Peter Steffen, Partner, Smith, Gambrell & Russell, LLP and Joseph Loggia, Team Leader, Buxbaum Loggia co-led a session on How to Improve & Monitor the TPA Relationship, delivering practical, experience-based guidance on managing one of the most critical, and risk-prone, partnerships in the insurance and reinsurance ecosystem. Drawing on extensive audit, claims, and legal experience, the panel focuses on prevention, oversight, and accountability.
Key takeaways include:
- Strong frontend due diligence is essential. Many TPA disputes originate from insufficient diligence at onboarding. Beyond reputation and pricing, carriers should assess operational capacity, staffing, financial strength, and specific experience with the relevant line of business.
- Watch for structural conflicts. TPAs affiliated with or owned by MGAs can present conflicts around reserving, renewals, and incentives. These issues often surface later, especially as losses develop or business moves into runoff.
- TPA agreements deserve close attention. Core provisions (i.e., authority limits, fee structures, indemnification, insurance requirements, access to records, audit rights, and termination) must be clearly defined. Vague language and unchecked assumptions are frequent sources of later disputes.
- Contracts must evolve as the relationship evolves. As books mature, shrink, or enter runoff, agreements should be formally amended. Relying on course of performance or silence can create misaligned expectations and unnecessary risk.
- Auditing is a core oversight function, not a checkbox. Regular, substantive audits are critical to monitoring claims handling, billing practices, reserving integrity, and compliance with authority thresholds. Effective oversight reflects the principle that performance follows inspection.
- Fee monitoring becomes more important over time. Changes in billing methodology, staffing turnover, or reduced workloads can materially impact costs, particularly in runoff. Fee structures that once made sense may no longer be appropriate.
- Changing TPAs is difficult, but sometimes necessary. While transitioning a book is costly and complex, continued misalignment or poor performance can be even more expensive. Carriers should weigh rehabilitation against replacement with a clear focus on indemnity dollars and claim outcomes.
- Ambiguity, not intent, drives most disputes. The majority of TPA conflicts arise from unclear authority, compensation terms, or documentation standards rather than bad faith. Clear expectations, consistent communication, and early intervention can prevent escalation.
Watch the full session to hear the panel’s war stories, lessons learned, and practical advice in their own words. Available now on AIRROC On-Demand!
