Third-Party Administrator (TPA)
An outside company that handles claims administration on behalf of a self-insured entity or an insurance carrier without itself carrying the underwriting risk, effectively renting out the claims-handling expertise a smaller self-insured company doesn't have in-house.
Why it matters
A policyholder dealing with a self-insured program is often actually talking to a TPA, not the ultimate risk-bearer, and understanding that relationship explains why some claims decisions get escalated back to the underlying company rather than settled on the spot.
On a real project
A large property owner that self-insures a portion of its own risk hires a TPA to process day-to-day claims, investigate losses, and issue payments, while the owner itself remains the party actually paying for the losses out of its own reserves.
Who this matters most to
An Insurance Adjuster may work for a TPA rather than directly for a carrier, handling claims on behalf of whichever self-insured client the TPA represents, while a Risk Manager is the one who hires the TPA in the first place.
Where this goes wrong
A policyholder under a self-insured program contacts the underlying company directly expecting a claims decision, but the company has delegated all day-to-day claims handling to its TPA. The call gets redirected, and the confusion over who actually has authority delays the claim.