Category: Claims · Reviewed by the Apex broking team · Last reviewed 2026-08-21
Category: Claims Also known as: TPA agreement, third party administrator agreement, delegated claims authority, DCA appointment Related concepts: delegated authority, managing general agent
A claims handling agreement is a form of delegated authority covering claims rather than underwriting. Under it, a third party administrator (TPA) takes first notification, opens and manages the file, appoints suppliers, sets reserves, and pays or declines claims up to an agreed level of authority. Anything above that level, or falling within a defined referral category, goes back to the insurer.
In the Lloyd’s market the equivalent role is the Delegated Claims Administrator. A managing agent may not appoint a firm to determine its claims — that is, to accept or deny them, agree amounts payable, or resolve disputes about them — unless Lloyd’s has approved that firm as a DCA and the relationship has been registered. Law firms are registered rather than approved, and a coverholder handling claims on the business it wrote does not need a separate DCA approval.
These roles are routinely confused, and the distinction determines who you can rely on.
Because the TPA is the insurer’s agent, a coverage position taken by the TPA is the insurer’s position, and a reservation of rights issued by the TPA is the insurer’s reservation. Equally, delay or poor handling by a TPA is the insurer’s problem, not a separate matter between the policyholder and the administrator.
The usual drivers are scale and specialisation. A carrier writing a delegated book in a territory or class where it has no claims team can buy the handling capability rather than build it. Volume classes benefit from process efficiency. Niche classes benefit from handlers who understand the subject matter. And where an MGA already owns the customer relationship, giving it claims authority keeps the service in one place.
The trade-off is control. The insurer is buying the outcome as well as the process, and the incentives are not perfectly aligned: an administrator paid per claim or on a fixed fee has no direct exposure to the indemnity spend. That is why authority limits, audit rights and reserving discipline are the parts of the agreement that carriers negotiate hardest.
Ask at inception, not at the point of loss, who will handle a claim and what they can decide. A TPA with meaningful authority will resolve an ordinary claim faster than a referral-heavy structure. A TPA with low authority limits will refer anything significant, and the referral is where the clock usually stops. If a claim is heading towards a coverage argument or an interim payment request, establish early whether you are talking to someone who can agree it.
No. A TPA holds delegated authority from the insurer to decide and settle claims within agreed limits. A loss adjuster is normally instructed to investigate a particular loss and report, without authority to bind the insurer. There is more on how claims are handled once the insurer is on notice.
Not usually, and generally there is no benefit while the claim sits within the TPA’s authority. Where the claim exceeds that authority or falls within a referral trigger, the insurer becomes involved anyway. Your broker can escalate if handling stalls.
Yes. Firms determining Lloyd’s claims must be approved by Lloyd’s as Delegated Claims Administrators, and the managing agent must register the relationship before it starts and maintain oversight of it.
This entry is part of the Apex Insurance Wiki. Last reviewed 2026-08-21. Next review: 2027-02-21.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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