Final answer:
False statement about Third Party Administrators (TPAs) in insurance companies.
Step-by-step explanation:
A. TPAs must be licensed and renew those licenses annually.
TPAs are typically licensed and regulated by state insurance departments. They are required to adhere to certain standards and regulations to ensure that they are operating legally and ethically. This includes obtaining a license and renewing it annually.
B. TPAs assume the risk on the policies they handle.
TPAs do not assume the risk on the policies they handle. They act as intermediaries between the insurance company and the insured, providing administrative services such as claims processing and policy management.
C. TPAs can adjust and process claims.
TPAs are responsible for adjusting and processing claims on behalf of insurance companies. They review claims for legitimacy, calculate benefits, and make payment decisions.
D. TPAs can collect premiums from insureds.
TPAs do not typically collect premiums from insureds. This is usually the responsibility of the insurance company or their designated agents.