Does Your TPA Understand Your ERM Objectives?
Most Third Party Administrators (TPAs) profess to understand their clients’ needs and challenges to provide the lowest possible costs associated with casualty, health and disability claims in an Enterprise Risk Management (ERM) environment.
However, our recent surveys indicate that most TPAs may not be able to provide the most innovative technology and services for the most critical elements of claim cost reduction. Peter Drucker once said, “Knowledge has to be improved, challenged, and increased constantly, or it vanishes.” In this age for immediate answers to complex situations, your TPA needs to understand your objectives and be continually monitored to meet them. There are three key areas to consider so that your institutional objective and knowledge doesn’t vanish with the retirement or reassignment of critical resources.
While most TPA’s say they employ advanced models to assess and manage claims with the critical resources necessary to resolve a claim, our practice has observed very few organizations that have invested the necessary resources to do so. An independent analysis would allow you to determine if your TPA is employing the proper resources to meet your individual needs in a cost effective way.
In almost every instance, a TPA will say they are doing everything to manage the entire process of a claim. The most advanced TPAs acknowledge that they can’t do “everything”, but can help to manage specialty resources such as complex predictive modelling, benchmarking, financial projections and planning, and litigation management. The smartest client and their brokers will help the TPA resolve claims utilizing all available resources, thereby reducing claim costs to the lowest possible amount.
Have you established clear ERM objectives for your TPA to follow? Do you have a dashboard available to monitor risks and claims according to your objectives? Do you receive a daily report of key drivers of risk and claim costs? Evidence has shown that if organizations are closely monitoring the critical factors of risk and claims activity, they are significantly outperforming their industry peers for similar risk profiles.
If you believe you may need additional resources to outperform your industry peers, please contact us for a free consultation.