NU Online News Service
The National Association of Insurance Commissioners said it will keep secret the names of bidders competing for a contract to assess the value of insurers' mortgage backed securities.
NAIC said the contract to help evaluate residential mortgage backed securities had gone to PIMCO. It provided no financial details, would not reveal what the winning bid was, or the names of any other bidders.
The organization's decision not to disclose bidder names is the latest move in a process to be totally shrouded from public inspection until a consumer group complained.
The NAIC contract award followed hearings and meetings to discuss becoming less reliant on ratings from nationally recognized statistical rating organizations (NRSROs) for evaluating the 18,000 securities involved.
The NAIC said it received more than 20 responses to an RFP before it eventually selected PIMCO.
NAIC communications director Scott Holeman said it is standard procedure for the association to not release names of bidders during or after an RFP process. He said it is done to protect the organizations that bid but that do not want their names revealed.
J. Robert Hunter, director of insurance for the Consumer Federation of America (CFA) also said for public entities contracting out services, bidders are usually disclosed after the process concludes to those who inquire. He said there may not be a press release sent out, but if one were to ask who the bidders were, that information is generally disclosed.
Mr. Hunter has previously served in public capacity before, including as Texas Insurance Commissioner.
With the NAIC, Hunter said CFA had to fight just to see the RFP, stating that he was initially told the RFP would remain private. After voicing objections, CFA was allowed to see it.
NU Online spoke with two public agencies, including the New York State Insurance Department, and both said when contracting out work after the process is completed they will disclose bidders upon request.
Ron Klug, a spokesman for the New York Department, said once a contract is executed, the department sends a letter to the unsuccessful bidders letting them know they were not selected.
He said the department will not release a list of the bidders, but if someone inquires, the department will instruct him/her to file a Freedom of Information Law (FOIL) request. Then the department releases the letters sent to the unsuccessful bidders to the individual.
Although the NAIC is made up of public officials – state insurance commissioners – Holeman said that the association itself is not a public entity.
Hunter said the NAIC has problems with lack of process, and pointed to the association's original intent to not disclose the RFP as an example. "They just make it up as they go along," he said.
He said the association's "lack of process" is a reason why consumer groups oppose a U.S. Senate Finance Committee proposal to give the NAIC rulemaking authority in drafting health insurance standards.
Consumer advocates announced their opposition to this measure in September. In their statement, Kevin Lucia, a professor at Georgetown University and NAIC funded Consumer Representative, said, "Any institution given the authority to promulgate final regulations which have the force of law – especially those that will determine health insurance benefits for millions of Americans – must be bound, at the very least, by all of the standards which federal government agencies are currently required to follow during the rule-making process."
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