Bringing workers’ compensation insurance in-house by self-insuring is an appealing option for many larger companies. Self-insuring has the potential to reduce claim costs and increase transparency. On the other hand, it also means taking on responsibility for a risky, highly regulated area of operation. To do this successfully, many self-insurers keep ultimate responsibility for their insurance but hand day-to-day claims management to an insurance specialist offering TPA services.
Specific Benefits of a TPA
A good TPA can offer you a number of benefits.
- Efficiency – They will have much more extensive experience with claims handling, which means they know the best ways to keep costs down and minimize troublesome long-running claims.
- Compliance – The regulations for workers’ compensation insurance are complicated and vary between states. Getting and keeping the staff to handle them is an expensive proposition, especially if you do business on a regional or national level.
- Staff Morale – Claim management can be a contentious issue. Letting a TPA be the face of your claim management process can reduce conflict with your employees and make the process of returning to work smoother.
Companies who self-insure want to have more control over workers’ compensation insurance but many don’t want the trouble of actually going into the insurance business. Owning the process while outsourcing the expertise required can strike the balance needed to fully realize the benefits of self-insurance.