Frequently Asked Questions

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, as according to Section 38-51-50.

Every TPA shall maintain its records for a duration of five years, which will be open for inspection by the department, as according to Section 38-51-60.

The TPA must place the funds in a separate account for each insurer or client in a fiduciary capacity.

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, as according to Sections 38-51-90 and 38-51-100.

TPAs 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, as according to Section 38-51-110.

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, as according to Section 38-51-120.