Ten benefits Insurers should be getting from their Third Party Administrators

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Father Knows Best is a classic American TV show from the 1950s starring Robert Young as insurance salesman Jim Anderson. Back then and over the decades since, in movies and on TV, the insurance business has been portrayed as conservative, unchanging and boring. Today, nothing could be further from the truth. Nimble insurance startups with […]

Father Knows Best is a classic American TV show from the 1950s starring Robert Young as insurance salesman Jim Anderson. Back then and over the decades since, in movies and on TV, the insurance business has been portrayed as conservative, unchanging and boring. Today, nothing could be further from the truth.

Nimble insurance startups with venture capital backing are disrupting the industry. Traditional insurers are reinventing themselves through new program development, acquisitions and partnerships. Yet legacy platforms are making it increasingly difficult, time consuming and costly to manage effectively.

If you haven’t already selected a Third-Party Administrator, there’s no better time. Even if you have, here are ten things you should be getting from your TPA relationship. Give yourself a check mark for each one you experience.

  1. Faster to market. A TPA can help you innovate faster. You can more quickly roll out or test hybrid and new products in the market without having to integrate them with your current systems. Legacy platforms are often too inflexible, and there are too many hoops to jump through just to see if a new program is of interest in the market. TPAs offer great flexibility for your business.
  2. Reduced costs. In addition to reducing the high operating costs of maintaining multiple systems, your TPA can also help reduce costs by taking on some claims handling responsibilities that do not require an attorney’s involvement. Contracting with a TPA is usually less expensive than building out an entire claims department, plus TPAs offer the flexibility to supplement your existing workforce as your business needs change.
  3. Competitive. Open source computing and development-on-demand has lowered the technical barriers to entry in the insurance industry. Nimble new players that can innovate quickly are taking advantage of the opportunity to fill the gaps that the incumbents have not. The right TPA can help you quickly introduce competitive products and options before a startup starts eating up your market share.
  4. Better customer experience. Another important area is the customer experience. New interaction channels such as web portals, mobile apps, robo-advisors, chat and texting support are extremely important – especially for serving millennials. At the same time, distribution is looking for new channels such as electronic apps and straight-through processing engines that enable faster sales. TPAs enable your brand to take full advantage of these new technologies.
  5. Quality controls. With multiple systems, it can be difficult to compare programs, manage financial risks and measure results. Your TPA should be providing you with comprehensive quality assurance metrics and key performance indicators, as well as cost analysis. You must know what claims are being handled and the services being provided on your behalf, and that these interactions are professional, timely and cost effective.
  6. Security. Insurance carriers face ever-evolving requirements due to new legislation, identity theft, cyber security and more. While claims handling used to be the main focus for a TPA, that has now broadened to include data compilation, data security and reporting responsibilities.
  7. Easier to manage. As you offer more diversified products of your own, or as a result of merger and acquisition activity or strategic partnerships, it becomes increasingly difficult to manage multiple legacy systems – as well as a disjointed workforce with expertise in one system but not another. Unifying the administration on a single platform should be your goal, but there is a high cost to getting there. Depending on the scope and time allotted to such a project, you’ll also face a conversion risk and a lack of operational readiness on the new platform. Getting up and running with a TPA is faster and simpler.
  8. Improved insights. When considering TPAs, be sure to select one with analytics expertise. For example, one with a data analytics solution that can pull together data from all platforms to provide you with an overall view of the block, plus reports that would otherwise not be possible. Analytics can estimate the value of legal claims or assess probabilities using new types of real-time data, such as from sensors and telematics. Your TPA should be able to incorporate these to help generate meaningful risk insights.
  9. Ease of implementation. The whole point of using a TPA is that you don’t have to go through a large internal project to get the results you want. Consider a bundled service offering that speeds up implementation and takes advantage of proven, leading platforms. For example, Capgemini’s Life & Annuity Policy Administration Services offers preconfigured, ready-to-use product templates and highly flexible, business rules-driven system configurations. Delivered via a secure cloud system, its policy administration on the leading Oracle platform, designed to help you launch new products faster, to lower administration costs and to meet the needs of your most demanding customers.
  10. Best of both worlds. System integration experience is a key consideration when selecting a TPA. Another is business operations expertise. Collecting the data is systems integration. Asking the right questions and having actionable data comes from the business operations side. A TPA with business experience can provide assistance with data modeling for faster decision making, risk assessments and profitability analysis. Look for a TPA that combines a technically superior platform with business operations experience in a proven partnership.

Father may have known best in the 1950s, but the insurance business today is nothing like it was. How many checkmarks did you give yourself? If you have five or fewer, write a policy against the death of your business… or be ready, willing and able to adapt to the new reality: You need a superior member experience that’s built for this fast-changing industry. A TPA service is the answer.

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