Which of the following do you want to believe? How will the results affect you? What can you do about it?
- TPA’s, or third-party administrators, are handling 15% to 30% of insured insurance property losses and growing.
- Other non-TPA’s are handling 70% to 85% of insured insurance property losses and shrinking.
So which headline do you want to start with? I guess it will depend on what you want the outcome to be. Have you ever thought about what you want the outcome to be? The percentage of these numbers are based on my asking people in the industry what they know and how they know it. Overall, insurance companies are very guarded as to how much money they are paying out for losses. TPA’s are equally concerned as to what they say, because they want and need to honor the client’s wishes. Not to mention, they may not be the only TPA working with that specific insurance company.
Looking back on the industry, the first TPA started about 20 years ago with USAA. It was a natural progression of their business, as they started doing business electronically from the beginning, serving officers in the military. If they needed someone to look at a claim at a policyholder’s location, they sent an independent adjuster out. It was a natural jump to a TPA relationship for USAA, especially once they had Xactimate software available to them and were then able to set up the connection to policyholders, themselves, Xactimate and a TPA.
Besides the history lesson, the point to also note is that some insurance companies do a large amount of business with TPA’s and others do a small amount of business. This also speaks to the percentages mentioned above and how percentages can sometimes give us a different picture as to what is really going on when you look past the averages.
Let’s assume that the averages are correct and talk about what you might consider doing regarding what your future responses need to. One thing that jumps out is the statistic that TPA’s are a growing part of the industry that is handling claims for the insurance field. It would therefore seem logical that I would want to work with those TPA’s who were working with the companies that I was working with or wanted to work with. Here is a good place to interject that contractors might consider the issue of what the rules are and who controls the job. Both the insurance company and the TPA’s have agreed to how the claims will be handled. It is the contractor who needs to decide whether or not they will work under the predetermined agreed upon rules.
Some contractors get this and some don’t. Fighting with the company that gives one business is not the smartest of positions to be in, nor is it conducive to a long-term relationship. Depending on which percent you decide to think is correct, I would consider not exceeding that percentage of total TPA work with the total amount of TPA’s work that you are working with.
Now let’s talk about the 70% to 85% of work that is not being handled by TPA’s. What are you doing to work with the companies that are not on a program? I can assure you that the TPA’s are calling on them and they are offering them the opportunity to work with them. I can also say that they are not dropping off candy, doughnuts, pens, pads or any other “tchotchkes” and expecting the insurance companies to do business with them as a result! Neither should you!
So what can or should you do? One of the options that has worked to date is offering them a one-stop full-service area network that would service all of the areas that they operate in. This requires the contractor to cover or work with a group that handles all of the areas that they operate in.
So where do you go from this discussion? I’d like to suggest to you that doing good work is expected and is not a positive. Not doing good work is a negative and is most certainly not good for your future relationship with whoever you are working with! It continues to look like businesses do business with people they trust, deliver what they mutually agreed to deliver and are constantly listening to the wants and needs of the client. So perhaps it’s needless to say, but you must be competitive and stay competitively priced in all of your dealings.
Wishing you continued profit in business!