Third party administrator bond cost
The Illinois Department of Insurance requires third party administrators to post surety bonds in varying amounts prior to conducting business. Applicants should verify their required bond amount with the state prior to bonding.
Your required bond amount and a review of your personal credit report will directly impact the premium price you’ll pay for your Illinois surety bond.
Why this bond
By posting a third party administrator surety bond in Illinois, principals (third party administrators) pledge to comply with all provisions of Section 511.104 of the Illinois Insurance Code. Under this code, principals must:
- Identify, to the Director, any ownership interest or affiliation of any plan sponsor or insurer
- Provide services as an administrator pursuant to the written agreement (with the plan sponsor or insurer)
- Maintain all written agreements with plan sponsors or insurers in his or her principal place of business for at least 5 years
- Provide the names and addresses of insurers and plan sponsors to the Director
- Use advertising that solely pertains to the approved plan
- Deliver all policies, certificate booklets, termination notices or other written communications to beneficiaries
- Accept compensation from beneficiaries only after services have been received
- And more
If the principal violates the terms of his or her bond agreement and a person or company suffers financial loss as a result, the surety will cover damages up to the full bond amount. The principal must reimburse the surety for any damages paid out.
Third party administrator bond details
Illinois third party administrator bonds are continuous in form. The surety can cancel this bond by giving 30 days’ written notice of its intent to terminate to the Director of the Department of Insurance in Springfield, Illinois.
Become a third party administrator
To become licensed as a third party administrator in Illinois, applicants must:
- Complete the application form prescribed by the Director
- Supply a list of the names, addresses and official positions of all individuals who are involved in the affairs of the administrator (board of directors, board of trustees, executive committee, etc.)
- Pay the mandatory $200 filing fee for the initial license
- And more
Apply for your surety bond
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