What is a TPA and how do they differ from MGAs?

Insurance Third Party Administrators (TPAs) manage and processing claims on behalf of insurers. Their scope of services can vary, though typically include gathering appropriate information about a claim, determining if the claim is payable, and even paying the claimant on behalf of the insurer. In this capacity, they may function as first-line customer service organizations for insurance companies. Insurance TPAs must have a valid license issued by the state they operate in before they can offer services. This ensures that Insurance TPAs are qualified and knowledgeable about the industry. Licensing also helps protect consumers from any potential fraud or negligence on behalf of the Insurance TPA. Managing General Agents (MGAs) and TPAs have some overlapping roles. The key differentiator is that MGAs help carriers to sell and market their products, while TPAs help with managing and processing claims.