According to a recent report published by Allied Market Research, titled, “Insurance Third Party Administrator Market by Service Type, End User, and Enterprise Size: Global Opportunity Analysis and Industry Forecast, 2021-2030,” the insurance third party administrator industry was valued at $280.69 billion in 2020, and is projected to reach $514.98 billion by 2030, growing at a CAGR of 6.3% from 2021 to 2030. Third party administrator is a licensed third-party entity, which provides management solutions to health insurance companies, employment firms, and others. It acts as an intermediary between the insurance company and policyholder to ensure cashless claims and reimbursement claims are settled effectively. Furthermore, increase in health insurance customers has accelerated the quantity of work and led to decrease in the quality of services. Therefore, TPAs are established to assist insurers to arrange for cashless treatments for the customers demanding seamless claim settlements. In addition, TPAs also scrutinize the hospital bills and documents for their accuracy and help in the processing of the claim.
Rise in need for effective claim handling and payment settlement, achieving operational efficiency & transparency in insurance business process, and adoption of third-party administrator in the health insurance are some of the factors propelling the insurance third party administrator market. However, risk of data theft and security issues are the major factors limiting the market growth. On the contrary, with rising number of health insurance policyholders, workers compensation prefers third party administrators to effectively handle claims and settlement of payment on behalf of the insurance companies. Thus, the demand for insurance third party administration is anticipated to grow exponentially in the coming years.
On the basis of end user, the property & casualty (P&C) insurance segment is expected to grow at a fastest rate during the forecast period. This is attributed to the fact that third-party administrators (TPAs) provide a variety of services such as billing services, data & analytics, and others, which help in claim processing & settlement while providing timely customer services.
By region, the insurance third party administrator market share is dominated by North America in 2021, and is expected to maintain this trend during the forecast period. Attributed to increased adoption of health insurance policies and favorable health insurance landscape in the U.S., there is a positive impact on the growth of the market. However, Asia-Pacific is expected to grow at the fastest CAGR during the forecast period due to continuous increase in healthcare costs and steady income of people, which act as factors that boost the insurance third party administrator market growth in the region.
The outbreak of COVID-19 has positively impacted the third party administrator market due to the rise is number of claims for health insurance during the pandemic. Therefore, insurance companies are depending on TPAs for handling such large number of claims and providing payment settlement. Furthermore, during the global health crisis, hospitalization has increased tremendously for which TPAs are providing ambulance services, medical facilities, and other value-added services. Therefore, the demand for third party administrator has increased during the COVID-19 pandemic.
Key findings of the study
- By service type, the claims management segment led the insurance third party administrator market size in terms of revenue in 2020.
- By end user, the property & casualty insurance segment accounted for the highest insurance third party administrator market share in 2020.
- By region, North America generated the highest revenue in 2020.
The top companies in the insurance third party administrator market analysis include such as Charles Taylor, CORVEL, CRAWFORD & COMPANY, ESIS, ExlService Holdings, Inc., GALLAGHER BASSETT SERVICES, INC., Helmsman Management Services LLC, Meritain Health, SEDGWICK, and United HealthCare Services, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the insurance third party administrator market.