How TPA partnered models unlock capital and foster carrier growth

In an increasingly competitive market, carriers are often constrained by capital requirements that limit their ability to invest in growth.

Partnering with a TPA that already has access to industry-leading technology, talent and an insightful view of regulatory requirements can unlock opportunities your business may otherwise not have been able to realise.

When it comes to traditional insurance carriers with on-going/live portfolios, there is more pressure to prioritise the deployment of capital and fuel innovation, while disposing of non-core business and legacy transactions are especially important as carriers look to make future acquisitions or drive organic growth. According to a recent survey, roughly 30% of legacy (run-off) transactions are motivated by disposing of non-core business and about 10% are executed to reduce operating expenses.

Identifying a strategic TPA partner to address the leadership challenges faced by carriers seeking growth can be a challenge, as there are a variety of factors you need to consider, such as: legacy IT systems, talent resourcing, product expansion and innovation.

The following issues must also be taken into consideration when selecting a claims administration partner:

• Requisite expertise
• Commitment to innovation
• Quality controls and superior performance
• Service excellence
• Talent recruiting and retention – career pathing
• Systems migration and integration capability
• Core IT systems - data integrity
• Geographic footprint
• Regulatory compliance.

Choosing the right partner can help carriers unlock the solutions to these challenges with ease. Our team here at Gallagher Bassett has successfully partnered with carriers attempting to profitably grow their portfolios and efficiently allocate capital across their organisation for decades. These partnered models enable carriers and their staff to focus on developing new products and services and expand into new markets, without the potential burden of navigating the numerous headwinds associated with maintaining an in-house claims function.

Within the Carrier Practice, a dedicated business segment inside Gallagher Bassett, the vast majority of our claim professionals have prior experience working for carriers. We understand the claims experience is the fulfilment of an insurance company’s promise to its insureds. Our team members enjoy a structured career serving as an extension of our carrier partner’s risk management team. Your client-facing business partners are ultimately a reflection of your culture and brand, which is why choosing an external partner to own this element must be a strategic decision, with real implications on a carrier’s growth prospects and brand.

1. Consider your total cost

Partnering with a TPA should be based on understanding your true internal cost of providing the services yourself versus that of an external partner. In addition to potentially freeing up capital via reduced fixed operational costs, carriers can benefit from a TPAs strong focus on: investments in innovation, management of ancillary solution providers, compliance with regulatory bodies and talent management resources, which can often be overlooked when comparing ‘cost to build’ versus ‘cost to buy’. 

2. Lead with strategy

Carriers should be clear on the benefits they are seeking when selecting a partner and what attributes of their claims program are considered strategic. Are you looking to demonstrate innovation and premium client service, or do you compete on a no-frills, low-cost value proposition? Do you plan to grow in new industry verticals or lines of coverage, or are you seeking to maintain your current market share? Knowing how you currently compete and where you are planning to go will help you select the right TPA for the journey. Take time to understand your strategic requirements, beyond the basic question of who can do the job and at what cost.

3. Focus on outcomes

It’s easy to fall into the trap of focusing on claim handling expense as the primary basis for evaluation. But, the real impact of selecting a partner for claims management is their ability to drive superior outcomes on dimensions like duration, litigation rate and reserving. This all aids the preservation of capital and drives performance. A TPA’s analytics offering and ability to articulate how they can deliver superior outcomes, will speak volumes about their focus and capabilities.

To learn more about how partnering with a TPA like Gallagher Bassett can help you unlock growth, connect with our experts today.