ALC Insurance Committee
January 14, 2026
Senator Jim Petty Members, if you’d find your seat, we’re going to get started here in about 30 seconds. Alright, members, let’s get started. We’re calling to order the State Insurance Programs Oversight Subcommittee of the Arkansas Legislative Council. We’ve got one item on the agenda. Mr Wallace, if you would approach and introduce yourself as a formality and then you may proceed.
RFQ for Captive audit
Grant Wallace Good morning. Grant Wallace, Director of the Employee Benefits Division in the Office of Property Risk. What you have before you is an item to review a request from the Office of Property Risk to utilize the request for qualifications procurement process to procure the auditing services for the state captive insurance program.
So kind of backing up a little bit, the governing statute that created the captive does require us to get an independent audit. We feel that the RFQ process is the best way to go about this due to the uniqueness of the captive program, the uniqueness of a government managing a captive program.
And we do acknowledge and understand that the accounting principles that would govern this, which are a FASB– and forgive me for not knowing the full acronym there– is not the expertise of Legislative Audit. So with that, I’d be glad to answer any additional questions.
Senator Jim Petty Thank you, Mr. Wallace. And I had a couple before we open it up. Looks like we’ve got a few already in there. That’s Financial Accounting Standards Board audits, just FYI. I wouldn’t expect you or anyone to understand that or know that. There’s plenty of acronyms. And I agree qualifications are important.
The question, I guess, that I had that was most pressing is, and you may know the answer to this, is do we always have to put a projected cost in there? Because it seems to me that that just kind of advertises what we are willing to pay.
And quite frankly, as I’ve done some research and talked to some, that’s pretty significant on a yearly basis. If anybody’s listening, I would expect it to be much less than that. But do you know if we have to put the anticipated costs?
Grant Wallace It is part of the review, all the different steps that we have to go through for the approval checkoff. Yes, you have to put an amount in there.
Senator Jim Petty And then I would also add, and I’m good with the RFQ approach, but I would also add that professional auditing standards require, yes, the auditor to have the qualifications in order to accept the engagement. So even if we didn’t do it as an RFQ, they would have to have the qualification. So with that, there are a couple here in the queue. So Representative Ladyman, you’re recognized.
Representative Jack Ladyman Thank you, Mr. Chairman. I’m over here. Well, thank you for being here and going over this. But I had a question about where you talk about we have an idea what the cost should be based on our market research. So I have a question about your market research. How do you do that? What’s the parameters of that? Do you look at, is that nationwide or is that just in the state of Arkansas?
Grant Wallace Yes, sir. So we looked at auditing firms that had experience working with insurance companies and with the FASB standards. That was a nationwide search.
Representative Jack Ladyman Was nationwide, okay. I asked this question yesterday in another committee, but do you give any advantage to companies that are located in Arkansas? Or is that possible when you’re looking at qualifications?
Grant Wallace Yes, I think you could write it in such a way that, yes, there would be a preference or an advantage to a company that was locally operating. You could have meeting requirements or you could have physical presence requirements for any potential awardee that could end up benefiting or giving additional kind of bonus points, for lack of a better phrase, to that awardee.
Representative Jack Ladyman Well, nobody would want to affect quality of the company. But if everything else being equal or close to equal, right, I think we should give an advantage to Arkansas companies. Thank you.
Senator Jim Petty Thank you, Representative Ladyman. And just again, as a recovering CPA myself, I think the key is going to be compliance with their standards, not even on RFQ, but the standards, the professional standards that they have to– and this captive insurance is a niche. It’s not like doing individual income tax returns. And so I am very confident there are those in Arkansas that can probably do this, but. Just wanted to add that clarification. All right, Senator Hickey, you are recognized.
Senator Jimmy Hickey So I want to make sure I fully understand this with something that was said. So this is a four year contract, right? All of 26, 27, 28 and 29.
Grant Wallace Right. We would start with the initial four year term.
Senator Jimmy Hickey Right. Now, this is the total cost for the four year term, not an annual amount?
Grant Wallace Total projected costs would be for the full term.
Senator Jimmy Hickey For the full term. So we’re talking about 200,000 a year? Okay. And that’s fair enough. And in addition to that though, once you do receive this and you get who you’re going to use, in the end, this committee and ALC will still have to approve that, correct?
Grant Wallace Correct. What we’re doing today is just giving us permission to utilize this process. Once we have a winner selected, it will go to the state Board of Finance and then it will come to hear this committee and the full ALC before we’re fully executed and engaging with them.
Senator Jimmy Hickey And as the chairman said, I always hate to put these costs out there. But I think at the very least that they should be notified that, yes, this may be an RFQ. It still has to be approved by this subcommittee, full ALC, the state board of finance. And just because we put this number out doesn’t mean that we’re going to throw cost out the window if it’s not something that we see in line. So I don’t think it would hurt to tell them that unless there’s something that keeps you from doing it.
Grant Wallace Right. And hopefully, all things being equal, it’s not like we’re ignoring costs in this process. We’re really striving to get those qualifications and those standards and then make sure we’re vetting that. And then if we get all things equal, absolutely, we would make sure we’re getting the best deal for the state.
Senator Jim Petty Thank you, Senator Hickey. I think my perspective on the number is the old, it’s bigger than a bread box. I know for a fact that we’ve got a very active state agency that does a lot of things in the area of finance and other areas, and their annual audit fee is probably half or less than that annual number. So hopefully we can get there.
Let’s see. Okay. I had one in the queue. Representative Beaty, you got yours answered? Well, seeing no one else, that’s good timing. I hear a motion. Do I hear a second? All those in favor, let it be known by aye. Any opposed? Motion carries. Seeing no other business before us, we are adjourned.
