CHAPTER 58-29D
REGULATION OF LIFE AND HEALTH ADMINISTRATORS
58-29D-1 Definition of terms.
58-29D-2 Administrator defined--Exceptions.
58-29D-3 Insurer defined.
58-29D-4 Written agreement between administrator and insurer.
58-29D-5 Provisions of written agreement.
58-29D-6 Termination of written agreement--Suspension of underwriting authority--Dispute.
58-29D-7 Status of payment of premiums and return premiums or claim payments to administrator.
58-29D-8 Recordkeeping by administrator.
58-29D-9 Director's access to administrator's records--Confidentiality.
58-29D-10 Insurer's ownership of administrator's records.
58-29D-11 Transfer of records to new administrator.
58-29D-12 Advertising--Approval of insurer.
58-29D-13 Insurer responsibility for procedures and administration of its programs--Review and audit of administrator.
58-29D-14 Fiduciary capacity of administrator--Accounting of underwriting transactions.
58-29D-15 Records of deposits and withdrawals from fiduciary account.
58-29D-16 Provisions in written agreement as to withdrawals from fiduciary account.
58-29D-17 Repealed by SL 2012, ch 252, § 37.
58-29D-18 Compensation of administrator.
58-29D-19 Notice of use of administrator to policyholder--Itemized charges--Disclosure of fees or commissions.
58-29D-20 Delivery of written communications from insurer.
58-29D-20.1 Annual report to employer of self-funded health benefit plan claims experience.
58-29D-21 Administrator's license or registration required.
58-29D-22 Application by administrator--Contents--Fee.
58-29D-22.1 Annual financial statement--Contents of application--Required audit.
58-29D-23 Inspection of applicant's contracts.
58-29D-24 Denial of license.
58-29D-25 Validity of license.
58-29D-26 Conditions not requiring license.
58-29D-27 Servicer of certain employee benefit plans--Exempt from licensure--Requirements.
58-29D-28 Notice of administrator's change in circumstance.
58-29D-29 Waiver of application requirements.
58-29D-30 Annual renewal of administrator--Fee--Lapse of license or registration.
58-29D-31 Grounds for denial, suspension, or revocation of license or registration.
58-29D-32 Immediate suspension of license--No notice required.
58-29D-32.1 Notice of denial of application or renewal--Request for hearing--Hearing on suspension or revocation--Notice.
58-29D-33 Money penalty in lieu of suspension or revocation.
58-29D-34 Promulgation of rules.
58-29D-1. Definition of terms.
Terms used in this chapter mean:
(1) "Affiliate" or "affiliated," any entity or person who directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, a specified entity or person;
(2) "Underwrites" or "underwriting," the acceptance of employer or individual applications for coverage of individuals in accordance with the written rules of the insurer; the overall planning and coordinating of an insurance program; and the ability to procure bonds and excess insurance.
Source: SL 1992, ch 352, § 1.
58-29D-2. Administrator defined--Exceptions.
For the purposes of this chapter, an administrator or third-party administrator or TPA is a person who directly or indirectly solicits or effects coverage of, underwrites, collects charges or premiums from, or adjusts or settles claims on residents of this state, or residents of another state from offices in this state, in connection with workers' compensation, life or health insurance coverage or annuities, except any of the following:
(1) An employer on behalf of its employees or the employees of one or more subsidiary or affiliated corporations of such employer;
(2) A union on behalf of its members;
(3) An insurer which is 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;
(4) An insurance producer licensed to sell workers' compensation, life or health insurance in this state, whose activities are limited exclusively to the sale of insurance;
(5) A creditor on behalf of its debtors with respect to insurance covering a debt between the creditor and its debtors;
(6) A trust and its trustees, agents and employees acting pursuant to such trust established in conformity with 29 U.S.C. § 186;
(7) A trust exempt from taxation under § 501(a) of the Internal Revenue Code, its trustees and employees acting pursuant to such trust, or a custodian and the custodian's agents or employees acting pursuant to a custodian account which meets the requirements of § 401(f) of the Internal Revenue Code;
(8) A financial institution which is subject to supervision or examination by federal or state banking authorities, or a mortgage lender, to the extent they collect and remit premiums to licensed insurance producers or authorized insurers in connection with loan payments;
(9) A credit card issuing company which advances for and collects premiums or charges from its credit card holders who have authorized collection if the company does not adjust or settle claims;
(10) A person who adjusts or settles claims in the normal course of that person's practice or employment as an attorney at law and who does not collect charges or premiums in connection with workers' compensation, life or health insurance coverage or annuities;
(11) An adjuster whose activities are limited to adjustment of claims;
(12) A person who acts solely as an administrator of one or more bona fide employee benefit plans established by an employer or an employee organization, or both, for which the insurance laws of this state are preempted pursuant to the Employee Retirement Income Security Act of 1974. Such person shall comply with the requirements of § 58-29D-27;
(13) A licensed managing general agency;
(14) A licensed reinsurance intermediary; or
(15) A person regulated under the Broker Controlled Act.
This chapter applies to any third party administrator who performs administration functions on behalf of any workers' compensation insurer or employer with a self-funded workers' compensation program.
Source: SL 1992, ch 352, § 2; SL 2001, ch 285, § 1; SL 2001, ch 286, § 152.
58-29D-3. Insurer defined.
For the purposes of this chapter, an insurer is any person undertaking to provide workers' compensation, life or health insurance coverage in this state. An insurer includes a licensed insurance company, a prepaid hospital or medical care plan, a health maintenance organization, a multiple employer welfare arrangement, or any other person providing a plan of insurance subject to state insurance regulation. The term, insurer, does not include a bona fide employee benefit plan established by an employer or an employee organization, or both, for which the insurance laws of this state are preempted pursuant to the Employee Retirement Income Security Act of 1974.
Source: SL 1992, ch 352, § 3; SL 2001, ch 285, § 2.
58-29D-4. Written agreement between administrator and insurer.
No administrator may act as such without a written agreement between the administrator and the insurer, and such written agreement shall be retained as part of the official records of both the insurer and the administrator for the duration of the agreement and for five years thereafter. The agreement shall contain all provisions required by this chapter, except insofar as those requirements do not apply to the functions performed by the administrator.
Source: SL 1992, ch 352, § 4.
58-29D-5. Provisions of written agreement.
The written agreement shall include a statement of duties which the administrator is expected to perform on behalf of the insurer and the lines, classes, or types of insurance for which the administrator is to be authorized to administer. The agreement shall make provision with respect to underwriting or other standards pertaining to the business underwritten by such insurer.
Source: SL 1992, ch 352, § 5.
58-29D-6. Termination of written agreement--Suspension of underwriting authority--Dispute.
The insurer or administrator may, with written notice, terminate the written agreement for cause as provided in the agreement. The insurer may suspend the underwriting authority of the administrator during the pendency of any dispute regarding the cause for termination of the written agreement. The insurer must fulfill any lawful obligations with respect to policies affected by the written agreement, regardless of any dispute between the insurer and the administrator. The insurer must file the notice and the reason for termination with the director within thirty days of such termination.
Source: SL 1992, ch 352, § 6.
58-29D-7. Status of payment of premiums and return premiums or claim payments to administrator.
If an insurer utilizes the services of an administrator, the payment to the administrator of any premiums or charges for insurance by or on behalf of the insured party shall be deemed to have been received by the insurer, and the payment of return premiums or claim payments forwarded by the insurer to the administrator may not be deemed to have been paid to the insured party or claimant until such payments are received by the insured party or claimant. Nothing in this section limits any right of the insurer against the administrator resulting from the failure of the administrator to make payments to the insurer, insured parties or claimants.
Source: SL 1992, ch 352, § 7.
58-29D-8. Recordkeeping by administrator.
Every administrator shall maintain and make available to the insurer complete books and records of all transactions performed on behalf of the insurer. The books and records shall be maintained in accordance with prudent standards of insurance record keeping and must be maintained for a period of not less than five years from the date of their creation.
Source: SL 1992, ch 352, § 8.
58-29D-9. Director's access to administrator's records--Confidentiality.
The director shall have access to books and records maintained by an administrator for the purposes of examination, audit, and inspection. Any trade secrets contained in such books and records, including the identity and addresses of policyholders and certificate holders, shall be kept confidential, except that the director may use such information in any proceeding instituted against the administrator.
Source: SL 1992, ch 352, § 9.
58-29D-10. Insurer's ownership of administrator's records.
The insurer shall own the records generated by the administrator pertaining to the insurer. However, the administrator shall retain the right to continuing access to books and records to permit the administrator to fulfill all of its contractual obligations to insured parties, claimants, and the insurer.
Source: SL 1992, ch 352, § 10.
58-29D-11. Transfer of records to new administrator.
In the event the insurer and the administrator cancel their agreement, notwithstanding the provisions of § 58-29D-8, the administrator may, by written agreement with the insurer, transfer all records to a new administrator rather than retain them for five years. In such cases, the new administrator shall acknowledge, in writing, that it is responsible for retaining the records for the prior administrator as required in § 58-29D-8.
Source: SL 1992, ch 352, § 11.
58-29D-12. Advertising--Approval of insurer.
An administrator may use only such advertising pertaining to the business underwritten by an insurer as has been approved in writing by the insurer in advance of its use.
Source: SL 1992, ch 352, § 12.
58-29D-13. Insurer responsibility for procedures and administration of its programs--Review and audit of administrator.
If an insurer utilizes the services of an administrator, the insurer is responsible for determining the benefits, premium rates, underwriting criteria and claims payment procedures applicable to such coverage and for securing reinsurance, if any. The rules pertaining to these matters shall be provided, in writing, by the insurer to the administrator. The responsibilities of the administrator as to any of these matters shall be set forth in the written agreement between the administrator and the insurer. It is the sole responsibility of the insurer to provide for competent administration of its programs.
In cases where an administrator administers benefits for more than one hundred certificate holders on behalf of an insurer, the insurer must, at least semiannually, conduct a review of the operations of the administrator. At least one review must be an audit of the operations of the administrator, whether conducted on-site or virtually.
Source: SL 1992, ch 352, § 13; SL 2024, ch 202, § 1.
58-29D-14. Fiduciary capacity of administrator--Accounting of underwriting transactions.
All insurance charges or premiums collected by an administrator on behalf of or for an insurer or insurers, and the return of premiums received from that insurer or insurers, shall be held by the administrator in a fiduciary capacity. Such funds shall be immediately remitted to the person or persons entitled to them or shall be deposited promptly in a fiduciary account established and maintained by the administrator in a federally or state insured financial institution. The written agreement between the administrator and the insurer shall provide for the administrator to periodically render an accounting to the insurer detailing all transactions performed by the administrator pertaining to the business underwritten by the insurer.
Source: SL 1992, ch 352, § 14.
58-29D-15. Records of deposits and withdrawals from fiduciary account.
If charges or premiums deposited in a fiduciary account have been collected on behalf of or for one or more insurers, the administrator shall keep records clearly recording the deposits in and withdrawals from the account on behalf of each insurer. The administrator shall keep copies of all the records and, upon request of an insurer, shall furnish the insurer with copies of the records pertaining to such deposits and withdrawals.
Source: SL 1992, ch 352, § 15.
58-29D-16. Provisions in written agreement as to withdrawals from fiduciary account.
The administrator may not pay any claim by withdrawals from a fiduciary account in which premiums or charges are deposited. Withdrawals from such account shall be made as provided in the written agreement between the administrator and the insurer. The written agreement shall address the following:
(1) Remittance to an insurer entitled to remittance;
(2) Deposit in an account maintained in the name of the insurer;
(3) Transfer to and deposit in a claims-paying account;
(4) Payment to a group policyholder for remittance to the insurer entitled to such remittance;
(5) Payment to the administrator of its commissions, fees or charges; or
(6) Remittance of return premium to the person or persons entitled to such return premium.
Source: SL 1992, ch 352, § 16; SL 2021, ch 210, § 19.
58-29D-17. Repealed by SL 2012, ch 252, § 37.
58-29D-18. Compensation of administrator.
An administrator may not enter into any agreement or understanding with an insurer in which the effect is to make the amount of the administrator's commissions, fees, or charges contingent upon savings effected in the adjustment, settlement, and payment of losses covered by the insurer's obligations. This section may not prevent the compensation of an administrator from being based on premiums or charges collected or the number of claims paid or processed. This section does not prohibit an administrator from receiving performance-based compensation for providing hospital and other auditing services.
Source: SL 1992, ch 352, § 18; SL 2013, ch 253, § 1.
58-29D-19. Notice of use of administrator to policyholder--Itemized charges--Disclosure of fees or commissions.
When the services of an administrator are utilized, the administrator shall provide a written notice approved by the insurer to covered individuals advising them of the identity of, and relationship among, the administrator, the policyholder, and the insurer.
When an administrator collects funds, the reason for collection of each item must be identified to the insured party and each item must be shown separately from any premium. Additional charges may not be made for services to the extent the services have been paid for by the insurer.
The administrator shall disclose to the insurer all charges, fees, and commissions received from all services in connection with the provision of administrative services for such insurer, including any fees or commissions paid by insurers providing reinsurance.
Source: SL 1992, ch 352, § 19.
58-29D-20. Delivery of written communications from insurer.
Any policies, certificates, booklets, termination notices, or other written communications delivered by the insurer to the administrator for delivery to insured parties or covered individuals shall be delivered by the administrator promptly after receipt of instructions from the insurer to deliver them.
Source: SL 1992, ch 352, § 20.
58-29D-20.1. Annual report to employer of self-funded health benefit plan claims experience.
Any administrator for an employer self-funded health benefit plan shall provide, at the written request of the employer, annual reports of the claims experience of that employer for the immediate past policy period and for any time frame that is not more than three years prior to the policy period in which the request was made. No administrator is required to provide any claims information that pertains to a prior administrator's experience with that employer. The claims report shall be of sufficient detail so as to provide the employer with the data necessary to assess the employer's future health benefit coverage needs and shall be provided to the employer within thirty days of receipt of the written request of the employer.
Source: SL 2006, ch 261, § 1.
58-29D-21. Administrator's license or registration required.
No person may act as, or offer to act as, or hold himself out to be an administrator in this state without a valid license or registration as an administrator issued by the director.
Source: SL 1992, ch 352, § 21; SL 2001, ch 285, § 3.
58-29D-22. Application by administrator--Contents--Fee.
An administrator shall apply to the director upon a form to be furnished by the director. The application shall include or be accompanied by the following information and documents:
(1) All basic organizational documents of the administrator, including any articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, shareholder agreement, and other applicable documents, and all amendments to such documents;
(2) The bylaws, rules, regulations, or similar documents regulating the internal affairs of the administrator;
(3) The names, addresses, official positions, and professional qualifications of the individuals who are responsible for the conduct of affairs of the administrator; including all members of the board of directors, board of trustees, executive committee, or other governing board or committee; the principal officers in the case of a corporation or the partners or members in the case of a partnership or association; shareholders holding directly or indirectly ten percent or more of the voting securities of the administrator; and any other person who exercises control or influence over the affairs of the administrator;
(4) Annual financial statements or reports for the two most recent years which prove that the applicant is solvent and such information as the director may require in order to review the current financial condition of the applicant;
(5) A statement describing the business plan including information on staffing levels and activities proposed in this state and nationwide. The plan shall provide details setting forth the administrator's capability for providing a sufficient number of experienced and qualified personnel in the areas of claims processing, record keeping, and underwriting;
(6) If the applicant will be managing the solicitation of new or renewal business, proof that it employs or has contracted with an insurance producer licensed by this state for solicitation and taking of applications. Any applicant shall provide proof that it has a license as a life and health insurance producer in this state; and
(7) Information regarding administrative actions, criminal convictions, or guilty pleas.
The director may request additional information if the information provided pursuant to this section is inaccurate, incomplete, or unclear. If an applicant fails to provide the requested information within thirty days of the receipt of the any written request pursuant to subdivisions (1) to (7), inclusive, it is grounds for denial of an application.
Any material change in the above information shall be filed with the director within thirty days. A filing fee of five hundred dollars shall accompany the application.
Source: SL 1992, ch 352, § 22; SL 2001, ch 286, § 153; SL 2013, ch 253, § 2.
58-29D-22.1 . Annual financial statement--Contents of application--Required audit.
Any annual financial statement or report required under § 58-29D-22 must be audited. The applicant is presumed to be solvent if the applicant has a positive net worth.
If the applicant has been in existence for less than two fiscal years, the applicant shall include in the application all 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 the financial statements or reports have been completed. If information provided pursuant to this section is prepared on a consolidated or combined basis, the applicant shall include a columnar consolidating or combining worksheet with the report or renewal and shall include in the worksheet the following:
(1) Amounts shown on the consolidated audited financial report or renewal;
(2) Amounts for each entity stated separately; and
(3) Explanations of consolidating and eliminating entries.
Source: SL 2020, ch 211, § 1.
58-29D-23. Inspection of applicant's contracts.
The applicant shall make available for inspection by the director copies of all contracts with insurers or other persons utilizing the services of the administrator.
Source: SL 1992, ch 352, § 23.
58-29D-24. Denial of license.
The director may not issue a license if the director determines that the administrator, or any individual responsible for the conduct of affairs of the administrator as defined in subdivision 58-29D-22(3), is not qualified for licensure by reason of § 58-30-167.
Source: SL 1992, ch 352, § 24; SL 2002, ch 240, § 1.
58-29D-25. Validity of license.
A license issued under this chapter shall remain valid, unless surrendered, suspended, or revoked by the director, for so long as the administrator continues in business in this state and remains in compliance with this chapter.
Source: SL 1992, ch 352, § 25.
58-29D-26. Conditions not requiring license.
An administrator is not required to hold a license as an administrator in this state if all of the following conditions are met:
(1) The administrator has its principal place of business in another state;
(2) The administrator is not soliciting business as an administrator in this state;
(3) In the case of any group policy or plan of insurance serviced by the administrator and less than one hundred certificate holders reside in this state.
Source: SL 1992, ch 352, § 26.
58-29D-27. Servicer of certain employee benefit plans--Exempt from licensure--Requirements.
A person is not required to hold a license as an administrator in this state if the person exclusively provides services to one or more bona fide employee benefit plans, each of which is established by an employer or an employee organization, or both, and for which the insurance laws of this state are preempted pursuant to the Employee Retirement Income Security Act of 1974. Any person not required to hold a license shall register with the director annually, verifying the person's status if the person directly or indirectly underwrites, collects charges or premiums from, or adjusts or settles claims of residents of this state in connection with a self-funded plan other than a governmental or church plan offering life, annuity, or health coverage.
Source: SL 1992, ch 352, § 27; SL 2020, ch 211, § 2.
58-29D-28. Notice of administrator's change in circumstance.
An administrator shall immediately notify the director of any material change in its ownership, control, or other fact or circumstance affecting its qualification for a license in this state.
Source: SL 1992, ch 352, § 28.
58-29D-29. Waiver of application requirements.
Upon request from an administrator, the director may waive the application requirements of § 58-29D-22 if the administrator has a valid license as an administrator issued in a state which has standards for administrators that are at least as stringent as those contained in this chapter. If waived, the administrator shall register with the director in this state. The waiver shall automatically lapse if the third party administrator granted a waiver is no longer licensed in the state for which the waiver was granted. Any waiver given by this section does not extend to any suspension or revocation of licensure or registration pursuant to § 58-29D-31.
Source: SL 1992, ch 352, § 29; SL 2001, ch 285, § 4.
58-29D-30. Annual renewal of administrator--Fee--Lapse of license or registration.
Each administrator licensed or registered shall file an annual renewal for the preceding calendar year with the director on or before July first of each year, or within such extension of time as the director for good cause may grant. The renewal shall be in the form and contain such matters as the director prescribes and shall be verified by at least two officers of the administrator. The annual renewal shall include the complete names and addresses of all insurers with which the administrator had an agreement during the preceding fiscal year. At the time of filing its annual renewal, the administrator shall pay a filing fee of two hundred fifty dollars. Failure to file such renewal shall result in lapsing of the license or registration of the administrator.
Source: SL 1992, ch 352, § 30; SL 1999, ch 255, § 1; SL 2012, ch 248, § 1.
58-29D-31. Grounds for denial, suspension, or revocation of license or registration.
The application or annual renewal must be denied and the license or registration of an administrator must be suspended or revoked if the director finds that the administrator or applicant:
(1) Is in an unsound financial condition;
(2) Is using methods or practices in the conduct of its business so as to render its further transaction of business in this state hazardous or injurious to insured persons or the public;
(3) Has failed to pay any judgment rendered against it in this state within sixty days after the judgment has become final;
(4) Has violated any lawful rule or order of the director, or any provision of the insurance laws of this state;
(5) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers has refused to give information with respect to its affairs or has refused to perform any other legal obligation as to the examination, if required by the director;
(6) Has, without just cause, refused to pay proper claims or perform services arising under its contracts or has, without just cause, caused covered individuals to accept less than the amount due them or caused covered individuals to employ attorneys or bring suit against the administrator to secure full payment or settlement of the claims;
(7) Is affiliated with or under the same general management or interlocking directorate or ownership as another administrator or insurer, which unlawfully transacts business in this state without having a license;
(8) At any time fails to meet any qualification for which issuance of the certificate could have been refused had such failure then existed and been known to the Division of Insurance;
(9) Has been convicted of, or has entered a plea of guilty or nolo contendere to, a felony, without regard to whether adjudication was withheld;
(10) Is under suspension or revocation in another state;
(11) Has supplied false information to the director;
(12) Has engaged in a discriminatory act, as described in § 58-29E-15; or
(13) Has engaged in an unfair act or deceptive practice, as described in § 58-33-135.
Source: SL 1992, ch 352, § 31; SL 2001, ch 285, § 5; SL 2013, ch 253, § 3; SL 2024, ch 203, § 1, eff. Jan. 1, 2025.
58-29D-32. Immediate suspension of license--No notice required.
The director may, in his discretion and without advance notice of hearing thereon, immediately suspend the certificate of any administrator if the director finds that one or more of the following circumstances exist:
(1) The administrator is insolvent or impaired;
(2) A proceeding for receivership, conservatorship, rehabilitation, or other delinquency proceeding regarding the administrator has been commenced in any state;
(3) The financial condition or business practices of the administrator otherwise pose an imminent threat to the public health, safety, or welfare of the residents of this state.
Source: SL 1992, ch 352, § 32.
58-29D-32.1. Notice of denial of application or renewal--Request for hearing--Hearing on suspension or revocation--Notice.
If the director denies an application or annual renewal for a license or registration, the director shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial. The applicant or licensee may make a written request to the director within thirty days of the date of the denial for a hearing to determine the reasonableness of the director's action. A notice of hearing shall be issued within thirty days of receipt of a written request.
The director shall suspend for not more than twelve months, or may revoke or refuse to continue, any license or registration issued under this chapter after a hearing. Notice of such hearing and of the charges against the licensee or registrant pursuant to § 58-29D-31 shall be given at least twenty days before a hearing. Notice of hearing shall be issued within twenty days of the director's suspension under § 58-29D-32 which shall include the reasons for suspension and may include grounds for revocation under § 58-29D-31. Any hearing under § 58-29D-32 shall be held within thirty days of the date of the director's suspension.
Any hearing under the provisions of this section shall be held pursuant to chapter 1-26. Nothing in this section or § 58-29D-31 applies to a renewal which is lapsed pursuant to § 58-29D-30.
Source: SL 2013, ch 253, § 4.
58-29D-33. Money penalty in lieu of suspension or revocation.
If the director finds that one or more grounds exist for the denial of an application, suspension, or revocation of a license issued under this chapter, the director may, in lieu of denial, suspension, or revocation, impose a money penalty pursuant to § 58-4-28.1.
Source: SL 1992, ch 352, § 33; SL 2000, ch 235, § 2.
