BMP005616Solicitation_RequirementsFinal.pdf

Request for Proposal under A.R.S. § 41-2534

Notice Page

Arizona Department of Administration

State Procurement Office

1802 W. Jackson, #100

Phoenix, AZ 85007

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 1 of 88

Solicitation Number: BPM005616

Description: Insurance Regulatory, Analytical, Examination, Services

Solicitation Due Date and Time: As indicated in APP

Pre-Offer Conference: Pre-Offer Conference will not be conducted

Proposals will only be accepted online in the “State’s eProcurement System”, Arizona

Procurement Portal (APP), at https://app.az.gov until the “Bid/Offer Due Date” indicated in the

“State’s eProcurement System” for the Solicitation No. shown at the top of this page. Proposals must be in the State Procurement Office’s possession online no later than that deadline.

Submit technical inquiries about navigating and/or submitting proposals in the State’s eProcurement

System to the State’s eProcurement System Help Desk by phone at (602) 542-7600, option 2; or by email to app@azdoa.gov.

LATE PROPOSALS WILL NOT BE CONSIDERED. No extension or grace period will be given for delays or incomplete proposals caused by internet connectivity problems, file uploading difficulties, or misunderstanding of the requirements or procedures for online submission in the “State’s eProcurement System”.

It is the responsibility of the Prospective Offeror to routinely check the APP website for Solicitation

Amendments. Additional instructions for preparing an Offer are included in this solicitation.

Persons with a disability may request a reasonable accommodation, such as a sign language interpreter, by contacting the Solicitation contact person. Requests shall be made as early as possible to allow time to arrange for the accommodation.

https://app.az.gov/ https://app.az.gov/ mailto:app@azdoa.gov

Table of Contents

Request for Proposal under A.R.S. § 41-2534

Solicitation No. BPM00XXXX

Title

Arizona Department of Administration

State Procurement Office

100 N 15th Avenue, Suite 305

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 2 of 88

Click here to return to the Table of Contents

Notice Page

Table of Contents

Solicitation Summary 3

Scope of Work 5

Special Terms and Conditions 6

Addendum A to the Special Terms and Conditions 40

Addendum B to the Special Terms and Conditions 41

Uniform Terms and Conditions 45

Exhibit A 62

Solicitation Summary

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 3 of 88

1. What is the State Soliciting?

The Arizona Department of Administration, State Procurement Office (the State), as authorized under A.R.S. § 41-2501 et seq. is seeking to establish one or more single-agency Contracts on behalf of the Department of Insurance and Financial Institutions, DIFI, (hereinafter referred to as

“State Agency”), and for their sole use, to provide Insurance Regulatory, Analytical, and

Examination Services.

The State anticipates awarding contract(s) with the intent to secure service coverage as needed by the State Agency. Whether or not it actually enters into any contracts, how many contracts it enters into, and how the work is awarded between those contracts are all at the State’s discretion.

Furthermore, the State will use any awarded contracts on an as-needed basis, with no guarantee as to its actual spending under them.

The State reserves the right to accept any item or combination of items specified in the Solicitation, unless the Offeror expressly restricts an item or combination of items in its Offer, and conditions its response on receiving all items for which it provided a proposal. In the event of such restriction, the State will evaluate if an award on such a basis will result in the best value and is in the best interest for the State. The State may otherwise determine, at its sole discretion, that such restriction is non-responsive and deem the Offeror ineligible for further evaluation.

2. What is in the Solicitation?

2.1. At the time of publication, the following documents are included in the Solicitation:

2.1.1. Attachment: BPM005616 Solicitation Requirements

2.1.1.1. Notice / Cover Page

2.1.1.2. Table of Contents

2.1.1.3. Solicitation Summary

2.1.1.4. Scope of Work

2.1.1.5. Special Terms and Conditions

2.1.1.6. Addendum A to the Special Terms and Conditions

2.1.1.7. Addendum B to the Special Terms and Conditions

2.1.1.8. Uniform Terms and Conditions

2.1.1.9. Exhibits (if applicable)

2.1.2. Attachment: BPM005616 Solicitation Instructions

2.1.2.1. Special Instructions to Offerors

2.1.2.2. Standard Instructions to Offerors (RFP)

2.1.3. Solicitation Attachments

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 4 of 88

2.1.3.1. Offer and Acceptance

2.1.3.2. Boycott of Israel Disclosure

2.1.3.3. Forced Labor of Ethnic Uyghurs Ban

2.1.3.4. Confidential Information Designation

○ Confidential Information Designation (for reference only)

2.1.3.5. Conformance Statements

○ Supplement – Conformance Statements - Exceptions to Instructions

○ Supplement – Conformance Statements - Exceptions to Scope of Work

○ Supplement – Conformance Statements - Exceptions to Contract Terms and Conditions

2.1.3.6. Key Personnel

2.1.3.7. Letter of Insurability

2.1.3.8. Organization Profile

2.1.3.9. Proposed Subcontractors

2.1.3.10. Experience and Capacity Response

2.1.3.11. References

2.1.3.12. Method of Approach

2.1.3.13. AZ Baseline Infrastructure Security Controls

2.1.3.14. Prerequisite Assessment of Arizona Baseline Infrastructure

Security Controls

2.1.3.15. Pricing Document

2.2. The State may issue a Solicitation Amendment at any time after Solicitation publication and before the Offer due date. It is the responsibility of the Prospective Offeror to routinely check the APP website for any Solicitation Amendments and revised documents.

Scope Of Work

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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Scope of W ork

Scope of Work

1. Purpose and Background

1.1. the Arizona Department of Insurance and Financial Institutions (hereinafter referred to as

“State Agency”) is authorized by ARS § 20-148 to contract for and procure, on a fee or part-time basis, or both, such actuarial, technical and other professional services as may be required for the operation of the State Agency.

1.2. The State Agency is permitted by ARS § 20-142(C) to conduct examinations and investigations of insurance matters.

1.2.1 The State Agency is required by ARS § 20-156 to examine the financial affairs, transactions, accounts, records and assets of each insurer seeking to do business in Arizona, and of other authorized insurers as often as deemed advisable.

1.2.2 The State Agency is permitted by ARS § 20-157 to employ experts to correct examinee accounting records and appraisers to valuate real estate.

1.2.3 The State Agency is permitted by House Bill 2322, Chapter 238 Second Regular

Session 2018 to conduct examinations and investigations of insurance matters related to health insurer provider credentialing.

1.2.4 Insurers that hold a certificate of authority issued pursuant to ARS § 20-216 generally file financial statements with the State Agency pursuant to statutory accounting practices. Financial examinations of these insurers must be conducted in accordance with the NAIC Examiners Handbook to determine whether those statements are in accordance with statutory accounting standards. Captive insurers that hold a certificate of authority issued pursuant ARS § 20-1098.01, and certain other entities over which the State Agency has examination authority, may prepare and file their financial statements using generally accepted accounting principles. Examinations of entities using generally accepted accounting principles will be conducted pursuant to the NAIC Examiners Handbook, where applicable.

1.2.5 The State Agency may pursuant to ARS § 20-358 utilize independent contractor examiners to review workers’ compensation manuals of classification, rules, rating plans and rates.

1.2.6 The State Agency must pursuant to ARS § 20-1615 and AAC R20-6-604.03 establish prima facie rates for credit disability insurance, credit property insurance

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 6 of 88 and credit life insurance, and may contract for such actuarial, technical, and other professional services as may be needed pursuant to ARS § 20- 148.

1.2.7 The State Agency is required by ARS §§ 11-952.01(M), 15-382(B)(2) and 41-

621.01(K) to examine each public agency pool and each contractor pool.

1.2.8 ARS §§ 20-662 and 20-683 establish the Arizona Property and Casualty Fund and the Arizona Life and Disability Insurance Guaranty Fund, respectively, within the

State Agency. The State Agency is authorized by ARS §§ 20-678 and 20-691 to examine the funds

1.2.9 The State Agency may review compliance of insurers and other regulated entities with Arizona statutes and rules governing premium rates, rating practices, reasonableness of benefits in relation to premium charged, policy form or rate filings and related requirements. Such services may be required as part of, or independent from, a financial examination.

1.2.10 The State Agency may conduct insurance risk assessment and valuation analysis necessary to implement state-adopted provisions of the federal Patient Protection and Affordable Care Act (“PPACA”). Services may include threshold rate review, review of benefit plan design or other assessments of health care insurance.

1.2.11 The State Agency may, pursuant to ARS § 20-156(A), conduct timely pay and grievance examinations, which involve verifying that insurers are paying claims in a timely manner, have an effective internal system for resolving grievances, and are paying appropriate interest if claims are not paid timely.

1.2.12 The State Agency may, pursuant to ARS § 20-156(A), conduct market conduct examinations, which can involve the review of marketing, advertising, underwriting, premium rating, complaints and claims activities of licensed insurers to determine compliance with Arizona and Federal laws and rules.

1.3. The State Agency is authorized by ARS § 20-159(B) to compensate independent contractors utilized pursuant to ARS § 20-148 for travel expenses, living expense allowance and per diem compensation. Persons receiving reimbursement or compensation are required by ARS § 20-159(C) to provide a detailed account of all expenses and compensation necessarily incurred on account of an examination.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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1.4. The State Agency is required to collect retaliation pursuant to ARS § 20-230 when another state or foreign country imposes taxes, fees, assessments, fines, penalties, licenses, deposit requirements or other material obligations, prohibitions or restrictions (collectively

“obligations”) upon Arizona- domiciled insurers that in total exceed the total obligations that Arizona imposes upon similar insurers of the other state or foreign country. Retaliation is calculated as part of insurer annual tax- and fee-reporting requirements. The calculation of retaliation excludes ad valorem taxes on real or personal property, personal income taxes, surcharges that are imposed on policyholders (even when collected and remitted to the state by insurers), and credits to insurers for the payment of insolvent insurer policyholder claims. The obligations imposed by each state can differ by type of insurer, by type of insurance transacted, by calculation methodology, by time period, and by other factors.

1.5. The State Agency is required to calculate an “addition to the rate of taxes” pursuant to

AAC R20-6- 205 for each state in which counties, cities and other political subdivisions of the state levy taxes, fees, assessments or other obligations on Arizona insurers, other than ad valorem taxes on real or personal property, personal income taxes, or credits to insurers for the payment of insolvent insurer policyholder claims.

2. Definitions

2.1. “AAC” means Arizona Administrative Code

2.2. “ARS” means Arizona Revised Statutes.

2.3. “Consulting project” means the State Agency’s assignment and specification of consulting services work to a contractor.

2.4. “Consulting services” means providing expert advice to the State Agency related to the

State Agency’s regulatory responsibilities or activities, including but not limited to financial examinations, market conduct examinations, insurance risk assessment and valuation analysis, information technology, reinsurance, supervision, conservatorship, claims payment processes, insurance rate review, and investments.

2.5. “Contractor” is an individual or a business entity with one or more individuals that has been awarded a contract pursuant to this RFP.

2.6. “Corrective Action Plan” means the plan developed by the State Agency and/or an examinee to identify steps the examinee will take to correct deficiencies identified in the examination report.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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2.7. “En route.” An examiner is en route when in travel status and traveling between the examiner’s residence and the examination site, or between examinations sites, except it does not include commuting between an examiner’s lodging and the examination site.

2.8. “Exam location” means the metropolitan area in which the examination site is located.

2.9. “Examination” means to review and evaluate an insurer’s business processes and controls

(including the quality and reliability of corporate governance) to assist in assessing and monitoring its current financial condition and prospective solvency; and, an insurer’s controls, market conduct processes, and market transactions including but not limited to company operations and management, complaint handling, marketing and sales, producer licensing, policyholder services, underwriting and premium rating, policy forms and filings, claims handling, network adequacy, benefit design, and provider credentialing in order to assess its compliance with Arizona and Federal laws.

2.10. “Examinee” is any entity examined pursuant to the director’s authority under Arizona

Revised Statutes Title 20.

2.11. “Examiner” is an individual employee or subcontractor that the contractor uses to perform services pursuant to this RFP.

2.12. “Examiner-In-charge” (or “EIC”) is an examiner appointed by the State Agency who is responsible for on- site management of the examination. The EIC will allocate examination tasks among other examiners under the supervision of the State Agency and will ensure that examination work is completed in an efficient and effective manner in accordance with the NAIC Examiners Handbook.

2.13. “Examination services contractor” means a person awarded a contract pursuant to this

RFP to examine the financial affairs, transactions, accounts, records, assets, market transactions and/or compliance with Arizona and Federal laws pertaining to the conduct of business of an authorized examinee.

2.14. “Examination site” and “project site” mean an office location of an examinee, the office of the State Agency, or another work location as assigned by the State Agency.

2.15. “Examination Progress Report,” completed by the EIC in a form prescribed by the State

Agency, provides a high-level overview of the examination, and may include a description of examination coordination roles, the examination status, summary of work performed, existing risk factors and circumstances that increase or decrease risk, current examination findings, strength of company management cooperation, issues involving coordination with the State Agency’s examination specialist, and other information the State Agency determines it needs.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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2.16. “Examination Status Report,” completed by the EIC in a form prescribed by the State

Agency, describes the progress of work completed on an examination in relation to the approved examination budget. The Examination Status Report for each examination may include information such as the estimated examination completion date, the percentage of examination fieldwork completed, the hours expended on each phase of the examination and other information the State Agency requires.

2.17. Lodging, the total cost of which is less than or equal to the published limits applicable to the destination, may be reimbursed or paid by the State when purchased in conjuction with official State business. Refer to Arizona Accounting Manual Topic 50 Travel, Section

30 Hotels, Motels and Lodging for complete guidelines.

2.18. Meals and Incidentals – Refer to State of Arizona Accounting Manual Topic 50 Section 25

Meals and Incidentals: Meals, the cost of which are less than or equal to the published limits, may be reimbursed when purchased and consumed in conjunction with official State business. Refer to Arizona Accounting Manual for a complete description of Meals and

Incidentals reimbursement guidelines. .

2.19. “Guaranty Fund Claims Examination” means a review by one or more individual who meets the requirements of Market Conduct Senior Insurance Examiner as set forth in this

RFP of the adjusting, handling and processing of claims by guaranty fund employees and contractor to determine if claims were processed in accordance with generally accepted insurance industry standards and in accordance with laws applicable to each guaranty fund.

2.20. ”NAIC” means the National Association of Insurance Commissioners.

2.21. “NAIC Examiners Handbook” means the NAIC Financial Condition Examiners Handbook when in reference to financial examination services or the NAIC Market Regulation

Handbook when in reference to market conduct examination services.

2.22. “Offeror” means a person (individual or business entity) who makes a proposal in response to an RFP.

2.23. “Request for proposals” (or “RFP”) means a solicitation process in which the State of

Arizona solicits proposals from vendors to provide goods and/or services.

2.24. “Retaliation” means the amount defined in ARS § 20-230 that a foreign insurer owes

Arizona when the total taxes, fees, assessments, fines, penalties, licenses and other obligations (collectively, “obligations”) that would be levied on an Arizona insurer by a foreign insurer’s domicile exceeds the total obligations that Arizona charged the foreign insurer.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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2.25. “Retaliation research” means researching, querying, collecting and analyzing information, and producing forms, reports and instructions to be used by foreign and alien insurers and other entities to calculate and report retaliation.

2.26. “State Agency” means the Arizona Department of Insurance.

2.27. “Threshold rate review” means review of certain health insurance rate increases that are subject to review under applicable regulations, including without limitation, AAC R20-6-

2301 et seq.

2.28. “Travel status” means the period of an assigned examination that is performed at an examination site that is in excess of 75 miles from the examiner’s place of residence and that requires at least one overnight stay.

2.29. “Work product” means Reports of Examination, examination-related work papers and associated documentation, status reports, examination budgets, assignment-related correspondence and other examination-related information produced by the contractor or its examiners.

2.30. “Work week” means a week beginning at 12:00 a.m. Saturday and ending at 11:59 p.m.

the following Friday.

3. Scope of Work

3.1. Mandatory Requirements:

3.1.1. Offerors are required to complete and pass the Arizona Mandatory Control Baseline Prerequisite Assessment (https://azdohs.gov/file/4357) and submit as part of their Offer. Arizona Department of Homeland Security (AZDOHS) Cyber Command will evaluate and rank submitted Arizona Baseline Infrastructure Security Controls for completeness, attention to detail, and understanding of NIST security controls and framework. AZDOHS Cyber Command will forward assessment results and recommendations to the Procurement Officer. Results of these IT security control reviews are for internal use only and will not be shared with responding bidders, though the results may be used by the Procurement Officer to determine Offeror susceptibility for award.

3.1.2. Pursuant to State Data Classification Policy P8110, and the Data classification defined in the Special Terms and Conditions, the Contractor will have access to the following type of Data as part of its work under the Contract:

☐ Low Impact Data (AZRAMP 125 / NIST Low Impact)

☐ Moderate Impact Data (AZRAMP 325 / NIST Moderate Impact) https://azdohs.gov/file/4357 https://azdohs.gov/information-security-policies-standards-and-procedures

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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3.2. Additional Requirements:

3.2.1. An examination services contractor shall provide examination services in accordance with the provisions of applicable ARS and the AAC. Contractors shall perform the services in accordance with standards set by the State Agency and the NAIC Examiners Handbook.

3.2.2. A contractor employing or subcontracting with a person who holds an insurance license issued by the State Agency shall provide to the director, for retention in the person’s insurance license file, a signed and dated attestation that the person shall not transact business under the license during the term of the person’s employment by the contractor. The person may renew the insurance license and avoid the lapse of the license by completing all license renewal requirements.

3.2.3. The contractor and its employees and subcontractors must comply fully with ARS § 20-149 throughout the term of the contract and shall ensure that each person assigned to provide services under the contract has read and understands ARS § 20-149, has no conflicts of interest and does not engage in any prohibited activity.

3.2.4. The State Agency may provide to the contractor NAIC reference manuals, specialized software, access to electronic data and other materials owned by or licensed to the State Agency. The contractor shall safeguard the manuals, software and materials to prevent their loss or theft, shall not provide access to the manuals, software or materials to anyone other than the contractor’s employees or subcontractors, and the contractor and its employees and subcontractors shall only use the manuals, software and materials in connection with performing work under the contract.

3.2.5. The contractor, on the contractor’s own time an at the contractor’s expense, shall obtain training and take other steps necessary to ensure the contractor and the contractor’s employees and subcontractors have and maintain an up-to-date working knowledge of evolving NAIC examination processes and standards, and maintain required professional designations. The State Agency may require a contractor to provide evidence of continuing training within 30 calendar days of advanced notice.

3.2.6. The State Agency shall not be responsible for loss or damage of the contractor’s supplies or equipment. A contractor shall take reasonable steps to safeguard the contractor’s supplies and equipment against theft or loss. A contractor may pursue a claim for loss or damage with an examinee; however, the State Agency must be provided copies of all correspondence and reparation information associated with the claim.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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3.2.7. The contractor shall maintain up-to-date and accurate supplier profile on the electronic procurement system, accessible over the Internet at https://app.az.gov, including, but not limited to, the contractor’s addresses, telephone number, fax number, e-mail address, and information as to whether the contractor is a small business, a minority-owned business and/or a woman-owned business. A contractor who is an individual or sole proprietor shall identify itself as a small business.

3.2.8. The contractor shall notify the Arizona State Procurement Office in writing within 30 days of using a new name or changing in ownership. As of the date of this solicitation, the Arizona State Procurement Office can be reached at 602- 542- 5511 for instructions on the information that needs to be submitted.

3.2.9. Prior to commencing work under the contract, the contractor shall furnish the State Agency a “State of Arizona Substitute W-9 & Vendor Authorization Form,” accessible from the Arizona General Accounting Office Internet “Online Forms” web page at https://gao.az.gov/publications/forms. The Substitute W-9 is accessible toward the bottom of the web page in a section entitled, “Vendor Forms.”

3.2.10. A contractor may accelerate its receipt of payments by having payments directly deposited into a designated bank account (instead of having payments printed on a paper check/warrant and sent by mail). To arrange for direct deposit, a contractor may complete Form GAO-618, “ACH Vendor Authorization,” accessible from the Arizona General Accounting Office Internet “Online Forms” web page at https://gao.az.gov/publications/forms. Form GAO-618 is accessible toward the bottom of the web page in a section entitled, “Vendor Forms.”

3.3. Work Assignments

3.3.1. Based on the qualifications of a contractor and its examiners, a contractor may be awarded a contract for one or more “service categories” as delineated in the Price Sheet and in Paragraphs 4 through 4.14.2, Contractor Service Categories. A contractor and its employees and subcontractors are only eligible to be assigned work in service categories for which the contractor is awarded a contract.

3.3.2. The State Agency will determine staffing requirements necessary to appropriately conduct its examinations and will assign examiners based on the service categories described in Paragraphs 4 through 4.14.2, Contractor Service Categories. Accordingly:

https://gao.az.gov/publications/forms https://gao.az.gov/publications/forms

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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a) The State Agency will determine the specific contractors and examiners that will be assigned to each examination or consulting project.

b) A contractor and its employees and subcontractors shall be utilized on an as-needed, if- needed basis. The State Agency at its sole discretion may terminate a contractor’s work assignment at any time during the term of the assignment.

c) The State Agency shall have exclusive authority to determine the appropriate service category that applies to each work assignment made to a contractor or a contractor’s employee or subcontractor, regardless of whether the contractor or its employee or subcontractor possesses qualifications to complete a work assignment at a higher service category level.

3.3.3. The State Agency may assign the contractor to conduct examinations of licensed insurers, reinsurers, captive insurers, the Arizona insurance guaranty funds, municipal risk pools, rating organizations, advisory organizations, rate service organizations and other entities over which it has statutory examination authority.

The examinations may be either on a full-scope, limited-scope, consulting or interim examination work basis including any necessary pre-examination preparation, post-examination services and other services attendant to fulfilling State Agency goals/requirements/needs in accordance with Arizona law and rule.

3.3.4. The State Agency may assign a contractor to a consulting project to provide expert advice to the State Agency related to the State Agency’s regulatory responsibilities or activities, including but not limited to financial examinations, market conduct examinations, insurance risk assessment and valuation analysis, rate analysis, information technology, cybersecurity, reinsurance, supervision, conservatorship, claims payment processes, insurance rate review, and investments.

3.3.5. The State Agency may assign a contractor to research laws, regulations, rules and practices applied by each state that would impose on an Arizona insurer taxes, fees, assessments, fines, penalties or other material obligations in the other states;

and, to develop forms in formats prescribed by the State Agency to collect information from insurers that accurately calculate each foreign insurer’s retaliation liability in accordance with ARS § 20-230.

3.3.6. The State Agency may assign the contractor to collect information from Arizona-domiciled insurers, risk retention groups, captive insurers, and other entities to determine the taxes, fees, assessments, fines, penalties or other material obligations that Arizona-domiciled insurers paid to counties, cities, and other

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 14 of 88 political subdivisions of each other state, and to calculate additions to the rates of tax in accordance with AAC R20-6-205.

3.3.7. The State Agency may designate an examiner on an examination as an Examiner-in-Charge (EIC) to carry out the responsibilities and authority of an EIC as set forth in Paragraphs 4.4 and 4.13.4 of this Scope of Work.

3.3.8. The State Agency will monitor examination activities performed by the contractor, and may select a contractor to act in the capacity of an Examination Supervisor to assist in monitoring examination activities performed by other contractors.

3.3.9. The contractor shall be required to conduct assigned examination work at the offices of the examinee, either within or outside the State of Arizona, or at any other examination site designated by the State Agency.

3.3.10. On an interval determined by the State Agency, a contractor may be required to furnish the State Agency with Examination Status Reports and Examination Progress Reports.

3.3.11. A contractor may be required to help an examinee formulate, and evaluate compliance with, a Corrective Action Plan.

3.3.12. Contractors whose engagements include reviewing manuals of classification, rules, rating plans, and rates, including threshold rate review, may be required to use the NAIC’s System for Electronic Rate and Form Filing (“SERFF”). The State Agency will arrange with the NAIC to provide a contractor with access to the

SERFF.

3.4. CONDUCT AND PRODUCTS OF WORK

3.4.1. The contractor shall furnish the State Agency with work product by transmission methods, in electronic and physical formats, and on media, acceptable to the State Agency.

3.4.2. Except for software programs, document templates and other resources that the contractor develops at no charge to the State Agency, the contractor’s work product shall at all times be the property of the State Agency. The work product, whether in electronic or hard-copy form, must be made readily available by the contractor at the request of the State Agency.

3.4.3. The contractor may use the photocopiers and/or facsimile machines of an examinee or the State Agency for contract- related purposes.

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Insurance Regulatory, Analytical, Examination

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Arizona Department of Administration

State Procurement Office

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3.4.4. With regard to computer hardware and software:

a) A contractor must have the equipment, software and knowledge to be able to produce electronic documents in formats acceptable to the State Agency. Currently, the State Agency uses “Microsoft Office 2019” software products for word processing, spreadsheets and databases however, the State Agency is in the process of migrating to most Google Suite software products. A contractor, at its expense, must upgrade computer hardware and software as necessary to be compatible with software utilized by the State Agency, such as TeamMate and remain able to deliver work products in formats acceptable to the State Agency.

b) A contractor may be required to efficiently and effectively select random samples and synthesize sampled data from examinee electronic transactions.

c) A contractor may be required to use electronic software products for the development and maintenance of automated examination work papers.

d) The State Agency currently allows, if necessary, contractors to use the State Agency’s copies of the current “TeamMate” software to document work and maintain examination work papers. Access to TeamMate projects will be provided to the contractors upon approval from the State Agency’s designated liaison(s). Access to TeamMate projects may be terminated at any time by the State Agency’s designated liaison(s).

3.4.5. A financial examination draft report, Management Representation Letter, Letter to Management and Summary Review Memorandum, or market conduct examination draft report prepared by a contractor shall conform to the guidelines set forth in the NAIC Examiners Handbook unless the State Agency has determined that alterations are appropriate or that another format is acceptable.

3.4.6. Each contractor assigned by the State Agency shall prepare an affidavit that certifies the contractor conducted the examination in a manner consistent with the standards and procedures required by the State Agency and, if applicable, by the NAIC Examiners Handbook, and that the examination work papers document compliance with those standards and procedures.

3.4.7. An examination report prepared by a contractor conducting a threshold rate review shall explain how the contractor’s analysis and conclusions account for:

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Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

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a) The reasonableness of the insurer’s assumptions underlying the rate increase; and,

b) How the factors set forth in AAC R20-6-2305(B) led the contractor to its conclusions.

3.4.8. As it relates to Guaranty Fund Claims Examinations:

a) Prior to commencing work, the contractor shall present to the Guaranty Fund Executive Director or designee a plan and budget for completing the examination. The plan and budget shall delineate the key personnel to be assigned, an estimate of the total billable hours required for the audit work, and the expenses the Contractor expects to incur. A purchase order issued by the Executive Director or designee shall constitute authorization for the contractor to commence work.

b) If the contractor finds that additional work should be performed that would cause the scope or budget to exceed that identified in the plan and budget, the contractor shall describe in writing the additional work the contractor recommends be completed. The contractor shall not commence any additional work without first receiving either an amended purchase order or additional purchase order issued by the Executive Director.

c) The contractor shall designate one individual acceptable to the State Agency to serve as the contractor’s contact person responsible for coordinating responses to questions and requests from the applicable guaranty fund board, and for resolving any deficiencies in the examination.

d) The contractor shall have, maintain, and adhere to written procedures for auditing claims, which shall include at least the following:

i. Obtaining a listing of all claims handled by the Fund or its contractor(s) during the period under audit, including, for each claim, the insured’s name, the claim number, the claimant name, and the amount and type of claim.

ii. Analyzing the size and range of claims identified on the claims listing.

iii. Using the size/range analysis to generate a sample of claims to be audited, ensuring that at least 75% of claims at or exceeding $50,000 are audited, and ensuring that a statistically valid sample of other claims are audited.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 17 of 88

iv. Obtaining and reviewing claim files

v. For a property or casualty claim, verifying the claim was a “covered claim” as defined by ARS § 20-661(3).

vi. For a life, disability or annuity claim, verifying the claim is eligible for payment under the terms and conditions of the insurance policy or annuity contract.

vii. Verifying that claim payments were made to appropriate payees, were adequately supported by documentation, and were properly approved.

viii. Verifying that recovery of disbursements from all other available sources, such as from subrogation, was effectively pursued.

ix. Verifying that claims were timely handled, were not duplicative, and were properly calculated.

e) If the contractor finds errors/exceptions in more than 10% of claims sampled for any claims administrator or for any class of claims administered, the contractor shall immediately apprise the Executive Director, who will determine whether additional work is indicated, and if so, shall issue an amended or additional purchase order for the additional work.

f) The examination report shall describe the scope of the examination, the sample selection procedures, exceptions noted and other specific, and findings as to whether claims were administered in accordance with insurance industry claims administration standards.

g) If requested by a guaranty fund board with at least one week’s notice, the contractor shall provide a qualified representative of the contractor to any board meeting.

3.4.9. If called upon, the contractor shall assist the State Agency in responding to any examinee objections to reports of examination or other examination findings and participate in any NAIC Accreditation and/or Certification review. The contractor shall also perform other duties that are reasonably requested by the State Agency and that relate to the examination work performed hereunder, including, without limitation, being called upon to testify as a witness in any administrative or court proceeding demanded by or commenced against any examinee and relating to any matters disclosed by any such examination.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 18 of 88

4. Deliverables by Service Category

The State Agency requires individuals with varying areas and levels of experience and qualifications to effectively and efficiently perform its examinations and consulting projects.

Contractors will be utilized on an as-needed, if-needed basis. The State Agency reserves the right to consider price, qualifications, completion and quality of education/training, the status of licenses and designations, and other factors when determining work assignments to contractors and contractor personnel.

4.1. Financial Examination Services. Contractors providing financial examination services may be required to conduct, or assist on the examination of, any insurer, reinsurer or any other entity regulated by the State Agency, at the State Agency’s discretion. The State Agency may assign a Financial Examination Services Contractor to serve in one or more of the following roles:

4.1.1. Financial Research and Support Assistant – A Financial Research and Support Assistant shall as directed by the State Agency assist on financial examinations or retaliation research work, or may assist information technology specialists, reinsurance transaction specialists, investment specialists, real estate specialists, supervisors/conservators, insurance risk assessment and valuation specialist, or State Agency personnel. Each key person must possess one of the following qualifications:

4.1.1.1 To be assigned work other than retaliation research work, each key person must:

a) Hold a degree or have completed coursework from an accredited college or university in accounting, economics, finance, mathematics, statistics, information technology, or a related field of study; OR,

b) Have a minimum of one year experience performing general examination and/or audit procedures such as, review of general ledger and journal entries, review and summarize agreements, Board, Audit, Investment and other committee minutes and assist the EIC in the review of planning documentation such as the Examination Planning

Questionnaires, SPC work papers and analytical/charter files.

4.1.1.2 To be assigned retaliation research work, each key person should possess all the following knowledge, skills and abilities:

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 19 of 88

a) Expertise in creating relational databases (esp. MS Access); AND

b) Expertise in creating complex spreadsheets (esp. MS Excel) that contain complex formulas; AND

c) Expertise in creating word-processing documents (esp. MS Word) that contain tables, use style sheets and involve other advanced features;

AND

d) Expertise in creating Adobe Acrobat PDF forms containing fields with

JavaScript-assigned values and attributes; AND

e) Technical writing experience that includes development of clear, concise and easily understandable forms and instructions; AND

f) Verbal and written correspondence skills that include use of proper grammar and tone, tact, and diplomacy; AND,

g) Ability to read, comprehend and learn complex laws, rules, policies, procedures, instructions and guidelines; to apply information to work activities; and, to produce work products that meet the State Agency’s specifications.

4.2. Financial Examiner – A Financial Examiner must:

4.2.1. Have and be able to apply knowledge, skills and ability to be able to independently perform examination activities in accordance with the NAIC Financial Condition Examiners Handbook and with instructions provided by the State Agency.

4.2.2. Have a bachelor’s or post-graduate degree in accounting, finance, economics, or a related field from an accredited college or university and must have at least one of the following:

a) Certification as an Accredited Financial Examiner (AFE) by the Society of

Financial Examiners (SOFE); OR,

b) Certification as a Certified Financial Examiner (CFE) by the SOFE; OR,

c) Certification as an Automated Examination Specialist (AES) by the SOFE; OR,

d) License by the American Institute of Certified Public Accountants as a Certified

Public Accountant (CPA); OR,

e) Two years’ experience in generally accepted accounting principles (“GAAP”) accounting as an auditor in a certified public accounting firm or as a corporate internal auditor.

4.3. Senior Financial Examiner -- A Senior Financial Examiner must:

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 20 of 88

4.3.1. Have and be able to apply the knowledge, skills and ability to be able to execute all responsibilities of a Financial Examiner and to respond to the most complex, difficult and unusual examination issues that may arise; AND,

4.3.2. Be certified by the SOFE as a CFE, or be licensed by the American Institute of Certified Public Accountants as a Certified Public Accountant (CPA)

4.4. Financial Examiner-In-Charge – A Financial Examiner-In-Charge must:

4.4.1. Have and be able to apply the knowledge, skills and ability to be able to execute all responsibilities of a Senior Financial Examiner, and be responsible for the report, day-to-day coordination and direction of the examination; AND,

4.4.2. Competently administer the duties of an examiner-in-charge as delineated in the NAIC Financial Condition Examiners Handbook

4.5. Supervising Financial Examiner – A Supervising Financial Examiner must:

4.5.1. Have and be able to apply the knowledge, skills and abilities to execute all responsibilities of a Financial Examiner-In-Charge and oversee the simultaneous conduct of more than one examination; AND,

4.5.2. Be certified as a CFE by the SOFE and shall have at least 5 years of experience examining insurance companies: AND,

4.5.3. Be exclusive to the State Agency.

4.6. Financial Analyst – A Financial Analyst must:

4.6.1. Have and be able to apply knowledge, skills and ability to conduct analysis in accordance with the NAIC Financial Analysis Handbook and with instructions provided by the State Agency.

4.6.2. Have a bachelor’s or post-graduate degree in accounting, finance, economics, or a related field from an accredited college or university.

4.7. Senior Financial Analyst – A Senior Financial Analyst must:

4.7.1. Have and be able to apply the knowledge, skills and ability to be able to execute all responsibilities of a Financial Analyst and to perform the more complex, difficult and unusual analysis issues that are associated with larger and more complex insurance companies.

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 21 of 88

4.7.2. Be certified by the Society of Financial Examiners as a Certified Financial Examiner (CFE), or be licensed by the American Institute of Certified Public Accountants as a Certified Public Accountant (CPA).

4.8. Information Technology Specialist - The Information Technology Specialist may be required to evaluate and render opinions regarding examinees’ data processing operations and systems, including but not limited to, assessments with respect to the existence and effectiveness of internal control policies and procedures. The State Agency may require the contractor to work with one or more Financial Research and Support Assistant employees or subcontractors to develop and execute data queries, spreadsheets and reports; locate, note, reference and summarize specified information within documents and datasets;

organize information into specified formats; make inquiries and record responses; and perform other work activities that support the contractor. An offeror should consider the support it may require and may include one or more Financial Research and Support

Assistant or other categories of services specified in this Scope of Work as part of its offer.

An Information Technology Specialist must:

4.8.1. Be designated as Certified Information Systems Auditor (CISA) by the Information Systems Audit and Control Association, or designated as Automated Examiner Specialist by the Society of Financial Examiners; AND,

4.8.2. Have two years’ experience performing audits of data processing operations and systems for the State Agency, for any other state insurance department or as a member of the internal audit staff for an insurer, financial services firm or organization.

4.9. Reinsurance Transaction Specialist - The Reinsurance Transaction Specialist may be required to analyze and render opinions regarding reinsurance transactions including, but not limited to, analyzing the effect of reinsurance on the financial condition of examinees and affiliated entities within an insurance holding company system. The State Agency may require the contractor to work with one or more Financial Research and Support Assistant employees or subcontractors to develop and execute data queries, spreadsheets and reports; locate, note, reference and summarize specified information within documents and datasets; organize information into specified formats; make inquiries and record responses;

and perform other work activities that support the contractor. An offeror should consider the support it may require and may include one or more Financial Research and Support

Assistant or other categories of services specified in this Scope of Work as part of its offer.

A Reinsurance Transaction Specialist shall possess a minimum of two years’ experience analyzing reinsurance transactions in a regulatory or business environment as a principal responsibility and shall either:

Solicitation No. BPM005616

Insurance Regulatory, Analytical, Examination

Services

Arizona Department of Administration

State Procurement Office

Solicitation Requirements | Revision No. 6 | Revised 08-10 | Page 22 of 88

4.9.1. Be a licensed CPA; OR,

4.9.2. Meet the requirements for a Senior Financial Examiner or Insurance Risk Assessment and Valuation Specialist.

4.10. Investment Specialist – An Investment Specialist may be required to appraise the value of structured products; review assets,…