The third party administrator (TPA) market has been growing steadily over the past two decades. That growth is expected to continue based on the latest market data. Modor Intelligence reports the TPA market size in 2024 to be $486.08 billion. It is expected to reach $677.57 billion by 2029 reflecting a compound annual growth rate (CAGR) from 2024-2029 of 6.87%. Currently, North America has the largest TPA market in the world with the Asia-Pacific region being the fastest growing TPA market. What is driving the TPA market’s growth? It can be attributed to specific market conditions and trends, as well as the TPA industry’s own measures. Looking ahead, Allied Market Research projected the global TPA market to reach $795.1 billion by 2032 reflecting a 9.6% CAGR.
TPA Market Conditions and Trends
During the COVID-19 pandemic, many insurance companies, and claims payers outsourced some of their administrative tasks to TPAs. There has also been a surge in regulations governing employee benefit plans, many of which are very complex and beyond the scope of in-house human resource and finance departments. Looking to mitigate their risk and exposure relating to noncompliance, plan sponsors are seeking out TPAs knowledge and expertise. Insurance companies, in their efforts to increase their operational efficiency, are also turning to TPAs to assist in their claims management and adjudication.
TPAs Adopting New Digital Technologies
Also contributing to the TPA market’s growth is the adoption of advanced digital technologies by TPAs. This digitalization is helping them achieve greater efficiency, accuracy, and transparency. Their customers not only value these attributes, but also their role in improving the overall experience for both plan sponsors and their members. Using digital technologies such as cloud-based platforms, incorporating Artificial Intelligence and Machine Learning, TPAs are better able to process and analyze large volumes of claims data in real-time. This enables the TPA to efficiently verify policy holder information, evaluate claims and support faster claims settlement. In a similar vein, TPAs are also offering 24/7 customer support to address customer inquiries using multiple channels ranging from social media platforms to email and text messaging.
In addition to their leveraging of technology, TPAs are introducing solutions to support their clients’ greater need for health care cost management including utilization management and medical stop loss insurance.
