5-Actuarial Scope of Work 1.docx

City of Dallas

Request for Bids (IFS) Project Title: Actuarial Services for Risk Management

Scope of Work

I. Introduction, Purpose and Intent

The City of Dallas is seeking is to establish a three-year service price agreement to provide actuarial service contract for risk management. Consultant for actuarial analysis for self-funded workers’ compensation, general liability and auto liability exposures.

BACKGROUND

The City’s current insurance coverage consists of:

1) Self-insured: Workers’ compensation, General Liability and Auto Liability

a) Workers’ Compensation claims are administered by TriStar Risk Management (Third Party Administrator)

b) General Liability and Auto claims are self-administered by in-house licensed adjusters, supervisor and manager

2) Excess Workers’ Compensation Policy - Texas Municipal League Intergovernmental Risk Pool The City owns and/or leases approximately 900 facilities. Total Insured Value (TIV) as of September 30, 2025 (building and contents) is $5.4 billion. Approximately two-thirds of these values are concentrated in highly protected risk properties. The City operates municipal water and wastewater systems and a sanitation collection system. The City owns and operates Love Field Airport, Dallas Executive Airport, and the Vertiport @ Dallas Convention Center (aviation facilities serve both commercial and private industry). The City owns the Dallas Convention Center and Dallas Zoo, but outsources operations management. The City owns Fair Park Complex and it is managed by the Park and Recreation Department. In addition, the City operates extensive cultural and recreational programs including museums and performing arts, one of the largest and most comprehensive municipal library systems in the nation.

Additional Data/Information:

1) Population Estimate of the City of Dallas: 1,326,087 (U.S. Census Bureau - July 1, 2024)

2) Number of City Employees – 14,093

3) Status of City from a sovereign immunity standpoint - The City of Dallas is a Texas home-rule municipality that by state law is immune from suit and liability from many claims.

II. Qualification of Bidders

The successful bidder should have a minimum of seven (7) years in a business providing actuary analysis and the assigned account representative shall have a minimum of three (3) years’ experience in providing actuary analysis.

The successful bidder shall be a member of the American Academy of Actuaries and Fellows of the Casualty Actuarial Society and meet the Qualification Standards of the American Academy of Actuaries to render actuarial opinions.

The successful bidder shall be an independent consulting firm (not an independent insurance agent). The firm shall not currently be engaged as the broker for the City. The Consultant shall, in its proposal, make a statement regarding its independence and may be disqualified if it is subsequently learned that the firm is not independent, as required.

Background information should be furnished regarding the specific agent/representative who will serve the City, the degree of the agent’s commitment to the City’s account and the expected frequency of agent contact. Information should be furnished as applicable, regarding the size of agency personnel and qualifications (particularly of the agent/representative who will serve the City), services, etc.

Bidders assigned team member(s) shall be a member of the American Academy of Actuaries and Fellows of the Casualty Actuarial Society and meet the Qualification Standards of the American Academy of Actuaries to render actuarial opinions.

Discuss the vendor’s prior experience in providing the proposed services to other organizations of comparable size and state why they should be qualified by the City to be selected. The narrative should emphasize issues that make them unique or give them an advantage over other vendors. Provide references of five clients of which you have provided similar services. References shall include: Client’s Name, Type of Business, Email and Mailing Address, Contact name and Telephone Number.

III. Specifications or Scope of Work Self-insured Workers’ Compensation, General and Auto Liability claims loss data and allocated loss adjustment expenses shall be reviewed for adequacy in accordance with applicable Actuarial Standards of Practice. An estimate of liabilities for claims that have been incurred but not reported shall also be included in any accounting for future liabilities.

The Consultant shall make professional personnel available for routine telephone consultations, meetings, research and advice as required by the City. The Consultant shall provide counsel and/or leadership (as requested) to the City’s Office of Risk Management; shall attend Committee meetings, as mutually convenient, as requested by the City and, if requested, can prepare minutes of such meetings.

Services The successful Actuary Consultant’s services shall include, but not be limited to the following:

Estimating ultimate loss costs, allocated loss adjustment expenses and incurred but not reported, are dependent upon future events, and not reflected in the day-to-day adjusting process. As a result, The City shall conduct an actuarial analysis to accurately identify and account for these future expenses. The data developed in the annual analysis will be incorporated into the City’s budget.

1. The Consultant shall provide pre and post loss consulting.

2. Using a combination of the City’s historical loss experience, industry trends and actuarial methods, the Consultant shall estimate the ultimate value of unpaid liabilities and expenses for existing workers’ compensation and liability claims that have occurred prior to October 1, for the previous fiscal year, and as of March 31 of the following year.

3. The Consultant shall provide an estimate of reserve requirements for claims that have been incurred but not reported prior to October 1, for the previous fiscal year, and as of March 31 of the following year.

4. Using historical loss results and other actuarial methods the Consultant shall estimate the projected loss development cost for the fiscal year beginning in October of the previous year and ending on September 30 of the following year.

5. The Consultant shall also provide recommendations regarding funding guidelines to account for loss development, allocated loss adjustment expenses and incurred but not reported for fiscal year 2025.

6. Changes in employee counts and annual payroll will change based upon service needs. The Consultant shall analyze the potential impact this growth will have on claim counts, loss costs including loss expense and total incurred losses by fiscal year.

7. The Consultant shall update their initial report based upon current fiscal year data and furnish this information to the City. The City shall furnish all loss, payroll and employee counts required to do the initial report as well as the annual updates.

8. The City shall have the ability to request additional reports or modifications to the reports provided by the successful bidder. All additional reports or modifications shall be inclusive of the price quoted in Exhibit A for the duration of the contract.

Timeline

1. The Consultant shall hold a preliminary conference call or meeting with the City to discuss the project parameters no later than one (1) week after contract execution. All financial information required to complete the actuarial analysis should be identified at that time. The City shall make this information available, either through its Third-Party Administrator (TPA), its Risk Management Information System (RMIS) vendor, or from internal records.

2. Additional information or clarification, whether required by the Consultant or the City, shall be requested through email or in writing. A timeframe for response shall be provided upon receipt of such a request.

3. Upon receipt of all required information, the Consultant shall have the draft actuarial analysis completed and sent electronically to the City for review within three weeks after receipt of all required data. Initial questions or clarifications shall be addressed upon completion of the City’s review and incorporated into the preliminary final report. The preliminary final report shall be ready for presentation no later than two weeks after the end of the fiscal quarter, and an electronic copy of the report shall be sent to the City at this time.

4. The actuarial report is required for budget and long-term financial planning. As a result, time is of the essence. The Consultant shall take all reasonable measures to operate within the stated timeframes to insure timely delivery of the final report by the stated due date. The successful bidder shall be available for a conference call or an on-site meeting at the City’s Office of Risk Management, upon request, to review the preliminary final report. The preliminary final report shall be presented no later than two weeks after the end of the fiscal quarter.

5. The Consultant shall make arrangements to present the preliminary final report to the City. If an on-site meeting is required by the City, the presentation shall take place at the City’s Office of Risk Management, located at 1500 Marilla St., Suite 6A-South, Dallas Texas. Scheduling of this meeting shall be coordinated through the City’s Office of Risk Management to ensure that all parties are available for attendance. An electronic copy of the final report shall be sent to the City and made available for the meeting and presentation.

6. Any clarifications or revisions arising out of this meeting shall be incorporated into the final report. An electronic copy of the final actuarial analysis report, with any agreed-upon revisions, shall be submitted to the City within one week after the presentation.

Objectives

1. Cost driver analysis

2. Loss forecasts - ultimate losses (frequency and severity)

3. Analysis of experience, projection of trends and strategic planning

4. Estimate the self-insured unpaid claim liability on a quarterly basis on an undiscounted, actuarial central estimate basis.

5. Estimate a high, medium and low range for the unpaid claim liability

6. Provide loss triangles

7. Provide risk reserve

Study Basis The firm will use actuarial concepts to evaluate claim liabilities of this program revolved principally around two factors:

1. Loss Development

2. Trends

Projection Methods

1. Calculations and estimates will be based on assumptions, data and methodology listed below to project losses to their ultimate levels.

2. Projection Methods to be used:

a. Incurred Loss projection

b. Paid Loss projection

c. Incurred Bornhuetter-Ferguson

d. Paid Bornhuetter-Ferguson

e. Frequency/Severity

f. Loss Cost

g. Fiscal year payment estimates (monthly payments)

h. Loss development triangles

Reporting Schedule

1. Quarter ending 3/31: Full analysis, all lines plus roll-forward projection to 6/30

2. Quarter ending 6/30: [roll-forward from 6/30 analysis]

3. Quarter ending 9/30: Full analysis, three lines plus roll-forward projection to 12/31

4. Quarter ending 09/30: Walk forward of liability claims greater than $200,000 and less than $200,000 for the Controller’s Office use

5. Quarter ending 12/31: [roll-forward from 9/30 analysis]

6. All months: Expected emergence of paid and incurred losses will be provided for the City’s use in comparison to actual emergence.

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