Illinois Third Party Administrator Bond Overview
- Purpose: To protect organizations from financial harm if a third-party administrator breaks the law
- Who Needs It: Providers that offer third-party administration services for another company’s insurance plan
- Regulating Body: The Illinois Department of Insurance
- Bond Amount: $50,000–$1,000,000
- Minimum Price: $500 or 1%; credit-based
What Is an Illinois Third Party Administrator Bond?
An Illinois third party administrator bond protects organizations from financial harm if a third-party administrator (TPA) commits theft or fraud or acts unethically.
If a TPA breaks any of the applicable laws outlined in the Illinois Insurance Code, the bond can reimburse clients and beneficiaries for damages.
Bond Coverage Requirements for Illinois Insurance Administrators
Your TPA bond requirement will vary depending on whether you maintain an Administrator Trust Fund (ATF) fund and/or a Claims Administration Services Account (CASA) for clients.
- If you maintain an ATF but not a CASA, your bond must be the greater of $50,000 or 5% of projected contributions and premiums for the next plan year from Illinois residents.
- If you maintain a CASA but not an ATF, your bond must be the greater of $50,000 or 5% of the claims and claim expenses projected to be held for the forthcoming year to pay claims for Illinois residents.
- If you maintain an ATF and a CASA, the bond must be the greater of the amounts above.
The maximum bond limit is $1,000,000.
How Much Do Third Party Administrator Bonds Cost in Illinois?
Illinois third party insurance and benefits plan administrator bond cost 1–10% of the bond amount. For instance, the minimum $50,000 bond starts at just $500 for qualified applicants.
We’ll run a soft credit preview to determine your exact rate. You can also select a multi-year term to save 25% on renewals. Apply for a free quote now.
SuretyBonds.com offers the lowest available rates from our nationwide provider network with no added fees.
How Does a Illinois Third Party Administrator Bond Work?
A third party administrator bond creates a legal contract between three parties.
| Bond Party | Description |
|---|---|
| 1) Principal | The bonded third party administrator |
| 2) Obligee | The Illinois Department of Insurance |
| 3) Surety | The issuing surety provider |
If the principal violates the contract terms and a person or company suffers financial loss as a result, the surety will cover damages up to the full bond amount. Then, the principal must reimburse the surety for any claims paid out.
How Do I Get a Third Party Administrator Bond?
Submit a quick application form on this page to get started. We’ll provide a free quote for your Illinois TPA bond within one business day or less. You can buy the bond online and select your preferred shipping option.
After receiving the physical bond form, file it through NIPR along with your other licensing documents.
Can I Get Bonded With Bad Credit?
We work with a variety of surety markets to match applicants with the best rate available. This means we also approve most applicants — even those with lower credit scores. The best way to see if you qualify is by submitting a quote request.
How Do I Renew My Bond?
Illinois TPA bonds last for one to three years, based on the term you select. They are also continuous, which means you can renew the same bond form year over year. We’ll send out reminders before your current term expires.
The surety can cancel this bond by giving 30 days’ written notice to the Director of the DOI.
How to Become a Third Party Administrator in Illinois
All Illinois third party administrator license applications are submitted through NIPR.com. You’ll need to submit your surety bond and all other documentation and pay the $200 licensing fee.
