Third-Party Administrator Bond Guide
Many states require surety bonds for third-party administrators as a licensing requirement. Learn how to navigate the bonding process and apply for the surety bond you need with this guide.
Bond Overview
- Purpose: To protect organizations from financial harm if a third-party administrator breaks the law
- Who Needs It: Providers that offers administration and operational services for another company’s insurance plan
- Required Amount: Varies by state and value of plans being managed
- Regulating Body: The state department of insurance
- Premium Rates: Typically 1–10% of the bond amount, credit-based
What Are Third-Party Administrator Bonds?
A third-party administrator bond is a type of surety bond that ensures insurance administrators comply with laws and industry regulations. The bond protects organizations from financial harm if a third-party administrator (TPA) commits theft, fraud or acts unethically.
A third-party administrator is any business that offers administration and operational services for another company’s insurance plan such as:
- Processing claims
- Collecting premiums
- Managing benefits plans
How Much Do Third-Party Administrator Bonds Cost?
Pricing varies from state to state. Third-party administrator bonds are sometimes a flat rate for all applicants while others are a small percentage of the total bond amount, based on credit score.
Select your state to purchase or apply for the TPA bond you need:
How Do Third-Party Administrator Bonds Work?
Third-party administrator bonds bind three parties in a legal contract:
- Principal: The third-party administrator purchasing the bond
- Obligee: The state department requiring the bond from the principal
- Surety: The company issuing and backing the bond
If a bonded principal fails to uphold the bond terms, the obligee can file a claim to recover financial damages. The surety will pay out valid claims then seek reimbursement from the third-party administrator.
How to Get a Third-Party Administrator Bond
SuretyBonds.com offers the fastest and easiest way to get your third-party administrator bond. Follow these quick steps:
- Find the TPA bond you need
- Submit a quote (if necessary)
- Purchase online
- File the bond with your obligee
If you have questions, our friendly surety experts are here to help! Call 1 (800) 308-4358 or email [email protected].
How Do I Update My Third-Party Administrator Bond Form?
If you need to update simple information on your bond form, email [email protected] outlining the necessary changes. For more information, read our complete guide on surety bond riders.
Can I Get a Third-Party Administrator Bond With Bad Credit?
Yes, we work with a variety of surety markets to approve 99% of all bond applicants for the bond they need! Apply today to see if you qualify or read more about our bad credit bonding program.
