Third-Party Administrators (TPAs) have stepped up their value proposition to insurers with their market knowledge and accumulated experience. The solutions they provide contain the critical ingredient of trustworthiness as technology makes its presence felt, says Nextcare CEO Mr Christian Gregorowicz.
The accumulated market knowledge and experience of TPAs enables them to assume a more mature role in supporting insurers. Even as technology has become inevitable in creating proper solutions, reliability of the TPA is the non-negotiable ingredient for success, says Mr Gregorowicz.
The enforcement of mandatory healthcare insurance in the northern Emirates beginning 2025, which means the entire UAE is now covered, will be a prime mover of increased growth in healthcare insurance.
The UAE health insurance market is expected to grow by 5% each year, driven by this new mandate. While insurers will benefit from having more customers, the basic, affordable plans aimed at a larger group may lead to reduced operational efficiency[1]. Digital tools like AI for claims processing, telehealth and data analytics will help insurers handle higher volumes of claims faster while keeping costs down.
Mr Gregorowicz said, “This will create more pressure on TPAs because they are increasingly required to provide new claims-handling solutions to serve insurers. AI and technology have a significant role in developing these solutions to provide digital tools such as Telehealth.
“Change is happening at different levels, including the sudden increase in the size of business as was seen in the UAE market recently, which necessitates the ability to absorb that increase in a short period of time to meet the clients’ expectations. This demonstrates the need for having in place the necessary processes, teams and systems ready to provide solutions swiftly.”
Of the need to use tech tools, he said, “This is being experienced across all markets. The implementation of healthcare systems requires the use of advanced technology and this is applicable to any insurance provider who wants to enter the market. Advanced technology has become a passport for insurance providers; it’s no more just an enabler to do business.”
As healthcare costs continue to rise, investing in digital technology will be essential to maintain efficiency and value for customers. With an increase in patient demand and pressure on healthcare facilities, technology will help manage appointments, patient flow, and resource allocation. AI, telehealth, and data analytics will streamline claims processing and operational workflows, ensuring efficient service delivery for a diverse population while maintaining cost-effectiveness and operational efficiency.
The role of TPAs is not confined to claims handling, even if it is their core business, said Mr Gregorowicz. “Claims handling in addition to managing payments and reconciliations among providers are some of the TPA’s major functions. However, with time, TPAs have built experience and knowledge that are instrumental to support insurers in structuring their products and forging their underwriting strategies.”
TPAs while themselves unable to underwrite are able to support insurance companies by providing strategic advice on underwriting, designing products, reducing fraud and building medical networks, he said. “Insurance companies are increasingly reliant on the expertise of the TPAs in these areas. Some reinsurers also seek advice from TPAs. This, eventually, adds value to business because additional expertise should help organise the marketplace and enhance the level of services.”
Another key element that sets apart a successful TPA is a trustworthy digital health ecosystem, such as the Lumi ecosystem, which integrates innovative tools like telehealth and other AI-driven services. Such an ecosystem enhances service delivery and ensures better health outcomes, further strengthening the TPA’s value proposition.
In essence, a successful TPA transforms operational efficiency into a competitive advantage, ensuring that both insurers and policyholders benefit in today’s market realities.
Sustaining balanced financial performance is the primary concern for TPAs, Mr Gregorowicz said. “We consistently strive to sustain favorable financial outcomes, and TPAs may experience challenges when adjustments are required.”
He said technology plays a crucial role in enhancing performance through resource optimization, process improvements, and enriched customer experiences, contributing to a competitive advantage. However, technology comes at a price, he said, “while technology offers significant benefits, it requires ongoing investment to keep systems updated. This presents a challenge for both TPAs and insurers as technological advancements occur rapidly. For instance, the use of cloud technology is evolving with the emergence of AI, necessitating continuous adaptation.”
Another challenge is keeping pace with regulatory developments, which puts operators under pressure, he said. “Regulatory developments are evolving considerably. Recently we have seen regulators moving actively to deal with data security issues including data privacy and localisation of data within the country, which is a positive development but also requires efforts and investment from providers.”
Mr. Gregorowicz highlighted that TPAs are essential in supporting insurers to achieve competitiveness through cost and efficiency enhancements. However, he cautioned that price-driven competition can sometimes undermine the sustainability of quality services. When prices are reduced, it can be challenging for providers to maintain the same level of service. He noted that while conditions vary by country, competition among TPAs is intense in most markets, and only a few can offer distinctive services that truly add value to providers and clients. Regulatory interventions are required to monitor the financial condition of operators, but the market is set to self-correct, he said. “I believe in having the market regulate itself and overcome its challenges. The regulator can monitor the financial health of providers to ensure that their operations are in line with the regulatory requirement and controls, then the market dynamics will take care of issues of competition.”
He suggested the importance of maintaining financial oversight to support a balanced and sustainable marketplace. He noted that some TPAs offer products at very low prices, raising questions about revenue sustainability. Ensuring a fair and stable environment through appropriate measures can help maintain industry standards. He said that healthcare insurance claims have high frequency and lower cost-per-claim compared to general lines of business, which explains the need for a large-sized TPA operation to service a sizeable volume of business.
Combining local expertise with global knowledge is a major differentiator for a successful international/regional setup, said Mr Gregorowicz. “At Nextcare, we exchange experiences with other markets where we operate. Being a Global player with strong local presence gives us a considerable exposure to other experiences and helps us share the knowledge we have gained from our markets.”
He said that operators’ success is predicated on unwavering integrity and commitment. “In addition to the common regulations that govern each certain market, we have our own guidelines in place that address governance, values and ethics and other standards that inform a high level of service.”
Healthcare ahead
Mr Gregorowicz said, “The region is witnessing a profound transformation in healthcare and private healthcare insurance services,” explaining the MENA market’s growth potential.
According to him, “Countries in our region are embracing private healthcare insurance system, which caters to the needs of the markets and takes the burden off the governments’ shoulders. This is especially in the GCC where there is no tax system, which is needed to fund the cost of healthcare services.”
He added that this justifies the need for more regulatory monitoring of insurance products to ensure adequate coverage for all citizens.
Mr Gregorowicz said that the anticipated growth in healthcare insurance will be accompanied by an increased use of digital healthcare services, with a more customer centric approach, in a region where clients are becoming more discerning and demanding.
“Technological advances are already changing the way healthcare services are delivered, and this is reflected in the healthcare insurance business. We will see more AI technology driving efficiency along with increased use of analytics to further support insurers in technical areas and build proper risk-management maps,” he said.
Nextcare has great ambitions for the future, and the upcoming projects are sure to extend beyond the region.
