Third-Party Administrators: What Public Entities Need To Know

Jasmine Kyles
January 15, 2015

Aaron Stone, Vice President of Claims, is published in the January 2015 issue of Public Risk Magazine illustrating the complexities of choosing an insurance program for public entities and local governments.

Risk managers have numerous programs and variables to consider, including vital services communities require. These services are expensive to run, and, in an economic situation where governments are still experiencing tight budgets, risk managers must often make difficult decisions on maintaining or prioritizing essential services, while remaining cost effective.

There are a variety of options available to public entities in creating and procuring their insurance programs. One of the options local governments are increasingly considering is a self-insured retention program (“SIR”), which can lower an entity’s upfront insurance premium cost. This option very often involves the participation of a Third-Party Administrator (“TPA”) for claims. A TPA, as the name suggests, is an outside vendor that can provide a wide array of claim handling services for the local government based on their specific needs.

While the idea of “outsourcing” claims services can save an entity money, it can also expose the entity to a subset of new issues and potential pitfalls.

The article explains the following concerns for public entities:

  • What to consider before employing a TPA;
  • Understanding a TPA’s roles and responsibilities; and
  • The TPA/insurance carrier relationship.

We encourage Public Risk Management Association (PRIMA) Members to access the article here.