What is the difference between a TPA and a broker insurance companies?

A Third Party Administrator (TPA; sometimes confused with a Broker) is a service provider for Insurance companies, providing services related to health insurance only.

There are three types of broker i.e. The Direct Broker (between end-users and primary insurers only), Re-insurance Brokers (between primary insurers and re-insurers only) and He can approach all Insurers for a competitive quote. Composite Brokers (both the above).

Brokers are highly regulated. Brokers need to be have fully trained staff and proper infrastructure.  

What is a TPA

For starters, the Third Party Administrator (TPA) is not a person. It is a company that acts on behalf of an insurance company to deliver the services of the insurance company to the insured. This mechanism enhances the quality and range of services as well as the geographical area that can be covered by an insurance company.

The importance of  TPAs

Outsourcing has been the buzzword for over a decade now. Businesses ranging from the Software Industry to the Medical fraternity have been outsourcing their tasks to agents, so that the mainstream specialists are free to do what they do best–specialize!Outsource agents serve as very efficient secretaries. Their main work is to assist the larger entity in providing quality service. The outsource agencies started hiking up their service quality too, because now there was across–the–board competition among outsourcing agencies!We now have professionals giving better service because their mechanical jobs are taken over by outsourcing companies. We also have excellent quality and infrastructure being given by the provider of the outsourcing service, lest the completion eat them up! Between the two professionals pulling themselves up, the winner is the consumer, who gets better service. 

The criteria for becoming a TPA

The regulatory agency for all TPAs is the Insurance Regulatory and Development Authority (IRDA). The IRDA grants and revokes licences to the TPA. It also lays down the guidelines and minimum criteria in terms of finance and infrastructure to be met before applying for a TPA licence. The detailed guidelines for TPA’s are provided at the site http://www.irdaindia.org/tpareg.htm. The salient points are

·         A TPA must be a registered company, with at least one registered doctor on its board of directors.

·         The TPA licence is valid for a period of3 years from the date of issue and must be renewed after every three years.

·         The IRDA reserves the right to cancel the licence if the TPA has been found guilty of deliberate malpractice.

·         An insurance company can tie up with more than one TPA. Terms and conditions of the interaction between the TPA and the insurance company are to be drawn up internally between the two parties, without the interference of the IRDA.

·         The TPA shall be remunerated directly by the insurance company for services provided. The buyer of the insurance policy cannot be charged for services rendered by a TPA.

While An insurance broker is a specialist in insurance and risk management.

Brokers act on behalf of their clients and provide advice in the interests of their clients. Sometimes an insurance broker will act as agent of an insurer, but where this occurs the situation should be fully explained to you.

A broker will help you identify your individual and/or business risks to help you decide what to insure, and how to manage those risks in other ways.

An insurance broker might specialise in one specific type of insurance or industry, or they might deal with many different types.

Insurance brokers can give you technical advice that can be very useful if you need to make a claim.

Brokers are aware of the terms and conditions, benefits and exclusions and costs of a wide range of competing insurance policies, so they can help you find the most appropriate cover for your own circumstances.

Brokers can help arrange and place the cover with the chosen insurer and can often provide advice on how to make the most of your insurance budget.

Apologized for the answer, I do not know, I leave the answer to the specialists.

In short & simple words. TPA  acts on behalf of the insurance company & provide all the back offices services to their clients.  

While Broker acts on behalf of the client & provide them an independent advise on product & place their policies with insurance company. He also provide post placement services throughout the policy period.

Third party administrator(TPA) is a specialized health service provider rendering a variety of services like arranging for hospitalization and settling a  policyholder's claims.

The TPA benefits the policyholder by providing faster hospitalisation while insurance companies are benefited by a reduction in their administrative costs, ruling out fraudulent claims and ultimately bringing down the claim ratios. On the other hand, an insurance broker's job is to get the best cover with the lowest premium for his corporate client.

Take for instance---Bhaichand Amulok Group which owns an insurance and reinsurance broking company called Bhaichand Amoluk consultancy services, also owns 26 per cent stake in Willis BA (insurance broking company) and thirdly owns a TPA called Health India.

i fully agree with the answers been added by experts..........thanks.

• An agent, unlike a broker, has the authority to bind coverage (legally obligate the insurance company to provide coverage according to the terms and conditions as bound).
• An agent is an acting representative of the insurance company’s product they are selling. A broker can seek out the best quote from insurance companies and make suggestions to their clients.
• Insurance agents can accept payment for the insurance company’s product they sold to their client(s). Where as, an insurance broker works on behalf of the client and cannot accept payment on their behalf.

TPA is a Third Party Administrator and does work what otherwise Insurance company should have been doing. It is an outsourcing agency working for insurance companies.

On the other hand, Brokers are agencies who are facilitating new or existing transaction between Insured and Insurer. They are agents. They may work dedicated to an insurance company or insured or there can be cases of brokers working independently.

Support answer..........Ghada Awada 

Agree with previous answers

*********************************