The Claims Confidence Gap: Why Insurers Hire TPAs on Cost but Fire on Outcomes
Insurers Are Spending More on TPAs. Why Are So Many Still Dissatisfied?
Claims leaders are under increasing pressure to improve outcomes while controlling costs, reducing leakage, accelerating cycle times, and navigating growing claims complexity. Yet many insurers describe their relationships with third-party administrators (TPAs) as broken—even as they increase their reliance on them.
In this exclusive HFS Research Market Impact Report, conducted in partnership with Xceedance, 302 senior P&C insurance leaders reveal a fundamental disconnect in how insurers select, evaluate, and manage TPA relationships.
The findings challenge conventional wisdom. The issue isn’t a lack of AI or technology. It’s a procurement model that prioritizes cost during selection, technology during evaluation, and outcomes only after problems emerge.
What You’ll Learn
Why TPA Relationships Continue to Underperform
Explore the structural disconnect between procurement, technology evaluation, and outcome measurement that leaves many insurers dissatisfied despite rising TPA investments.
Why Partnership Matters More Than AI
While AI ranks among the top selection criteria for insurers, the research finds that partnership quality, account management, transparency, and talent stability are far more likely to determine long-term satisfaction.
The Real Drivers Behind TPA Switching
Learn why claims outcomes—not pricing—are the leading reason insurers replace TPAs and how organizations can build stronger, outcome-focused relationships.
How AI Adoption Is Reshaping Claims Operations
Understand where insurers are investing in AI today, which use cases are delivering measurable value, and why most organizations remain in the early stages of transformation.
Six Attributes of a Strategic Claims Partnership
Discover the characteristics that separate high-performing TPA relationships from transactional vendor arrangements, including outcome-linked commercial models, shared AI roadmaps, and claims strategy advisory support.
Key Findings from the Research
- 94% of insurers say their current TPA operates as a processing vendor rather than a strategic partner.
- 82% acknowledge that procurement still prioritizes cost-per-claim over outcome governance.
- 98% rank AI and automation among their top TPA selection criteria.
- 42% of insurers changing TPAs cite dissatisfaction with claims outcomes as the primary reason.
- 85% of insurers are still building foundational claims transformation capabilities rather than operating AI-first claims models.
- Only 12% of TPA contracts are currently structured around measurable business outcomes.
Who Should Read This Report?
This report is designed for insurance leaders responsible for claims performance, operating model transformation, and vendor strategy, including:
- Chief Claims Officers (CCOs)
- Claims Operations Leaders
- COOs and CFOs
- Vendor Management Leaders
- Procurement Executives
- Program Administrators and MGAs
- Claims Transformation and Innovation Teams
