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New insurers entering the market can take advantage of a third-party administrator (TPA) to manage claims without initially investing in expensive systems and teams. (Photo: OpturaDesignAdobe Stock)

Despite difficult macroeconomic circumstances, the insurance market has seen green shoots of recovery after years of depressed rates. We have seen combined ratios, excluding catastrophic losses, improve markedly and new entrants, both excess and surplus and admitted, emerged in recent months.

The improvement has been uneven, however, and carriers have worked hard to allocate capital to where opportunities are more abundant. Pockets of profitability are proliferating. Flexibility and elasticity are needed to take advantage of this upturn. By taking advantage of a third-party administrator’s (TPA) offering, new entrants into the market can manage their claims without initially investing in expensive claims systems and teams. This is a niche that TPAs have successfully occupied over the past few years, as the TPA sector has matured into a core piece of the U.S. market’s profitability puzzle.

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