Third-party administrators (TPAs) have always been essential to the insurance ecosystem. Acting as extensions of carriers and MGAs, they manage day-to-day claims and play an important role during periods of high claims volumes, such as after catastrophic events, keeping operations running smoothly, and sharing accountability for delivering excellent claims outcomes. Their role has been critical in ensuring insurers can continue to serve policyholders effectively, no matter the circumstance.
The scale of the industry supports this. The global TPA market was worth $325 billion in 2022 and is forecast to reach $795 billion by 2032, more than doubling in size. In the U.S. alone, it already exceeds $150 billion. Growth is being accelerated by digital-first TPAs that use tools such as AI, machine learning, and automated workflows to enhance fraud detection, speed up claims, and strengthen risk insights. Prominent TPAs such as Sedgwick, Crawford & Company, and CorVel are some at the forefront of this transformation, underscoring the increasing recognition of TPAs as trusted partners.
Closing Gaps in Claims Connectivity
While TPAs are deeply integrated with carriers in many aspects of claims handling, financial infrastructure often remains a weak link. Even highly capable TPAs can be constrained when claims funds are not available in real time.
Without seamless connectivity between carriers, MGAs, and TPAs, delays emerge: cash calls become necessary, bordereaux cycles cause lags, and the end-customer waits longer for payment. These gaps are not about the quality of claims handling, they are about the unseen challenge of fund availability.
By addressing this infrastructure gap and ensuring real-time visibility and movement of both data and funds, TPAs and carriers can accelerate claims settlement and eliminate friction. The result is faster payouts, stronger customer trust, and the ability to scale without bottlenecks.
Meeting Rising Pressures with Adaptability
Economic conditions, catastrophic events, and increasing settlement values all add pressure to the system. More than two-thirds of carriers say these factors are already driving premiums higher.
For TPAs, adaptability goes beyond scaling operations or adopting new front-end technology. It requires fully integrating the financial side of claims, ensuring that funds and data flow seamlessly even during periods of high claim volumes.
For example, Hurricane Ian in 2022 generated more than $60 billion in insured losses and created a massive spike in claims. Handling that volume effectively required TPAs to rapidly deploy resources, logistics, and systems that ensured both financial and information flows kept pace with the demand.
Embedding Compliance into Everyday Practice
Compliance expectations around safeguarding and transparency are intensifying. Carriers and MGAs want confidence that their partners can demonstrate compliance and withstand scrutiny.
Delegated funds are a central challenge. Once money leaves an insurer's account and sits with a TPA, safeguarding and segregation responsibilities arise. Regulators are increasingly focused on this issue. For example, the UK's Financial Conduct Authority (FCA) has rules on how intermediaries safeguard client money, while in the U.S., the National Association of Insurance Commissioners (NAIC) has strengthened its model regulations around third-party oversight. These developments show how compliance is becoming an operational reality for TPAs, not just a regulatory checkbox.
A modern financial infrastructure addresses this by ensuring funds are held in segregated accounts, protected under tier-1 bank standards, and operated by a licensed platform provider. For TPAs, this approach eases much of the regulatory burden while strengthening trust with carriers, clients, and regulators alike. It transforms compliance from a requirement into a differentiator.
Modernizing Infrastructure to Match Carrier and MGA Expectations
For many TPAs, legacy systems remain a barrier. Around 74 percent of insurers still rely on outdated systems that slow down claims and limit visibility.
Carriers and MGAs are increasingly clear about their priorities. They expect faster settlements that keep policyholders satisfied, cost efficiency achieved through streamlined processes, and full transparency and control over claims and funds. TPAs who modernize their infrastructure, enabling real-time visibility, straight-through processing, and automated reconciliations, will be best positioned to meet these demands.
The Future of the TPA
The TPA of the future will be judged not only on how claims are processed but on how seamlessly they integrate with their partners across operations, funds, and compliance.
Connectivity provides the integration needed to deliver speed. Compliance provides the foundation of trust. Together they empower TPAs to continue serving as true strategic partners, driving efficiency, resilience, and growth for the insurers and MGAs they support.