A Third Party Administrator Bond is a type of surety bond required of applicants for a life, health or other insurance administrator's license or certificate of authority/ registration in the state. The bond is sometimes called an Insurance Administrator Bond. The bond is written for the benefit and protection of insureds and insurers whose monies the bonded principal handles in (his/her/its) capacity as Administrator.
The surety bond typically guarantees compliance with provisions of state insurance laws; and protects against an administrator’s acts of fraud or dishonesty, or failure to pay any legally obligated benefits. In many cases, the bond also ensures that the Administrator makes a full accounting and due payment to the person or company entitled thereto of funds coming into his possession as an incident to Third Party Administrator transactions.
