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What is a TPA? Understanding the Role of Third-Party Administrators

August 22, 2023

August 22, 2023

In the world of insurance, seamless claims handling and customer satisfaction are key. To assist in the process, third-party administrators (TPAs) provide efficient claims management and administrative services for carriers, adjusters, and policyholders. In this article, we’ll explore the functions and advantages of TPAs and shed some light on how they can improve claims-handling processes.

What is a TPA?

A TPA isn’t an insurance company. Instead, it’s an independent company that helps insurance carriers and adjusters manage claims. When an insurer receives a claim, they have the option to outsource it to a TPA. By leveraging a TPA’s expertise and resources, insurance companies can concentrate on their core operations. The result is improved efficiency and better outcomes for all parties involved.

How is a TPA different from an insurance company?

While both TPAs and insurance companies are crucial to the insurance landscape, they serve different functions. Insurance companies provide coverage and pay claims, assuming the financial risk for policyholder claims. TPAs don’t sell policies or bear financial risk. Rather, they provide support to insurance companies by handling administrative tasks and operational duties related to claims management.

Let’s look at an example of a TPA in insurance. Let’s say that Mary, a homeowner, files an insurance claim for wind damage. When Mary files the claim, her insurance company assigns it to a TPA. The TPA then processes the claim, investigates the damage, and confirms whether Mary’s homeowners policy covers the loss.

Services and skills of TPAs

TPAs can have various specialties, focusing on specific insurance claims, industries, or niches. While their services may vary, TPAs generally provide the following skills and offerings:

  • Actuarial services
  • Claims processing
  • Operational administration
  • Coordination with service providers
  • Data analytics and reporting

By partnering with the right TPA, insurance providers and adjusters can improve their claims management capabilities and provide better customer service.

Why work with a TPA?

Insurers and adjusters can tap into a variety of benefits when they work with a TPA. From improved efficiency and cost savings to specialized expertise and regulatory compliance, collaborating with a TPA can lead to a more effective claims-handling process.

Improved efficiency and cost savings

TPAs can expedite claim settlements, improve customer service, and negotiate cost-effective solutions, all of which result in cost savings. They also reduce expenses and provide scalability and flexibility during natural disasters or high-volume events, and lighten the workload for insurers.

Expertise in specialized claim areas

TPAs are skilled in fraud detection and prevention, to protect insurers from potential losses. They can access claims data and analytics and often have in-depth knowledge of specific industries, which ensures accurate assessments and fair claim settlements.

Regulatory compliance

Keeping up with the changes in insurance regulations takes time and effort — sometimes a lot of both. Florida’s Senate Bill 2A, for example, brought big changes for insurers, adjusters, and policyholders. TPAs prioritize regulatory compliance and quickly adapt their processes to meet updated standards and legal requirements. Insurers and adjusters who work with TPAs can have peace of mind knowing the claims process is in line with the most current regulations.

CNC’s role as a TPA

As a leading TPA in the insurance industry, CNC is vital to the claims management process. After a carrier submits a claim to CNC, an adjuster contacts the insured (or policyholder) to schedule an inspection. 

From there, the field adjuster inspects the damage and documents the loss by taking photographs. The adjuster submits estimates to cover the loss, and the claim is settled and closed.

Partner with CNC for seamless claims adjusting

Third-party administrators like CNC are a crucial partner in the claims management process for insurance companies and adjusters. A commitment to regulatory compliance and specialized expertise allows us to handle claims efficiently and effectively.

If you’re ready to unlock the full potential of your insurance operations and deliver unparalleled service to your policyholders, partner with CNC for claims that are always handled with precision and care.

Contact us today to learn how our TPA expertise can help you quickly resolve claims and keep your clients satisfied.

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