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Insurance Third Party Administration Market Outlook, Share To 2030
(MENAFN- Straits Research) Third-party administrators (TPAs) are used by businesses to manage their claims. Many cater to medium- to large-sized companies that have decided to self-insure a portion of their liability, commercial property, or workers' compensation risks. They are also responsible for handling claims for businesses that have self-funded their health, dental, and other benefit plans. TPAs generally range in size from small to medium. Third-party administrators are commonly referred to as TPAs, but they are also referred to as "administrative services only" occasionally (ASO).
As it expands into new geographies, value chain segments, client types, and product lines, the TPA industry must align its services and operating models with shifting demand patterns. As a result, they must stay current with other sectors.
Market Dynamics
Burgeoning Technology and Higher Healthcare Cost to Propel the Market
TPAs have adopted several technologies to stay in line with market trends. The risen adoption of advanced technologies such as IoT, artificial intelligence, machine learning, and robotics process automation has resulted in the expansion of the insurance third-party administrator industry. TPAs also use these technologies to ensure efficient processes that provide excellent service while lowering costs. Corvel Corporation, for example, has introduced CogencyIQ, artificial intelligence and predictive analytics tool designed to address complex claims.
Furthermore, by consistently investing in and updating their technology, TPAs embrace customer trends and accommodate new technologies at a lower cost to update their administrative platform. Again, technological innovation in the insurance industry has been evolving rapidly in recent years, and the pace of these advancements is expected to accelerate in the future with the introduction of increased process automation, automated underwriting, and higher levels of customer interaction.
To stay competitive, digital TPAs provide a technologically advanced ecosystem in a timely and cost-effective manner to assist insurers in effectively handling claims. As a result, these are the primary motivators in the market for third-party insurance administrators.
Furthermore, rising healthcare costs are expected to increase the demand for third-party administrators. The cost of healthcare has risen dramatically in recent years and is expected to increase even further as chronic disease prevalence increases. TPAs have proven to be a valuable asset to self-insured programs by lowering costs without sacrificing employee healthcare quality. As a result, TPAs have piqued the interest of investors. In recent years, major health insurers United, Anthem, and Centene have made significant TPA acquisitions.
Surging Adoption of Third-Party Administrators in the Health Insurance Industry
A third-party administrator is required to process healthcare claims. In the practical world of insurance, a few responsibilities of a TPA may include the commitment to expedite the claim process as soon as the insured indicates it. Their responsibility is to review all supporting documents and settle the claim either cashlessly or on a reimbursement basis. TPAs also manage other services, such as ambulances, wellness programs, and so on, in addition to the claim process.
The health insurance industry has witnessed substantial growth over the last five years to 2021. The industry has benefited from an aging population due to the aging baby boomer population. COVID-19 has also had a positive impact on the health insurance industry. The coronavirus outbreak is expected to boost healthcare insurance growth in a relatively under-insured market by increasing health coverage penetration.
At the right time, people have realized that purchasing a health insurance policy is the only way to stay financially secure during this pandemic. Following this trend, the industry is expected to grow at a compound annual rate of around 6%, reaching nearly 6.4 trillion US dollars in 2025. (Statistics from Statista) As the health and medical insurance industries expand, the TPAs market will provide lucrative opportunities.
Impact of COVID-19
Profitable opportunities in the insurance third-party administrator market are expected due to the COVID-19 outbreak. Demand is likely to be driven by the adoption of digital technology in insurance and rising demand for third-party administrator solutions hosted or managed in the cloud.
Furthermore, there was an increase in health insurance claims during the pandemic. As people have become more aware of the seriousness of health issues, there has been an increase in the demand for insurance. As a result, insurance companies are heavily investing in third-party administrator services to effectively handle such a large number of claims. Because of these factors, insurers are thinking about hiring third-party administrators to improve cost efficiency and business operations during a pandemic. The market is expected to expand as more people become aware of it.
Regional Analysis
According to the regions mentioned, North America will have the largest share in 2020. The primary reason is the market in the United States. The demand for insurance third-party administrators in the United States is concentrated and fragmented. High competition is the primary negative factor affecting this industry in the United States, while low revenue volatility is the primary positive factor. Consumers' disposable income rises, allowing them to buy cars, houses, and other assets that require insurance.
In addition, higher per capita disposable income allows individuals and households to increase coverage by paying higher premiums for health, life, property, and casualty insurance. Furthermore, the COVID-19 pandemic has positively impacted the US insurance industry. As the number of claims increased, many insurance companies began to invest in third-party administrator services.
Asia-Pacific is a significant market expected to grow at the fastest CAGR. With the rise of medical tourism, many Asian hospital chains are positioning themselves as centers of excellence, which will lead to TPA collaborations with healthcare providers. Furthermore, TPAs are destined to play an ever-increasing role in controlling Asia's healthcare costs and ensuring quality healthcare.
Key Highlight
The global insurance third party administration market was valued at USD 400.27 billion in 2021 and is expected to grow at a CAGR of 6.48% during the forecast period.
Based on Insurance type, Health Insurance acquires the largest share and is expected to grow at a CAGR of 6.87% during the forecast period.
Players of the Market
Key players in the insurance third party administration market are
Sedgwick Claims Management Services Inc
UMR Inc.
Crawford and Company
Maritain Health
Gallagher Bassett Services Inc
Helmsman Management Services LLC
ESIS Inc
Healthscope Benefits
CorVel Corporation
Market News
April 6th, 2022- Sedgwick's comprehensive managed care services are now available as a standalone offering. The company's independent managed care solutions help the client by providing the option of selecting just one or more services from their entire suite.
March 8th, 2022- Sedgwick acquired the business of UK Assitnace247 Ltd, a leading provider of home emergency repair fulfillment services in the UK.
October 7th, 2021- Crawford and Company released the SaaS of Asservio, a leading-edge automated and digitalized platform that optimizes efficiency management and claims processing.
ESIS Inc introduced ECOS, the newest TPA claim system in the marketplace. ECOS is designed to support more efficient and effective claim management through system-driven workflows and process automation by providing deeper insights, enhanced program configurability, and empowered claim management.
On December 7th, 2021, CorVel Corporation launched CogencyIQ. CogencyIQ provides comprehensive solutions to the customers.
Global Insurance Third Party Administration Market Segmentation
By Insurance Type
Health Insurance
Retirement Plans
Commercial General Liability Insurance
Other Insurance (Motor Insurance, etc.)
By Region
North America
Europe
Latin America
APAC
The Middle East and Africa
As it expands into new geographies, value chain segments, client types, and product lines, the TPA industry must align its services and operating models with shifting demand patterns. As a result, they must stay current with other sectors.
Market Dynamics
Burgeoning Technology and Higher Healthcare Cost to Propel the Market
TPAs have adopted several technologies to stay in line with market trends. The risen adoption of advanced technologies such as IoT, artificial intelligence, machine learning, and robotics process automation has resulted in the expansion of the insurance third-party administrator industry. TPAs also use these technologies to ensure efficient processes that provide excellent service while lowering costs. Corvel Corporation, for example, has introduced CogencyIQ, artificial intelligence and predictive analytics tool designed to address complex claims.
Furthermore, by consistently investing in and updating their technology, TPAs embrace customer trends and accommodate new technologies at a lower cost to update their administrative platform. Again, technological innovation in the insurance industry has been evolving rapidly in recent years, and the pace of these advancements is expected to accelerate in the future with the introduction of increased process automation, automated underwriting, and higher levels of customer interaction.
To stay competitive, digital TPAs provide a technologically advanced ecosystem in a timely and cost-effective manner to assist insurers in effectively handling claims. As a result, these are the primary motivators in the market for third-party insurance administrators.
Furthermore, rising healthcare costs are expected to increase the demand for third-party administrators. The cost of healthcare has risen dramatically in recent years and is expected to increase even further as chronic disease prevalence increases. TPAs have proven to be a valuable asset to self-insured programs by lowering costs without sacrificing employee healthcare quality. As a result, TPAs have piqued the interest of investors. In recent years, major health insurers United, Anthem, and Centene have made significant TPA acquisitions.
Surging Adoption of Third-Party Administrators in the Health Insurance Industry
A third-party administrator is required to process healthcare claims. In the practical world of insurance, a few responsibilities of a TPA may include the commitment to expedite the claim process as soon as the insured indicates it. Their responsibility is to review all supporting documents and settle the claim either cashlessly or on a reimbursement basis. TPAs also manage other services, such as ambulances, wellness programs, and so on, in addition to the claim process.
The health insurance industry has witnessed substantial growth over the last five years to 2021. The industry has benefited from an aging population due to the aging baby boomer population. COVID-19 has also had a positive impact on the health insurance industry. The coronavirus outbreak is expected to boost healthcare insurance growth in a relatively under-insured market by increasing health coverage penetration.
At the right time, people have realized that purchasing a health insurance policy is the only way to stay financially secure during this pandemic. Following this trend, the industry is expected to grow at a compound annual rate of around 6%, reaching nearly 6.4 trillion US dollars in 2025. (Statistics from Statista) As the health and medical insurance industries expand, the TPAs market will provide lucrative opportunities.
Impact of COVID-19
Profitable opportunities in the insurance third-party administrator market are expected due to the COVID-19 outbreak. Demand is likely to be driven by the adoption of digital technology in insurance and rising demand for third-party administrator solutions hosted or managed in the cloud.
Furthermore, there was an increase in health insurance claims during the pandemic. As people have become more aware of the seriousness of health issues, there has been an increase in the demand for insurance. As a result, insurance companies are heavily investing in third-party administrator services to effectively handle such a large number of claims. Because of these factors, insurers are thinking about hiring third-party administrators to improve cost efficiency and business operations during a pandemic. The market is expected to expand as more people become aware of it.
Regional Analysis
According to the regions mentioned, North America will have the largest share in 2020. The primary reason is the market in the United States. The demand for insurance third-party administrators in the United States is concentrated and fragmented. High competition is the primary negative factor affecting this industry in the United States, while low revenue volatility is the primary positive factor. Consumers' disposable income rises, allowing them to buy cars, houses, and other assets that require insurance.
In addition, higher per capita disposable income allows individuals and households to increase coverage by paying higher premiums for health, life, property, and casualty insurance. Furthermore, the COVID-19 pandemic has positively impacted the US insurance industry. As the number of claims increased, many insurance companies began to invest in third-party administrator services.
Asia-Pacific is a significant market expected to grow at the fastest CAGR. With the rise of medical tourism, many Asian hospital chains are positioning themselves as centers of excellence, which will lead to TPA collaborations with healthcare providers. Furthermore, TPAs are destined to play an ever-increasing role in controlling Asia's healthcare costs and ensuring quality healthcare.
Key Highlight
The global insurance third party administration market was valued at USD 400.27 billion in 2021 and is expected to grow at a CAGR of 6.48% during the forecast period.
Based on Insurance type, Health Insurance acquires the largest share and is expected to grow at a CAGR of 6.87% during the forecast period.
Players of the Market
Key players in the insurance third party administration market are
Sedgwick Claims Management Services Inc
UMR Inc.
Crawford and Company
Maritain Health
Gallagher Bassett Services Inc
Helmsman Management Services LLC
ESIS Inc
Healthscope Benefits
CorVel Corporation
Market News
April 6th, 2022- Sedgwick's comprehensive managed care services are now available as a standalone offering. The company's independent managed care solutions help the client by providing the option of selecting just one or more services from their entire suite.
March 8th, 2022- Sedgwick acquired the business of UK Assitnace247 Ltd, a leading provider of home emergency repair fulfillment services in the UK.
October 7th, 2021- Crawford and Company released the SaaS of Asservio, a leading-edge automated and digitalized platform that optimizes efficiency management and claims processing.
ESIS Inc introduced ECOS, the newest TPA claim system in the marketplace. ECOS is designed to support more efficient and effective claim management through system-driven workflows and process automation by providing deeper insights, enhanced program configurability, and empowered claim management.
On December 7th, 2021, CorVel Corporation launched CogencyIQ. CogencyIQ provides comprehensive solutions to the customers.
Global Insurance Third Party Administration Market Segmentation
By Insurance Type
Health Insurance
Retirement Plans
Commercial General Liability Insurance
Other Insurance (Motor Insurance, etc.)
By Region
North America
Europe
Latin America
APAC
The Middle East and Africa
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