Third-party administrators (TPAs) play an important role in the claims process. While insurance companies have traditionally handled claims, there is a growing trend as more insurers are utilizing TPAs to manage claims on their behalf in an effort to reduce expenses and increase profitability.
TPAs can assist with ensuring that damage appraisals are completed accurately and on time, provide expertise on federal and local regulations, and help streamline processes for insurers and policyholders. Many TPAs utilize independent appraisers throughout the claims process to complete insurance estimates on their behalf. A recent study found that TPAs are twice as likely to outsource all of their appraisals to independent appraisers when compared to insurance companies, fleet owners/operators, leasing companies, remarketing companies and self-insured companies.
Whether an insurer is working with a TPA, or the TPA is using independent appraisers, effective oversight is critical to successfully managing the claims process for all parties involved. When it comes to choosing an independent appraiser, there are a number of factors TPAs should consider to find the best company that will complement their needs and work environment.
Research shows that TPAs view accuracy as the top metric when evaluating independent appraisers. When you step back and evaluate the relationship between the two groups, it only makes sense. Independent appraisers are the TPAs’ eyes and ears for estimates. TPAs rely on independent appraisers to advise them on claims – making estimate accuracy critical.
Material damage experts
When working with independent appraisal companies, TPAs should look for providers with expertise in the various types of claims they will be handling. Independent appraisers should be experts with years of experience in completing claims, and have references from other companies. Reports should provide clear documentation of what occurred during the appraisal process, what repairs are suggested, and address any specific details or anomalies, leaving no questions unanswered.
An independent appraisal organization with a large geographic footprint can frequently provide a global perspective of business on a state-by-state basis. There should also be consistency with estimate reports so they provide the same information regardless of location, since this increases trust and produces more consistent results.
Time is of the essence in the insurance industry and independent appraisers need to complete claims in a timely manner. Research found cycle time was the second most important metric in the evaluation of independent appraisers by TPAs.
The industry standard for turnaround time is 24 hours to make initial contact with the customer, 48 hours to inspect the damage and 72 hours to complete the estimate. Look for an appraisal company who can meet or exceed those standards.
Independent appraisers should use the most recent technology available to complete estimates. Does the company use a smartphone estimating tool? Is there a way for clients to login and view real-time updates on their claims? State-of-the-art technology is a driving factor that affects cycle time, accuracy and efficiency. Without it, the claims process may suffer.
Finding the right partner for any relationship is critical, and because TPAs are relying on independent appraisal companies to provide the best, most accurate results possible, choosing the right one is vital to everyone's long-term success.
Ken Loose is the COO at Property Damage Appraisers. He brings over 25 years of multi-line claims and claim management experience to PDA. Loose is responsible for the day-to-day leadership and general management of PDA. He is accountable for process and workflow, metrics reporting, client satisfaction and the quality and calibration of PDA's captive franchise network, delivering a robust menu of appraisal services. Ken can be reached at firstname.lastname@example.org.
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