State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 1759, a third-party administrator (TPA) is a person who:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 1759 defines a third-party administrator as a person who, for compensation, collects premiums, or adjusts or settles claims, in connection with insurance policies under a contract with an insurer, but who does not act as an agent or broker for the insurer. TPAs perform administrative and claims functions while the insurer remains responsible for the coverage itself.
Why the other options are wrong
- B) Selling policies is the role of licensed agents and brokers, not administrators.
- C) Market regulation belongs to the Commissioner and the Department of Insurance, not to TPAs.
- D) Solvency guarantees are provided through capital requirements and guaranty associations, not by TPAs.
Memory hook
TPA = the insurer's hired back office: premiums in, claims out, no sales pitch included.