How often should you audit a TPA?

It depends on the volume and complexity of the business and on the service agreement. Periodic formal audits are standard, backed by ongoing file reviews and reporting. Continuous review of open files lets issues get fixed before claims close.

What is TPA oversight?

TPA oversight is the client's ongoing management of its third-party administrator: setting guidelines and authority levels, approving payments above thresholds, reviewing reports and files, and auditing handling quality. Audits supply the evidence; oversight acts on it.

What should a TPA audit report include?

Findings by file, each with its evidence, the guideline involved, and the recommended fix. At the portfolio level, trends by line, office, or adjuster, repeat findings from earlier audits, and any financial effect that can be estimated, such as leakage.

Field Guide definitionSeptember 27, 2026

TPA audit

A TPA audit reviews how a third-party administrator handles claims for a carrier, MGA, or self-insured organization. It checks claim files against the client's guidelines, authority levels, and best practices, and it supplies the evidence for TPA oversight.

What is a TPA audit?

A carrier, MGA, or self-insured organization that outsources claims to a P&C TPA keeps responsibility for the outcome. A TPA audit is how the client checks that the administrator handles claims the way the service agreement and claim-handling guidelines require. It's one part of TPA oversight, alongside reporting, authority controls, and ongoing file review.

What does a TPA audit check?

Compliance with the client's contact, investigation, documentation, and reporting standards
Payments, reserves, and settlements within delegated authority, with approvals obtained above it
Coverage and liability positions that the policy and the facts support
Reserves set promptly and updated as exposure changed
Statutory and contractual deadlines met
Subrogation pursued, and defense counsel and vendors managed to budget

How do you audit a TPA?

Start from the service agreement, claim-handling guidelines, and authority levels, so reviewers and the TPA work to the same criteria.
Pick the file set. A traditional audit samples about 2% of files; a larger share, or the whole book, gives a more reliable view and shows patterns a sample misses.
Include open claims, so issues reach the TPA while the claim can still be corrected.
Tie each finding to the note, document, or payment it relies on, so the TPA can respond and fix it.
Track remediation and repeat findings by adjuster, office, and line, and bring the results to performance reviews with the TPA.

Why audit a TPA?

Outsourced claims still count in the client's loss results and regulatory record. Handling gaps show up as claims leakage, reserve surprises, complaints, or market conduct findings, and the client answers for them with regulators and capacity providers. Regular audits also give the TPA specific, evidence-backed feedback on where to improve.

Who runs TPA audits?

Carriers and MGAs that delegate claims, self-insured organizations that rely on an administrator, and reinsurers with ceded claims at stake. TPAs prepare for and respond to these audits.

Elysian works on both sides. Ely Audit reviews files whether they're handled in-house or by a TPA, and Elysian TPA handles claims under the client's guidelines and authority.

FAQ

How often should you audit a TPA?
It depends on the volume and complexity of the business and on the service agreement. Periodic formal audits are standard, backed by ongoing file reviews and reporting. Continuous review of open files lets issues get fixed before claims close.
What is TPA oversight?
TPA oversight is the client's ongoing management of its third-party administrator: setting guidelines and authority levels, approving payments above thresholds, reviewing reports and files, and auditing handling quality. Audits supply the evidence; oversight acts on it.
What should a TPA audit report include?
Findings by file, each with its evidence, the guideline involved, and the recommended fix. At the portfolio level, trends by line, office, or adjuster, repeat findings from earlier audits, and any financial effect that can be estimated, such as leakage.

Related definitions

Claims leakage
Claims leakage is money lost on covered claims through handling failures: the gap between what an insurer pays, including loss adjustment expense (LAE), and what it would have paid if each claim had been handled to its own guidelines.
P&C TPA (third-party claims administrator)
A P&C TPA, or third-party claims administrator, handles property and casualty claims for a carrier, MGA, or self-insured organization, from first notice of loss to resolution, under the client's guidelines and authority.

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