If you're looking to become a licensed third-party administrator (TPA) in your state, it's important to understand the process and requirements. Licensing regulations for TPAs vary from state to state, so it's essential to check the process in your state to make sure you're prepared every step of the way. You'll need to gather all the relevant documentation, including financial statements, proof of a business license, a business plan, and more. There is no annual renewal, but there are annual reporting requirements.
Each state has its own rules and regulations regarding the certification and licensing of TPAs. Some states require TPAs to submit copies of their agreements to provide services to insurance companies to the state insurance department. Captive agents represent a single insurance company, while independent agents represent multiple insurers. The Independent Insurance Agents and Brokers of America (Big “I) is an advocacy group for independent insurance brokers and agents.
In a group health insurance context, the insurer that administers the fully insured health plan provides coverage, but it also handles many administrative tasks, such as claims operations and compliance with the Employee Retirement Income Security Act (ERISA). External managers of commercial liability insurance providers assume similar functions to those of claims liquidators. The external claims administrators of commercial liability insurance providers act much like claims adjusters and can work together with the insurance company's internal claims adjuster, as well as with external claims investigators and the defense attorney. External administrators are organizations that administer group insurance policies and work with employers and insurance companies to process claims, manage loss control, and provide consulting and risk management services.
Surplus line insurers are companies that assume risks that a licensed company is unwilling to insure.