Third Party Administrator Bond - Statewide in Connecticut

Brief Summary

Connecticut sets the third party administrator bond at no less than $500,000, and the Insurance Commissioner can set it higher. If you do not qualify for the audited financial statement waiver, this bond is what lets the license issue and renew each September 30. We quote it on the license applicant's own financials so you know where you stand before you file on NIPR.

A third party administrator licensed in Connecticut must execute a surety bond under CGS 38a-720j in an amount the Insurance Commissioner finds sufficient to protect insurers and others using the administrator, with a minimum penal sum of $500,000. The commissioner may waive the bond for an applicant that submits audited financial statements for its two most recent fiscal years showing positive net worth. Administrators that handle self-funded governmental or church plans post an additional bond of $100,000 or ten percent of that coverage, whichever is greater.

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How to Apply for a Third Party Administrator Bond:

• Decide whether you will post the bond or ask for the waiver based on two years of audited financials showing positive net worth.
• Confirm the penal sum the commissioner requires. It cannot be less than $500,000.
• If you handle self-funded governmental or church plans, calculate the additional bond at the greater of $100,000 or ten percent of that coverage.
• Provide company financial statements and owner information for underwriting.
• Complete the bond application, review the quote and pay the premium.
• Submit the executed bond with the NIPR license application and the $500 fee, then keep it in force for each September 30 renewal.

Detailed Information About the Connecticut Third Party Administrator Bond:

The minimum is $500,000

CGS 38a-720j(a) requires a license applicant to execute a surety bond in an amount the commissioner determines is sufficient to protect insurers and other persons using the administrator, and not less than a penal sum of $500,000. The bond has to be maintained for the license to be renewed.

The audited financial statement waiver

The same subsection lets the commissioner waive the bond if the applicant submits audited annual financial statements or reports for its two most recent fiscal years that show a positive net worth. Consolidated statements need a columnar worksheet showing each entity separately. An administrator renewing under the waiver submits its most recent audited statement. An administrator without two years of audited financials, or without positive net worth, posts the bond.

A second bond for governmental and church plans

Under 38a-720j(h), an administrator that handles self-funded coverage under governmental plans or church plans posts an additional bond. The amount is the greater of $100,000 or ten percent of the aggregate total amount of self-funded coverage under those plans handled in Connecticut and all other states. The waiver in subsection (a) does not reach this bond.

Who needs the license

The Connecticut Insurance Department describes a third party administrator as an entity that collects premiums, underwrites, or adjusts or settles claims on behalf of a life, annuity or health insurer. CGS 38a-720a exempts employees working under a licensed administrator and licensed insurers acting only in lines they are licensed for. Certain persons exempt from licensing register under CGS 38a-720k instead, which is a separate filing from the license.

Fees and renewal

The Department lists a $500 initial license fee and a $450 renewal fee. The license runs one year and renews September 30 every year. Applications and renewals are filed through NIPR. Confirm the current bond form and filing steps with the Connecticut Insurance Department before the bond is issued.

Eligibility and Requirements for a Connecticut Third Party Administrator Bond:

• Surety bond under CGS 38a-720j with a minimum penal sum of $500,000.
• Amount set by the Connecticut Insurance Commissioner to protect insurers and others using the administrator.
• Additional bond under 38a-720j(h) for administrators of self-funded governmental or church plans.
• Legal name on the bond matching the NIPR license application.
• Bond maintained in force as a condition of license renewal.
• Underwriting review of financial statements. Larger penal sums usually call for fuller financial review.

Connecticut Third Party Administrator Bond FAQs:

Official and Additional Resources for the Connecticut Third Party Administrator Bond: