What is the role of "third-party administrators" in insurance?

The role of third-party administrators (TPAs) in insurance is to handle claims processing and administration for self-insured plans and insurance companies. TPAs serve as intermediaries that manage the day-to-day operations related to claims on behalf of insurance carriers or self-insured employers. Their responsibilities typically include managing claim submissions, processing payments, handling customer service inquiries, and ensuring compliance with relevant regulations. By outsourcing these functions to TPAs, insurance companies can improve efficiency, reduce costs, and focus on their core competencies, while self-insured organizations can benefit from professional administration of their self-funded health plans.

This choice accurately reflects the primary duties of TPAs within the insurance landscape, distinguishing them from other options that describe unrelated functions. For instance, providing legal advice is not a standard function of TPAs, as legal professionals usually handle that. Selling insurance policies and managing investment portfolios also fall outside the typical responsibilities of TPAs, as those tasks are primarily the domain of insurance agents and investment managers, respectively.