Third-party administrators [TPAs] have an increasing hold over workers’ compensation and occupational medicine in the US. The country’s mandatory workers’ comp system has resulted in healthy TPA growth and the production of a mature and efficient market, according to Christopher Schaffer, USA CEO of Charles Taylor Insurance Support Services.
“Third-party administration is an incredibly emerging market worldwide,” Schaffer says. “The TPA market is notably mature in the US compared to other countries. I really believe the TPA market in the US is healthy and thriving because of the workers’ compensation system. It’s mandatory coverage in the US, and there are 50 states with different regulatory requirements. All of that has brought about a need for the TPA market earlier than it was needed globally.”
TPAs have the legal expertise and technological capabilities to ease the somewhat tricky workers’ compensation claims process on behalf of their clients. They also can provide discounts and can protect clients from both financial and regulatory exposures.
“In workers’ compensation, there are tons of forms that need to be filed and payments that need to be processed on a recurring basis,” Schaffer says. “It’s also vital to have electronic connectivity with every workers’ compensation commission or state regulatory agency. All of the processing involved in workers’ compensation claims has resulted in insurers, brokers and self-insureds turning to TPAs to shift not only the process, but also the regulatory burden.”
Charles Taylor provides insurance-related professional services – including management, adjustment and insurance support – and workers’ compensation is at the core of its operations in the US. The company is committed to growing its TPA business organically and through acquisition, both in the US and globally – although Schaffer acknowledges that in countries outside of the US, which typically don’t have the “vast workers’ compensation bureaucracy embedded in claims systems,” TPAs haven’t been as vital.
However, he notes that demand for TPA services is growing globally, thanks to heightened scrutiny by the Lloyd’s markets and international regulators. Global markets that didn’t have a compelling need for TPAs in the past are now looking to utilize TPAs to “satisfy compliance burdens and make sure their data is secure,” Schaffer says. These other jurisdictions might look to the US as an example of success in the third-party claims administrator space.