Virgin Islands Enacts New Third Party Administrator Law
Third party administrators and their business partners doing business in the Virgin Islands should ensure they are compliant with a new TPA law.
Specifically, Virgin Islands House Bill No. 31-0446, which became effective on February 20, 2017, requires TPAs doing business in the Virgin Islands to be licensed and regulated. Any entity that was doing business as a TPA in the Virgin Islands on February 20, 2017, was given a 30-day grace period after February 20th to submit an application for licensure as a TPA. The new law also prohibits any entity that was doing business as a TPA in the Virgin Islands on February 20, 2017, from acting as, or holding itself out to be, a TPA 90 days after February 20th, unless the entity is duly licensed as a TPA in the Virgin Islands. Absent an extension of the grace period from the Virgin Islands Division of Banking and Insurance, any entity currently doing business as a TPA in the Virgin Islands should now either be licensed as a TPA or cease doing business as a TPA in the Virgin Islands until licensed as a TPA.
The new law incorporates much of its language from the new National Association of Insurance Commissioners’ Third Party Administrator Model Act (Model 1090).
Other items of interest regarding the new law include, but are not limited to, the following:
Under the new law, the terms “Third Party Administrator” or “TPA” are defined as “…a person who directly or indirectly underwrites, collects charges, collateral, or premiums from, or adjusts or settles claims on residents of the Virgin Islands, in connection with life, annuity, health, or stop-loss coverage.”
A TPA who is a non-resident of the Virgin Islands is not eligible for a TPA license if it does not hold a home state certificate of authority or license in a state that has adopted the NAIC Third Party Administrator Model Law or a state that applies substantially similar provisions as are contained in that Model Law to that TPA.
The TPA shall file with the Commissioner the names and addresses of the payors with whom the TPA has service agreements. If a payor does not assume or bear the risks, the TPA shall disclose the name and address of the ultimate risk bearer. This filing requirement applies to the initial application for a TPA’s license and each renewal application.
The Commissioner may impose a fine upon a TPA not to exceed $5,000 for each violation for knowingly and willfully violating an order of the Commissioner. In no event, may the fine exceed an aggregate amount of $25,000 for any violations arising out of the same action.