The U.S. Property and Casualty (P&C) Insurance BPO market has been registering a healthy growth rate of around 17% over the last four years and is expected to grow at 14-16% in the next few years. Within the high-growth P&C Insurance space, Workers’ Compensation in the United States is one of the key segments that has witnessed high adoption of third-party outsourcing. More complex rules and reporting requirements, and different operating models are some of the characteristics that differentiate the administration of Workers’ Compensation from that of other P&C insurance segments.
The Workers’ Compensation market in the United States has witnessed changes in the third-party engagement model in the last few years. The Workers’ Compensation market has traditionally been dominated by specialized players or Third-Party Administrators (TPAs); however, we have seen some BPO service providers also gaining entry and traction in this market.
Key discussion points of this viewpoint are:
Introduction
Difference between Workers’ Compensation and commercial health insurance
Modalities of Workers’ Compensation: Self-, fully-, and excess-insured
Challenges in administering Worker’s Compensation
Adoption of third-party outsourcing to mitigate the challenges
Third-party spend in the Workers’ Compensation space
Key processes within the space and the degree of outsourcing
Other processes/activities for cost-containment and faster Return-to-Work (RTW)
Service provider landscape
TPAs
BPO service providers
Outsourcing models
Shift in outsourcing model – BPOs gaining traction
Outlook
This paper helps insurers and employers understand the appropriateness of entities (TPA or BPO, or BPO+TPA) based on outsourcing drivers, and provides Everest Group’s point of view on what the future of outsourcing is going to look like in the Workers’ Compensation industry.
