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Title:

2009 Annual Meeting ? Assembl

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... groups Trustee plans Hour banks ... Advisors Seek business through captive agents in ... Insurance Industry Market Share and Business Development ... – PowerPoint PPT presentation

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Date added: 9 January 2020
Slides: 27
Provided by: actu150
Learn more at: http://meetings.actuaries.ca
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Title: 2009 Annual Meeting ? Assembl


1
Canadian Institute of Actuaries
LInstitut canadien des actuaires
  • 2009 Annual Meeting ? Assemblée annuelle 2009
  • Halifax, Nova Scotia ? Halifax (Nouvelle-Écosse)

2
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Agenda
  • History of TPAs
  • Makeup of the various types of TPAs, ownership
    and market focus
  • Administration relationships
  • Insurers
  • Clients
  • Market relationships
  • with insurers
  • Advisors/Consultants
  • Market share and business development
  • Advantages and perceived disadvantages of TPAs
  • Regulatory oversight
  • TPAAC and its role in the current environment
  • What does the future hold?
  • Questions and discussion

3
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • History of TPAs
  • Formed to meet administrative challenges of
    multi-employer groups
  • Trustee plans
  • Hour banks
  • Pension arrangements
  • Focused consulting
  • Associations
  • Professional groups
  • Trade associations
  • Unassociated multi-employer arrangements

4
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Billing consolidation when multiple insurers
    involved
  • Single employer administration
  • Insured and self-funded arrangements
  • Third Party Payer (TPP) and/or Administrator
    (TPA)
  • MGAs or MGUs

5
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • What do we mean by Administration?
  • TPP and TPA
  • Data gathering and management
  • Eligibility verification
  • Premium billing and remittance
  • Employee queries
  • Document production
  • TPP
  • Claims adjudication
  • Claims payment
  • Claims reporting
  • Will use TPA for both types of administrators.

6
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Ownership and Market Focus
  • Union Ownership
  • Focused on Trustee plans
  • i.e. PBAS owned by UFCW
  • Developed Hour bank systems
  • Manage Group and Pension administration and
    investment arrangements
  • Internal Consulting
  • Actuarial valuations for Pension as well
    self-funded Disability arrangements.

7
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Privately Owned/Consultant Driven
  • Trustee Groups
  • Associations
  • Trade
  • Professional
  • Industry
  • Large single employers

8
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Privately Owned No Consulting
  • Premium Billers or consolidators, claims payment
  • Multi-employer unassociated businesses
  • i.e. Chamber of Commerce, Board of Trade
  • Better Business Bureau
  • Independent Federation of Business
  • Single employers
  • Individual Products
  • Privately Owned Broker
  • Premium Billers or consolidators
  • Single employers
  • Some claims payment

9
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Publicly Traded Consulting Firms
  • i.e. Morneau Sobeco, Mercer, etc.
  • Premium Billing, some Claims Paying
  • Flex and other Benefit Administration
  • Large Single Employers
  • Large Industry Associations
  • Public/Employee Association Organizations
  • i.e. SAHO, MTS (Teachers) OTIP etc.
  • Premium Billing, Claims Paying
  • Disability Management
  • Actuarial Valuations either internally or through
    external consultants

10
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Administration Relationships
  • Insurers
  • Out Sourcing for Insurers
  • Collect premium on behalf of insurers
  • Produce booklets, certificates of insurance
  • Administer employee adds, deletions etc.
  • Claims paying
  • Follow insurer guidelines, open to annual or more
    frequent audits

11
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Clients
  • May have relationship as Consultant/TPA
  • Represent client needs to insurer
  • Also acts on clients behalf as TPA
  • If appointed by independent consultant will
    follow direction of client/insurer/consultant
  • In self-funded arrangements act on behalf of
    client
  • Holds reserves or funds on deposit
  • Administers employee adds, deletions etc.
  • Pays claims

12
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Market Relationships
  • Insurers
  • Partners
  • Insured products
  • Life, LTD, ADD, Optional Life, CI etc.
  • Stop loss and out of country pools
  • Insured Health and ASO
  • Competitors
  • Self-funded plans
  • Wellness programs
  • Provide same non-insured products such as Best
    Doctors, EAPs etc. through other providers

13
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Advisors/Consultants
  • Partners
  • Captive advisors tied by contract
  • Selected advisors in market
  • Open market
  • Competitors
  • Act as consultants
  • May take ownership of plans for Tied Advisors
  • Seek business through captive agents in
    opposition to incumbent advisors

14
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Market Share and
  • Business Development
  • Group and Individual Benefits
  • Estimated Insured and Self-funded Benefits
  • In excess of 4 Billion
  • Self-funded Health, LTD, Trustee arrangements
  • Pension Funds under Administration
  • Unknown but includes Trustee plans, large single
    employer Defined Benefit administration
  • Money Purchase administration
  • Investment services

15
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Advantages and
  • Perceived Disadvantages of TPAs
  • Advantages
  • Systems designed to administer difficult
    Multi-employer arrangements
  • Focused personalized administration
  • Self-funded Health, LTD, Trustee arrangements
  • Consolidation of multiple insurer arrangements
  • Lower Cost environment
  • Pension Funds under Administration
  • Trustee plans, large single employer
  • Defined Benefit and Money Purchase administration
    and Investment services

16
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Perceived Disadvantages
  • Not as efficient or competent as insurers
  • Process claims do not adjudicate
  • Not technically developed
  • Personnel not trained well
  • Unregulated and therefore nor properly overseen
  • Unfair competition, not subject to same capital
    and financial requirements as insurers
  • A number of companies with questionable practices

17
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Answers to Perceived Disadvantages
  • Competence, training and system development vary
    by TPA but in most are well developed
  • Most TPAs train their personnel to a high
    standard or hire already trained employees
  • Main business is administration, proper claims
    adjudication is critical (most adhere to this)
  • Old Superintendents Regulations are adhered to as
    are CCIR rules by most
  • TPAs do not assume risk and therefore capital and
    financial obligations insurers are subject to are
    not required by TPAs. Any risk in TPAs portfolio
    is assumed by insurers. Adhered to by most.
  • What about those that are not included with
    most

18
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Regulatory Oversight
  • TPAs are the largest unregulated Area in the
    Financial Services Sector!?
  • There is no legislation or proposed legislation
    or regulation to govern TPAs
  • Risk Based Market Regulation will have an impact
    on both TPAs and insurers that outsource to them
  • OSFI Risk based rules require insurers to ensure
    that TPAs they work with follow best practices
    and a code of conduct
  • The unregulated environment and those TPAs not
    following Best Practices prompted the formation
    of the Third Party Administrators Association of
    Canada (TPAAC)

19
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • TPAAC and Its Role
  • in The Current Environment
  • Formed in 2003 by 9 diverse TPAs

20
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Why Form TPAAC?
  • Met with regulators and TPAs to discuss specific
    concerns
  • Unregulated industry
  • Not all TPAs follow best practices (those not
    considered part of most)
  • Little market or industry input
  • Little relationship between TPAs in what is a
    large insurance market sector
  • No common body to meet challenges and
    opportunities

21
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Process of Forming TPAAC
  • Met with regulators and TPAs to outline initial
    approach to meeting concerns
  • Formed basis for Association and presented vision
    to Regulators, TPAs and other industry
    participants
  • Made a final verbal and written presentation to
    CCIR
  • Formally set up TPAAC
  • Met with CLHIA to outline TPAACs direction
  • Started process of moving toward one common set
    of Best Practices and Code of Conduct for TPAs in
    Canada

22
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • TPAAC Mission
  • To create a financially strong Third Party
    Administration industry and to establish certain
    guidelines and uniform standards required to
    preserve the integrity of our industry and to
    protect our consumers." 

23
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • What does TPAAC Offer
  • Code of Conduct
  • Best Practices
  • Industry education and information sharing
  • Liaison and joint proposals with other Industry
    participants
  • Stakeholder with CCIR
  • Set high ongoing standards for Association
    members
  • Adding new vision to changing insurance industry

24
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • Requirements for Membership
  • Application for Membership
  • EO and Bond coverage
  • No Co-mingling of funds held proper use of
    Trusts
  • Comprehensive Disaster Recovery Program
  • Established procedures and training
  • Good business practices
  • Audit by KPMG of
  • Key factors in TPA operation
  • Ensure all requirements of membership are met
  • If not meeting criteria, KPMG indicates what
    needs to be done for TPA to be able to join

25
Third Party Administrators (TPAs) - Their Role in
the Group Insurance Industry
  • What Does the Future Hold
  • Third Party Administrators are a large and
  • increasingly important part of the market
  • Still a great need for increased participation in
    TPAAC to ensure Best Practices are being met by
    TPAs in the market
  • Increasing partnerships with Insurers
  • Increasing work with top Advisors
  • Growth in self-funding of health and dental
  • Work closely with regulators, the CLHIA and other
    industry stakeholders
  • Will become stronger contributors to the future
    of the insurance industry

26
  • Thank you
  • Questions
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