The use of third-party administrators (TPAs) is one of the hottest trends in insurance today. According to the Society of Professional Benefits Administrators (SPBA) 66 percent of all U.S. workers are covered under self-funded plans, most of which are managed by independent, third-party administrators. But what do you look for in a TPA? If you’re an independent agent, here are some things to consider.
- Your first step is to determine the needs of your clients.
- Who are your target customers? And what types of workers do they have?
- Determine if your customers are fully insured, minimum premium or self-funded.
- Then, find out what size of self-funded groups they have: small (50-200 employees), mid-sized (200 to 2,000) or large (more than 2,000). *This is important because TPAs that serve only large corporations may not be inclined to give proper attention to a company group of 75 employees. Employees kept waiting for insurance cards for two months after enrolling, for example, will complain to their chief financial officer or human resources administrator.
- Finally, determine whether your target customers are in a single state or if they are spread out. Also, find out what capabilities are important to them. Do they need a provider with online capabilities? Do they need a TPA that can provide self-service for employees? Are they looking for one that provides real-time information on claims?