seven (7) hard copies of each Proposal shall be submitted for evaluation” by mail or hand delivery. Will there be an allowance for electronic submission given the constrains of the COVID-19 pandemic?

Answer:   Proposal submission shall be exactly as stated in the RFP.

Date: 3/17/2021

Inquiry: 83393


Question:   If available, how many hours were billed for the prior analyses and reports for the last three years, by year?

Answer:   Oct 2017-Sep 2018 = 3,010 hours, Oct 2018-Sep 2019 = 2,436, Oct 2019-Sep 2020 =2,664 hours

Date: 3/17/2021

Inquiry: 83391


Question:   Can you provide the proposal scoring from the previous RFP?

Answer:   This can be provided by making a formal public records request to the following email address: publicrecords@bwc.state.oh.us

Date: 3/17/2021

Inquiry: 83391


Question:   Can we get a copy of the proposal of the last successful proposer?

Answer:   This can be provided by making a formal public records request to the following email address: publicrecords@bwc.state.oh.us

Date: 3/17/2021

Inquiry: 83391


Question:   Can we receive a copy of the prior actuarial studies prior to submitting the bid? If not, will BWC provide the prior actuarial report to the firm awarded the work?

Answer:   Numerous studies have been conducted. They can be provided by making a formal public records request to the following email address: publicrecords@bwc.state.oh.us

Date: 3/17/2021

Inquiry: 83391


Question:   What is the current annual fee for this service?

Answer:   The costs for actuarial services during Oct 2020 through Sept 2021 are not to exceed $1.543 million

Date: 3/17/2021

Inquiry: 83391


Question:   Is the incumbent prevented from bidding on this work for the current RFP?

Answer:   No

Date: 3/17/2021

Inquiry: 83391


Question:   How long has the incumbent been providing this service?

Answer:   They have continuously provided actuarial consulting services to BWC since July of 2013.

Date: 3/17/2021

Inquiry: 83391


Question:   Who is the incumbent actuarial firm providing this service?

Answer:   Oliver Wyman

Date: 3/17/2021

Inquiry: 83391


Question:   Our firm currently does the actuarial work for the audit of BWC’s reserves. We are willing to stop doing that work as required to perform the services in the RFP. For the rate engagement, would the prior work be a conflict that would preclude us from doing the rate work for BWC? If we were awarded the rate engagement, would BWC require that we stop doing our work for BWC’s auditor?

Answer:   This prior work does not disqualify the inquiring firm from submitting a proposal. However, the firm will not be permitted to conduct rate analyses under this contract and actuarial work for auditing BWC’s financial statements.

Date: 3/17/2021

Inquiry: 83390


Question:   Our firm currently does the actuarial work for the audit of BWC’s reserves. We are willing to stop doing that work as required to perform the services in the RFP. For the reserve engagement, would the prior work for the auditor be a conflict that would preclude us from doing the reserve work for BWC?

Answer:   This prior work does not disqualify the inquiring firm from submitting a proposal. However, the firm will not be permitted to conduct reserve analyses under this contract and actuarial work for auditing BWC’s financial statements.

Date: 3/17/2021

Inquiry: 83389


Question:   7. For task 4.3, will the winning firm have access to the existing economic capital models, documentation, reports, and data used by the current actuarial consultant?

Answer:   The existing economic capital model has been built and maintained using proprietary software of our existing actuarial consultant. As such, the model is not transferable to a future actuarial consultant. Any data provided to our existing consultant and any reports or documentation issued to BWC from our existing consultant will be available to the future consultant.

Date: 3/17/2021

Inquiry: 83387


Question:   6. Can the BWC describe the existing ERM framework used for item 4.3?

Answer:   Four main risk components have been modeled: assets, liabilities (primarily unpaid claim liabilities), pricing, and catastrophes. These components were modeled independently and then combined together with appropriate recognition given to their covariances to constitute the full economic capital model. For more details, a presentation was made in Oct and Nov 2020 to the Actuarial Committee of the Board of Directors, which can be found in the Board Effect section of https://info.bwc.ohio.gov/wps/portal/gov/bwc/about-bwc/agency-overview/board-of-directors/BWC+Board+of+Directors.

Date: 3/17/2021

Inquiry: 83387


Question:   5. In Section 4.2.2, it states that the “peer review must contain ranges of reasonableness”. As part of the peer review process, do you expect the consultant to perform a quarterly update analysis as of September and December in order to determine ranges? If not, can you add more context on what is expected of the consultant as part of the peer review in order to allow for it to contain ranges of reasonableness?

Answer:   BWC will provide a report of its internal analysis for the consultant to peer review and is prepared to provide data that the consultant and BWC mutually deem necessary to determine a reasonable range.

Date: 3/17/2021

Inquiry: 83387


Question:   4. In Section 4.2.2 can you please define “peer review” and your expectation of the consultant’s deliverables for the peer review?

Answer:   BWC has asked respondents in Section 5.6 to provide details regarding how they plan to approach to peer reviews.

Date: 3/17/2021

Inquiry: 83387


Question:   3. Section 4.2.2 states that the consultant with conduct either an actuarial evaluation or a peer review of internal analyses. Can you please describe what internal unpaid claim analyses are currently being performed?

Answer:   BWC’s internal analysis uses typical deterministic loss reserving methodologies such as chain ladder and Bornhuetter-Ferguson that are conducted on data at a more granular level than what is being requested in the RFP. Reserves are separately analyzed for 7 different medical categories (medical only, hospital, physician, pharmacy, chiropractor, rehabilitation, other health) and for 10 different indemnity benefit categories (temporary total, permanent total, survivor, lump sum settlements, lump sum advancements, % permanent partial, permanent partial, wage loss, living maintenance, additional awards). The results of BWC analysis will be summarized to the level outlined in the RFP for the consultant’s peer review. Any analysis performed by the consultant will need to be conducted at the level outlined in the RFP or summarized and presented at that level.

Date: 3/17/2021

Inquiry: 83387


Question:   2. For “as needed” services in section 4.1.4, how many hours by level by year over the last three years were used?

Answer:   See response to question 1 for number of hours. The requests for section 4.1.4 are expected to be infrequent. One major study was conducted 4-5 years ago to review the impact of mergers and acquisitions on experience modifiers and any other requests required minimal time commitment.

Date: 3/17/2021

Inquiry: 83387


Question:   1. Can the BWC provide total number of hours spent by the current actuarial consultant on tasks 4.1.2, 4.1.4, 4.2.2, and 4.3.2 in the past four years?

Answer:   Contract year begins October 1 and ends September 30. Hours are as follows: 4.1.2: Sep 2017=1,266, Sep 2018=1,037, Sept 2019=811, Sep 2020=452 4.1.4: Sep 2017=602, Sep 2018=0, Sept 2019=0, Sep 2020=18 4.2.2: Sep 2017=1,424, Sep 2018=1,355, Sept 2019=1,413, Sep 2020=1,548 4.3.2: Sep 2017=7, Sep 2018=514, Sept 2019=155, Sep 2020=581

Date: 3/17/2021

Inquiry: 83387


Question:   Will the federal adjudication status level (FASL) be identified (entitled, denied, pending, etc.)?

Answer:   Yes.

Date: 3/10/2021

Inquiry: 83254


Question:   Will the date that the claimant left coal mine employment (CME year) be provided?

Answer:   Termination dates are available for all employees.

Date: 3/10/2021

Inquiry: 83254


Question:   Often the claim “status” for BL claims is not always clear. How are offsets between federal and state benefits handled?

Answer:   The benefits provided are federal benefits.

Date: 3/10/2021

Inquiry: 83254


Question:   Will we have access to personnel knowledgeable about the loss run to ask questions?

Answer:   Yes.

Date: 3/10/2021

Inquiry: 83254


Question:   What fields will be contained in the loss run?

Answer:   A wide range of information is available regarding characteristics of the injured worker, any eligible dependents, and details related to medical and indemnity benefits.

Date: 3/10/2021

Inquiry: 83254


Question:   How many years of consecutive annual loss runs (i.e. historical data) are available?

Answer:   Data is available to at least 2009 and potentially dating back to 1997 for some claims.

Date: 3/10/2021

Inquiry: 83254


Question:   Will they include both open and closed claims?

Answer:   Yes

Date: 3/10/2021

Inquiry: 83254


Question:   Will a loss run of individual black lung claims be provided?

Answer:   Yes

Date: 3/10/2021

Inquiry: 83254


Question:   Are claims handled internally or by an outside third party administrator (TPA)?

Answer:   Claims are handled internally with US DOL adjudication.

Date: 3/10/2021

Inquiry: 83254


Question:   How many new entitled claims have been reported in each year for the past 3 years?

Answer:   The latest 3 calendar years have approximately 14 entitlements (CY2017), 15 entitlements (CY2018), and 11 entitlements (CY2019).

Date: 3/10/2021

Inquiry: 83254


Question:   4.2.2 C - Unpaid Claim Liability estimates for Black Lung Fund What data will be available to the successful bidder? How many new claims are reported in each year for the past 3 years?

Answer:   The latest 3 calendar years have approximately 57 new claims (CY2017), 40 new claims (CY2018), and 16 new claims (CY2019).

Date: 3/10/2021

Inquiry: 83254


Question:   In the Phase II Point Scale Rating, subsection A.b (Consulting Firm Credentials), how is the percentage for credentials determined? If a firm has staff of other insurance disciplines (Life, Health, etc.), do credential actuaries in these fields count against the 50%? If the actuarial firm has non-actuarial departments (claims, underwriting, product programmers etc. are these other departments to be included in the total firm staff count?

Answer:   BWC recognizes that a large organization may have multiple departments or divisions and that some of them may have no relevance to actuarial functions or to workers compensation insurance. The focus should be on the actuarial personnel that would be available and able to provide support to the project team. As the work required by BWC is of a more sophisticated actuarial nature and often carries tight timeframes, BWC needs to have an understanding of the composition of the actuarial staff at the disposal of the project team to fill in, should the need arise (through heavy workload, attrition, etc).

Date: 3/5/2021

Inquiry: 83182


Question:   In subsection 4.2.2 (Reserving task description) items N - U are marked as "At the BWCs request." Within the contract period (including optional renewals), how often does the BWC expect to request services pertaining to these items? How often did the BWC request services pertaining to these items during the last 5 years and what were the actual amounts spent per year on these items?

Answer:   Item N. It is expected that presentations to the Board of Directors will be a normal part of the communication process each quarter for sections A, B, and C. Presentations for sections G and H may be included with sections A and B, as needed. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to track presentation expenses separately from analysis expenses. Item O. Education sessions are critical to ensuring the Board of Directors is adequately prepared to receive actuarial reports and presentations. As the BWC has a staff of credentialed actuaries who are capable of performing this task, this clause may be used on a minimal basis. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to separately track this expense. Item P. The BWC regularly reviews the reserving discount rate. As the BWC has a staff of credentialed actuaries who are capable of performing this task, this clause may be used on a minimal basis. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to perform this task within the last 5 years. Item Q. The investment advisors to the BWC regularly conduct an asset-liability management study. As the BWC has a staff of credentialed actuaries who are capable of performing this task, this clause may be used on a minimal basis. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to perform this task within the last 5 years. Item R. The BWC regularly conducts a study on cash flow and liability estimates. As the BWC has a staff of credentialed actuaries who are capable of performing this task, this clause may be used on a minimal basis. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to perform this task within the last 5 years. Item S. As the BWC has a staff of credentialed actuaries who regularly monitor the Individual Case Reserving Systems, this clause may be used on a minimal basis. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to perform this task within the last 5 years. Item T. As the BWC has a staff of credentialed actuaries who evaluate reserves, attendance at legislative sessions may be minimal. We do not have costs specifically associated with presenting the results as we have not requested our current actuarial contractors to separately track this expense. Item U. As the BWC has a staff of credentialed actuaries who regularly review monitor and analyze loss adjustment expenses and administration costs of the State Insurance Fund, this clause may be used on a minimal basis. Additionally, it may be included within the reserving analysis described in other tasks of section 4.2.2 Task Descriptions. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to separately track this expense.

Date: 3/5/2021

Inquiry: 83182


Question:   In subsection 4.2.2 (additional retrospective premium return projections) item I, how many private and public employers need premium calculations for their retrospective policies? What does the “additional” mean in this request?

Answer:   The projections will be conducted in aggregate for all retrospective premiums. This will be conducted separately for private employers and public employer taxing districts. The “additional” clause is meant to convey that the estimate is for the amount of our current unpaid loss (reserve) that will eventually be billed to the employers participating in Individual Retro during the 10-year retro billing period.

Date: 3/5/2021

Inquiry: 83182


Question:   In subsection 4.2.2 (Reserving task description) item D, is a separate actuarial opinion needed for each fund or one opinion on the total booked reserves?

Answer:   The actuarial opinion will be for the combination of all funds under the purview of BWC.

Date: 3/5/2021

Inquiry: 83182


Question:   In subsection 4.1.4 (Special Studies task description), how often have “special studies” been performed within the contract period? Specifically, how often did the BWC request services pertaining to these special studies over the last 5 years and what were the actual amounts spent per year on these items?

Answer:   Special studies are expected to be infrequent. Two studies were conducted in the last 5 years, one to review a proposed piece of legislation affecting the workers compensation system at a cost of approximately $70,000 and the other to conduct the impact of mergers and acquisitions to experience rating at a cost of approximately $338,000.

Date: 3/5/2021

Inquiry: 83182


Question:   In subsection 4.1.2 (Ratemaking task description) item G regards professional testimony. When was the last instance the BWC required the actuary (hired under the scope of these services) to provide professional testimony and what was the nature of the testimony?

Answer:   There have been no requests to provide professional testimony in at least the last 5 years. A separate contract has been created specific to the litigation at hand.

Date: 3/5/2021

Inquiry: 83182


Question:   In subsection 4.1.2 (Ratemaking task description) items C - H, O, and P are marked as "At the BWCs request." Within the contract period (including optional renewals), how often does the BWC expect to request services pertaining to these items? How often did the BWC request services pertaining to these items over the last 5 years and what were the actual amounts spent per year on these items?

Answer:   Item C. Requests are expected to be infrequent. One request was made to conduct a study each for Individual retrospective, group retrospective, and deductibles in the last 5 years at a combined cost of approximately $480,000. Item D. Requests are expected to be infrequent. Two requests were made to review the experience rating programs in the last 5 years at a combined cost of approximately $189,000. Item E. Requests are expected to be infrequent. Three requests were made to review rate adjustments and rebate programs in the last 5 years at a combined cost of approximately $479,000. Item F. Requests are expected to be infrequent as BWC Actuarial employees currently handle this activity. Communications with interested third parties will be conducted on the occasions when various rate studies have a pronounced effect on certain employer segments. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to track presentation expenses separately from analysis expenses. Item G. There have been no requests to provide professional testimony in the last 5 years. A separate contract has been created specific to the litigation at hand. Item H. There have been no requests to make ratemaking improvements related to case reserves in the last 5 years. Item O. It is expected that presentations to the Board of Directors will be a normal part of the communication process, especially for sections A, B, I, J, and K. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to track presentation expenses separately from analysis expenses. Item P. Education sessions are critical to ensuring the Board of Directors is adequately prepared to evaluate information presented to the Board of an actuarial nature. As the BWC has a staff of credentialed actuaries who are capable of performing this task, this clause is expected to be used on a minimal basis. We do not have costs specifically associated with this activity as we have not requested our current actuarial contractors to separately track this expense.

Date: 3/5/2021

Inquiry: 83182


Question:   Is it the preference of the BWC to have one model that covers all Employer/Funds of the BWC combined or would each fund be modeled separately and then rolled into one overall enterprise risk model?

Answer:   The BWC’s Simple Funding Ratio guidelines applies only to the State Insurance Fund, as outlined in the first paragraph of 4.3.1. At this time, BWC seeks an analysis only for the State Insurance Fund as this fund carries the majority of our exposure to risk.

Date: 3/5/2021

Inquiry: 83196


Question:   4.3 - Has an enterprise risk management (ERM) analysis been done in the past, if so, who was the incumbent ERM firm and what was the cost of the project? What software is the BWC currently using, if any for the ERM analysis?

Answer:   Oliver Wyman is our current actuarial consultant and has provided services for anything related to Enterprise Risk Management. Included is their most recent presentation to the Actuarial Committee of the Board of Directors in November 2020. The cost for that work was approximately $300,000. Similar work was done in 2019 for a similar cost and in 2017 for approximately $435,000. The costs in 2017 were higher as this was BWC’s introductory work on economic capital modeling, which required additional time and effort. BWC does not currently utilize any software; BWC relies on the services of Oliver Wyman, who are free to use tools and products they need to support their efforts.

Date: 3/5/2021

Inquiry: 83196


Question:   Reference 5.17.A, Cost Proposal - Annual Contract Costs, page 29 What were the "not to exceed" costs at the major task level and overall for the previous three years under the Contract?

Answer:   Overall cost for 10/01/2018 - 09/30/2019 was $1,434,421.13 (Ratemaking $285,515.75, Reserves $670,765.00, Other Projects $478,140.38). Overall cost for 10/01/2019 - 09/30/2020 was $1,505,779.50 (Ratemaking $299,863.00, Reserves $703,990.00, Other Projects $501,926.50). Overall cost for 10/01/2020 - 09/30/2021 was $1,543,524.38 (Ratemaking $307,274.25, Reserves $721,742.00, Other Projects $514,508.13)

Date: 2/22/2021

Inquiry: 83073


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Inquiry period ended:  3/17/2021 8:00:00 AM