Third Party Administrator Bonds
We offer the following Third Party Administrator Bonds:
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What is a third party administrator bond?
Third party administrators (TPAs) are businesses that handle administrative functions for other organizations. TPA services can include tasks such as overseeing employee insurance claims, managing retirement plans, implementing risk management programs, creating emergency response plans, and providing accounting assistance. Many states require these businesses to post a surety bond as part of their licensing process.
Like other types of surety bonds, a TPA bond helps encourage lawful practices and serves to protect your clients in the event your business breaks a law or industry regulation.
What is a third party administrator?
A third party administrator, or TPA, is defined as any business that handles administrative functions for other organizations. This can include:
- Overseeing employee insurance claims
- Managing retirement plans
- Implementing risk management programs
Over time, the role of TPAs and the number of services they handle has grown. It's becoming increasingly common for TPAs to take on many day-to-day operational roles, such as emergency response planning, investment operations, and even accounting.
Typically, professionals working as third party administrators come from backgrounds in finance, accounting, or insurance. But this is changing, too, as the TPA industry expands to handle more operational functions for their clients.
How much does a TPA bond cost?
The bond liability amount states require for TPAs can differ widely. It can range from $5,000 to $500,000 in a state like Utah, or up to as much as $1,000,000 in states like Iowa.
Often, states will base your bond's liability amount on the percentage of total funds handled by your company. For example, in Utah the bond amount for TPAs is calculated as 10% of the total funds your business handles, with a maximum liability amount of $500,000.
Regardless of the bond's liability amount, you only have to pay a small fee as your annual premium for coverage. Premiums typically range between 1% and 15% of your bond's full value. The cost of your third party administrator bond will vary based on several factors, including:
- Your credit rating
- Your business’s license history and experience
- The bond amount your state requires
NNA Surety Bonds currently offers policies for third party administrators in 20 states.
Cost of Third Party Administrator Surety Bonds
| State | Bond Amount | Cost* (Annual Premium) |
|---|---|---|
| Arizona | Varies | 1% - 3% of bond amount |
| Arkansas | $25,000 | $250 |
| Connecticut | Varies | 1% - 3% of bond amount |
| Georgia | $5,000 | $100 |