Third Party Administrators (TPAs)
Q: Where can I find the laws and regulations governing TPAs in Hawaii?
A: Act 072, signed into law by Governor David Y. Ige on June 7, 2019, relates to the regulation of TPAs in Hawaii. A copy of Act 072 is available at:
Q: What is the definition of a TPA?
A: “TPA” or “Administrator” means a person who collects charges or premiums from, or who adjusts or settles claims on, residents of Hawaii in connection with self-insurance, stop-loss, or life insurance coverage, accident and health or sickness insurance coverage, or mutual benefit
Q: Who needs to obtain a TPA license?
A: Any person who acts as or holds themselves to be an Administrator in Hawaii needs to obtain a TPA license.
Q: Do TPA licensing requirements apply only to an entity? Do individuals need to get a license?
A: The law requires any “person” acting as an Administrator to obtain a TPA license. “Person” includes any individual, company, insurer, association, organization, group, reciprocal or interinsurance exchanges, partnership, business, trust, or corporation. In other words, TPA licensing requirements apply to both business entities and individuals.
Q: If my insurance administration activities are incidental to a business or profession, or if I’m acting in a limited capacity, do I still need a TPA license?
A: You will need to be licensed as a TPA if acting as an Administrator UNLESS you are:
- An employer, on behalf of its employees or the employees of a subsidiary or an affiliated corporation of the employer.
- A union, on behalf of its members.
- An insurer authorized to transact insurance in this State with respect to a policy lawfully issued and delivered in and pursuant to the laws of this State or another state.
- A producer licensed to sell life insurance coverage or accident and health or sickness insurance coverage in this State, whose activities are limited exclusively to the sale of insurance.
- A managing general agent licensed in this State whose activities are limited exclusively to the scope of activities conveyed under that license.
- An individual adjuster licensed in this State whose activities are limited exclusively to the scope of activities conveyed under that license.
- An individual who adjusts or settles claims in the normal course of practice or employment as an attorney at law and who does not collect charges or premiums in connection with life insurance coverage or accident and health or sickness insurance coverage.
- A creditor, on behalf of its debtors with respect to insurance covering a debt between the creditor and its debtors.
- A trust established in conformity with title 29 United States Code section 186 and trustees, agents, and employees acting under that trust.
- A trust exempt from taxation under title 26 United States Code section 501(a) and trustees and employees acting under that trust, or a custodian and the custodian’s agents and employees acting under a custodian account that meets the requirements of title 26 United States Code section 401(f).
- A financial institution subject to supervision or examination by federal or state banking authorities, or a mortgage lender that collects and remits premiums to licensed producers or authorized insurers in connection with loan payments.
- A credit card issuing company advancing for and collecting premiums or charges from its credit card holders who have authorized collection; provided that the company does not adjust or settle claims.
- A person who acts solely as an administrator of one or more employee benefit plans established by an employer or an employee organization.
Consult with your legal counsel to determine if you fit into any of the stated licensure exemption categories.
Q: How do I apply for a TPA license?
A: You may visit our website at the link below and select ‘Third Party Administrator’ for further instructions on how to apply for a TPA license: http://cca.hawaii.gov/ins/producers/instructions_insurance_license/
Q: Can I apply for a TPA license online?
A: No. You must submit a paper application along with a hard copy of other required documents.
Q: Do I need to submit every listed item on the “TPA Checklist” when I apply for a TPA license?
A: Yes. All items listed on the “TPA Checklist” must be completed and submitted together with your TPA Application packet. Any incomplete TPA Checklist or Application packet will not be processed.
Q: If I have an out-of-state TPA license, do I still need to file all items listed on the TPA Checklist/Application packet to apply for a nonresident TPA license in Hawaii?
A: Yes. Due to variations of the license requirements for each state, you are required to submit all items listed in the TPA Checklist/Application packet when you apply for a TPA license in Hawaii.
Q: Do individuals employed or contracted by a TPA to adjust claims need to be licensed as adjusters?
A: TPA employees or contracted individuals who adjusts claims for a TPA will need to be licensed as individual adjusters prior to doing adjuster work. However, they may not be required to be licensed as an individual adjuster if they fall under the adjuster license exemption category set forth in Hawaii Revised Statutes (“HRS”) §431:9-105(2)(C). For example, a salaried employee of a TPA owned by an insurer may fit into the adjuster license exemption stated in HRS §431:9-105(2)(C). Consult with your legal counsel to determine if you fit into any of the stated licensure exemption categories.
Q: Can a TPA also solicit insurance?
A: A TPA who intends to directly solicit insurance contracts or otherwise act as a producer shall first be licensed as an insurance producer. If a TPA employs or has contracted individuals to sell, solicit, or negotiate insurance business, the employees or contracted individuals shall first be licensed as producers.
Q: Are there any continue education (“CE”) requirements for a TPA?
Q: Is notice of appointment required for a TPA?
Q: Who can I contact if I have more questions regarding TPA licensing requirements?
A: You can contact the Licensing Branch at (808) 586-2788 or email [email protected].
SURETY BOND INFORMATION
Q: Are there any bonding requirements for a TPA operating in Hawaii?
A: Yes. A TPA must obtain a minimum of $100,000 surety bond executed by the TPA and a company authorized to do business in Hawaii as a surety. This surety bond may not be cancelled or terminated until two years have lapsed from the last day the applicant was a TPA, unless the Commissioner has given prior written consent. The surety bond shall be undertaken and may be enforced in the name of “Commissioner of Insurance, State of Hawaii.” The Surety Bond form is available with the TPA Checklist/Application packet.
Q: Can the surety bond requirement be met after an approval is given on the application?
A: No. The surety bond must be in place at the time of submission of the application. Failure to acquire the surety bond prior to the application review will result in a denial of the application.
ANNUAL REPORTING INFORMATION
Q: Where can I file the annual report?
A: The annual report shall be filed electronically by March 1 of each year, starting with the year 2020. The annual report can be filed electronically at [email protected]. The TPA annual report form is available at http://cca.hawaii.gov/ins/producers/forms/.
Q: Our company has been in existence for less than two fiscal years; what kind of financial statement should we submit?
A: If an applicant has been in existence for less than two years, the Application packet should include financial statements or reports, certified by an officer of the applicant and prepared in accordance with Generally Accepted Accounting Principles, for any completed fiscal year, and
for any month during the current fiscal year for which such financial statements or reports have been completed.
Q: If a TPA is licensed around March 1, are they still required to file an annual report?
A: Yes. A TPA who is licensed on or before March 1 of the reporting year, starting with the year 2020, shall file an annual report for the preceding year.
Q: What will happen if a TPA fails to file an annual report?
A: If a TPA fails to timely file its annual report, the Commissioner may deny, refuse to renew, suspend, or revoke the license.
Q: Who can I contact if I have more questions regarding financial requirements and annual report filing for TPAs?
A: You can contact the Financial Surveillance and Examination Branch at (808) 586-3870 or email [email protected].