Request for Proposal
Property and Liability and Workers Compensation Claims Audit
July 24, 2003
Page 1 of 5
MARCIT
REQUEST FOR PROPOSALS
Property and Liability and Workers Compensation Claims Audit
MARCIT, Kansas City, Missouri, is soliciting proposals to conduct an on-site claims audit of MARCIT's property and liability, and workers compensation claims operations.
Audit Objectives
MARCIT is seeking proposals from qualified claims auditing firms for the purpose of meeting the following objectives:
1.Verify that claims services and operations are performed effectively in accordance with MARCIT’s performance standards and recommended best practices.
2.Confirm compliance with applicable laws and regulations.
3.Obtain recommendations to improve the claims handling process.
MARCIT
MARCIT is a governmental risk pool, serving Missouri and Kansas local governmental agencies. MARCIT was created in 1983 under specific enabling legislation.
MARCIT offers three programs to its Members: workers compensation (WC), property and liability (P&C) and employee benefits (EB).
The employee benefits program is not included in this RFP.
WC has 35 members and premiums of about $ 3,011,008. P&C has 31 members and premium income of about $ 3,483,648. Not all Members participate in both the programs.
MARCIT provides service to its Members with a small staff and contracts with third party administrators to perform most administrative functions. The TPA for all WC and P&C services is: Thomas McGee L.C., 920 Main Street, Kansas City, MO 64105, 800-423-9044. McGee provides claims handling, underwriting and reinsurance brokerage services.
Attorneys selected by MARCIT provide legal defense. The MARCIT staff provides loss control services. All WC and P&C members are located in Missouri.
Program Overview
MARCIT's Property and Casualty program is an excess pooling arrangement under which Members have a significant deductible.
The property program requires Members to pay the first $ 5,000 of each loss. MARCIT is responsible for the next $ 20,000 of each loss. The excess carrier satisfies losses above $ 25,000. The excess carrier is Travelers Insurance Company. The coverage document is a Traveler’s policy with the policy limits of about $ 490 million.
The casualty program has a significant Member deductible. The Member is responsible for the first $ 25,000 of each loss including both ALAE and indemfication. MARCIT retains the next $ 975,000 of each loss. The reinsurer is responsible for losses above $ 1 million to policy limits. The program is on a modified claims made manuscript form. The coverage document is broad and includes general liability, E&O, auto physical, auto liability, law enforcement and employment practices coverages. Missouri has enacted both governmental immunity and liability caps for local governmental entities. The liability program includes auto physical damage coverage and employee fidelity coverage. The Members’ deductible is $ 5,000 for auto physical and $ 25,000 for employee fidelity.
Workers compensation is governed to a major degree by statutory provisions and State of Missouri rules and regulations. Missouri law requires statutory limits for all workers compensation carriers. MARCIT retains the first $ 250,000 of each WC claim.
The audit covers the 2-year period July 1, 2001 to June 30, 2003.
Claims Data
Claims information for the period July1, 2002 to June 30, 2003:
Number claims: property, 13; casualty, 215; WC, 355.
Number of open claims: property, 4; casualty, 98; WC, 115.
Number of claims in litigation: property, 0; casualty, 11; WC, 5.
Please note that the loss data is dependent on the number of participants which may vary from year to year.
Scope of Services Desired
The on-site claims audit shall focus on MARCIT's approach to claims services and operations and shall address the following issues:
- Oversight of claims adjusting process including settlement authority, Member contact and communication, and quality and thoroughness of investigation compared to recommended best practices.
- Deductible billing procedures.
- Litigation management process including attorney selection criteria and process, reporting procedures, monitoring of files, case management and legal expenses.
- Claim reserve practices including accuracy and timeliness of reserve review and adjustment.
- Coverage analysis.
- Adjustor workload including overall workload.
- Claim management process including diary and record controls, claims handling procedures, quality and appropriateness of written policies and procedures, assessment of quality of file documentation, and level and effectiveness of supervisory oversight and quality control.
- Claim management information system including accuracy and tracking of claims, and distribution timeliness and accuracy of information provided to Members and others.
- Accuracy and timeless of communication with Members, reinsurers, other service providers and MARCIT staff.
The auditor shall prepare a written report to be presented to MARCIT's Board of Directors. This final report shall inform MARCIT's leadership as to whether its claims program is properly managed and operated. Additionally, the final report should make recommendations for MARCIT to meet best practices in public pool claims handling.
Scope of Audit
The auditor shall use appropriate sampling techniques that will provide a 90% level of confidence. The sampling techniques and methodology shall be outlined in the RFP. The sampling techniques shall include at least the following factors:
- Open files from each adjustor;
- Open files in litigation;
- P&C files with reserves greater than $ 20,000 and WC files with reserves greater than $ 5,000;
- A representative number of files from all lines of coverage;
- Closed files for each adjustor.
MARCIT, as of July 1, 2003, has 55 liability files and 35 WC files in litigation.
Timetable, Copies
- RFP sent to interested firms September 3, 2003
- RFP Due October 3, 2003
- Selection of Auditor October 17, 2003
- Final Report Due December 19, 2003
- Report to Board of Directors January 16, 2004
Submit 15 copies of the final report.
Proposal Requirements
The RFP shall clearly address the following:
1.The scope of work to be completed and services to be provided.
2.Description of special services, capabilities or experiences that distinguish you firm from other firms.
3.Provide a history of the firm as well as a resume of the individuals who will supervise or perform any professional work on the audit.
4.Provide names and contact persons and phone numbers of at least five (5) governmental risk pools and/or insurance company clients for whom the firm have provided similar auditing services.
5.Outline your fees and charges, including a not-to-exceed figure, for all work associated with providing the necessary auditing services to MARCIT.
Additional Requirements
The firm is expected to enter into a professional services agreement for services that will incorporates this RFP, the firm’s proposal, a statement of independence, and other normal requirements including professional liability insurance, errors and omissions coverage, hold harmless and indemnification clauses.
All costs associated with the preparation and delivery of the RFP, required copies, and presentations shall be the responsibility of the individual or firm submitting the proposal.
Selection Process
Each RFP will be reviewed and a select number of firms will be invited, at the firm's cost, to make a presentation of its proposal. MARCIT will make a selection of the firm that in MARCIT's sole opinion meets MARCIT's needs.
Reserved Rights to MARCIT
MARCIT reserves the right to waive any requirements in this RFP. All submitted proposals are the property of MARCIT. Award of the contract will be made to the firm that, in MARCIT’s sole opinion, best meets MARCIT’s need and concerns. This is a professional services agreement and cost is only one, but not the controlling factor, in award of the contract.
Proposal Submission Information
Four (4) copies of the written proposal must be submitted to MARCIT by 5 PM, Central Standard Time, October 3,2003.
Please submit your proposal to:
Rufus L. Nye, President and CEO
MARCIT
600 Broadway, Suite 300, Kansas City MO 64105-1554
Bidders are responsible for familiarizing themselves with the requirements outlined in this RFP and to inquire or secure whatever information is necessary to prepare a proposal. Questions may be addressed to Rufus L. Nye at (816) 474-4240.