Those who collect premiums from or adjust/settle claims on behalf of Texas residents in connection with life, health, accident, pharmacy, or workers' com benefits are classified as Administrators and must secure a Third-Party Administrator Fidelity Bond. The Fidelity Bond is essentially a safety blanket, enforced by the Texas Department of Insurance, which holds administrators accountable for any fraudulent or dishonest actions that lead to financial harm to their customers.
Jet’s process to obtain the bond is simple. The application only takes a few minutes to complete and for the most part a rate is immediately offered in minutes online. The bond limit requested and number of employees are factors considered to be approved for a rate.
The fidelity bond must be no less than $10,000, and may not be less than:
See the chart below for price examples at a couple of bond amounts. Please note that any bond application for a limit over $100,000 will have to be reviewed by a Jet underwriter. All others can be purchased immediately.
|Bond Term||# of Employees||Cost|
Once Jet receives bond payment you will receive your bond right away. A copy of your bond must be sent to the Commissioner of the Texas Department of Insurance.
The Third Party Administrator Bond must be active as long as you are fulfilling administrator duties. If the number of funds being managed or employee count changes, you will need to make sure these changes are reflected with Jet to ensure the bond is adequate for the states requirements.
Following the Texas Insurance Code is a good place to start to avoid bond claims. Basically, don’t commit fraud or act negligently when working with customers. Always act in your client’s best interests..
If a claim is filed by a customer, Jet looks into the validity of the claim before making a payout. Any valid claims will be paid in the full amount, not to exceed the bond’s limit. As the administrator, you are responsible for paying claims back to restore the bond to its full amount. Failing to reimburse Jet for a claim payout can result in suspension or revocation of your Certificate of Authority.