- Are payments made to TPAs from policyholders considered received?
Yes. Whenever an insurer utilizes the services of a tpa under terms of a written agreement as required, the payment to the tpa of any premiums or charges for insurance by or on behalf of the insured is considered to have been received by the insurer. (Section 38-51-50)
- How long does a TPA required to preserve its records?
Every TPA shall maintain its records for a duration of five years; which will be open for inspection by the department. (Section 38-51-60)
- What are the requirements for TPAs collecting for more than one insurer or client?
The TPA must place the funds in a separate account for each insurer or client in a fiduciary capacity.
- Can a TPA pay claims from premiums collected?
TPAs can pay claims from withdrawals made from the fiduciary account, however, any withdrawals from the fiduciary account must be stated in the written agreement. Claims paid from funds collected on behalf of the insurer must be paid only on drafts authorized by the insurer. (Sections 38-51-90 and 38-51-100)
- How are TPAs compensated for services rendered?
TPA’s compensation may be based on the premium or charges collected or the number of claims paid or processed. The compensation may in no way be contingent on claim experience. (Section 38-51-110)
- Do TPAs have additional requirements when they contract with an insurer?
Yes. When the services of a TPA are utilized, the TPA is to provide a written notice to the policyholder identifying the relationship between the TPA, policyholder, and the insurer. The notice must be approved by the insurer. (Section 38-51-120)