Wyoming Third Party Administrator Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a Wyoming Third Party Administrator Bond

At a Glance:

• Lowest Cost: $150 per year or $15 per month, based on the applicant’s credit
• Bond Amount: Equal to 10% of the annual premium written in Wyoming (more on this later)
• Who Needs it: All third party administrators (TPAs) operating in Wyoming
• Purpose: To ensure the public will receive compensation for any damages should the TPA fail to comply with licensing law
• Who Regulates Third Party Administrators in Wyoming: The Wyoming Department of Insurance

Background

Wyoming Insurance Regulation 4-12 requires all TPAs operating in the state to obtain a license with the Department of Insurance. The Wyoming legislature enacted the licensing laws and regulations to ensure that TPAs engage in ethical business practices. To provide financial security for the enforcement of the licensing law, TPAs must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Wyoming Third Party Administrator Bond?

Wyoming requires TPAs to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the TPA fails to comply with the regulations set forth in Wyoming Insurance Regulation 4-17. Specifically, the bond protects the public in the event the TPA engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the TPA breaks licensing laws.

How Can an Insurance Agent Obtain a Wyoming Third Party Administer Surety Bond?

BondExchange makes obtaining a Wyoming Third Party Administer bond easy. Simply log in to your account and use our keyword search to find the “administer” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How is the Bond Amount Determined?

Wyoming Insurance Regulations 4-17 dictates that the bond amount must be equal to 10% of the annual premium written in Wyoming. However, the bond amount may not be less than $1,000 and may not exceed $500,000.

Is a Credit Check Required for the Wyoming Third Party Administrator Bond?

Surety companies will run a credit check on the owners of the TPA company to determine eligibility and pricing for the Wyoming Third Party Administrator bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Wyoming Third Party Administrator Bond Cost?

The Wyoming Third Party Administrator bond can cost anywhere between 0.75% to 5% of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. BondExchange also offers monthly-pay-as-you-go options for these bonds. The chart below offers a quick reference for the bond cost on a $20,000 bond requirement.

$10,000 Third Party Administrator Bond Cost

Who is Required to Purchase the Wyoming Third Party Administrator Bond?

Wyoming requires TPAs to purchase a bond as a prerequisite to obtaining a business license. However, the Department of Insurance may waive the bond requirement for TPAs with exceptional financial statements and experience. Wyoming Insurance Regulation 4-3 defines a third party administrator as a company that handles various day-to-day administrative tasks for insurance companies and/or employee welfare benefit plans.

Exemptions to this definition include:

• Employers on behalf of the employees of subsidiary companies
• Unions
• Fully self-funded insurance plans
• Licensed insurance companies
• Prepaid hospital or medical care plans
• Licensed insurance agents/brokers acting within the scope of their licenses
• Creditors on behalf of their debtors
• Banks, credit unions, and other financial institutions
• Credit card companies that collect premiums from consumers and do not settle claims
• Licensed attorneys and adjusters acting within the scope of their licenses

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How do TPAs Apply for a License in Wyoming?

TPAs in Wyoming must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the Department of Insurance’s licensing page for details on the process.

License Period – All Wyoming Third Party Administrator Licenses expire on March 31 every two years and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

TPAs must at all times maintain a positive company net worth (assets – liabilities) and must submit audited financial statements verifying their net worth with their license application

Step 2 – Purchase a Surety Bond

TPAs must purchase and maintain a surety bond. The required limit for first-time applicants is 10% of the expected premium to be written in Wyoming during the upcoming calendar year.

Step 3 – Complete the Application

All Wyoming Third Party Administrator License applications should be completed online here. TPAs must complete the application in its entirety, and submit the following items:

• • TPA appointment form for each Wyoming insurer or Multiple Employer Welfare Arrangement (MEWA) the TPA contracts with
  • TPA contract checklist for each Wyoming insurer or MEWA the TPA contracts with
  • TPA funds handled disclosure for the estimated amount of funds to be handled by the TPA during their first year in business

TPAs must pay a $200 fee when submitting their application.

How do Wyoming TPAs Renew Their Licenses?

TPAs should submit their renewal applications, including a $200 fee, online here. All Wyoming Third Party Administrator Licenses expire on March 31 every two years and must be renewed before the expiration date.

What are the Insurance Requirements for TPAs in Wyoming?

Wyoming does not require TPAs to purchase any form of liability insurance as a prerequisite to obtaining a business license. TPAs must purchase and maintain a surety bond (see above for limits).

How Do Wyoming TPAs File Their Bonds?

TPAs should submit their completed bond forms, including the power of attorney, electronically here. The surety bond requires signatures from both the surety company that issues the bond and from a representative of the TPA. The surety company should include the following information on the bond form:

• Legal name of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Date the bond goes into effect
• Date the bond is signed

What Can Wyoming TPAs Do to Avoid Claims Against Their Bonds?

To avoid claims against their bonds, TPAs in Wyoming must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

• Do not engage in any acts of fraud
• Do not breach any contracts made with consumers
• Do not be negligent

What Other Insurance Products Can Agents Offer TPAs in Wyoming?

Wyoming does not require TPAs to purchase liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Wyoming TPA Customers?

Wyoming conveniently provides a public database to search for active TPAs in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.