Which statement best describes what a private self-insurer must do if it has not been self insured previously?

Which statement best describes what a private self-insurer must do if it has not been self insured previously?

• A. A Adjust its own claims
• B. B Contract with a third party administrator for the first three years of self insurance
• C. C Contract with a TPA for the first 5 years of self insurance
• D. D Conduct the administration of each self insurance program through the services of a competent person or persons located in CA

Answer: (B)

New private self-insurers must hire a third-party administrator to handle claims for the first three years. This arrangement ensures professional, compliant claims processing and regulatory oversight as the self-insurer develops internal capability. The other options don’t fit the rule: adjusting claims in-house from the start isn’t allowed for a new self-insurer; the requirement specifies a three-year period, not five; and relying only on a competent person in California without a formal TPA arrangement doesn’t meet the established requirement for initial claims administration.

New private self-insurers must hire a third-party administrator to handle claims for the first three years. This arrangement ensures professional, compliant claims processing and regulatory oversight as the self-insurer develops internal capability. The other options don’t fit the rule: adjusting claims in-house from the start isn’t allowed for a new self-insurer; the requirement specifies a three-year period, not five; and relying only on a competent person in California without a formal TPA arrangement doesn’t meet the established requirement for initial claims administration.