There is a very large market for third-party administrators and insurance claims adjusters because the insurance industry is a very large industry not only in the United States of America but in other countries of the world. Please note that you are expected to carry out thorough feasibility studies and market survey if indeed you want to maximize profits from this line of business.
Aside from that, you must master effective cost control in order to ensure that the pricing policy and financial position of the company is appropriate to stay afloat as a third-party administrators and insurance claims adjusters company in the United States of America.
If you want to start your own third-party administrators and insurance claims adjusters company, but do not know how to go about it, then you should consider going through this article; it will sure give you the needed guide.
Steps to Starting a Third-Party Administrators and Insurance Claims Adjusters Company
1. Understand the Industry
Companies in the Third-Party Administrators and Insurance Claims Adjusters industry basically investigate, appraise and settle insurance claims; provide third-party administration services of insurance and pension funds; and offer insurance advisory and ratemaking services.
Please note that the Third-Party Administrators and Insurance Claims Adjusters industry does not include companies that provide portfolio management services, sell insurance policies or offer actuarial consulting services.
The Third-Party Administrators and Insurance Claims Adjusters industry plays a critical role in the insurance and retirement markets by enabling businesses to outsource claims processing, administrative services and risk management.
Insurance carriers and pension funds, health and welfare funds, workers’ compensation funds and self-insurance funds have increasingly relied on these services to cut operating costs and improve efficiency. In addition, insurance carriers and employee-benefit funds incurred major losses due to the financial crisis of the mid-2000s, which severely affected the investments of these funds and demand for insurance plans.
A recent report published by IBISWorld shows that the Third-Party Administrators and Insurance Claims Adjusters industry is in the mature stage of its economic life cycle, as reflected in the measure of industry value-added (IVA). The report further shows that over the 10 years to 2023, IVA is forecast to rise at an annualized rate of 3.5 percent.
In comparison, GDP is projected to increase at an annualized rate of 2.2 percent during the same period. Demand for industry services rose precipitously during the financial crisis of the mid-2000s, as a wave of loan defaults, foreclosures, and financial markets volatility increased demand for industry services.
The Third-Party Administrators and Insurance Claims Adjusters industry is indeed a large industry and pretty much active in most developed countries of the world most especially in the United States of America, United Kingdom, Australia and Canada et al.
Statistics has it that in the United States of America alone, there are about 138,458 registered and licensed third-party administrators and insurance claims adjusters companies scattered all across the United States responsible for employing about 443,947 people and the industry rakes in a whopping sum of $236 billion annually.
The industry is projected to enjoy 4.4 percent annual growth within 2012 and 2017. No establishment can boast of having the lion share of the available market in this industry.
One thing is certain about starting a third-party administrators and insurance claims adjusters company, if you are able to conduct your market research and feasibility studies, you are more likely not going to struggle to secure clients because there are always clients all across the United States who would need your services from to time.
It is important to state that this industry is not saturated. As a matter of fact, in the whole of the United States of America, statistics shows that there are only 138,456 registered and licensed third-party administrators and insurance claims adjusters companies.
So also, the fact that no player can boast of dominating the market in this industry means that there is room large enough to accommodate Johnny-come-latelies.
Some of the factors that encourage entrepreneurs to start their own third-party administrators and insurance claims adjusters company despite the fact that the entry barrier is high could be that the business is profitable and can be started in part of the country, without the rigors raising capital to meet certain capital base as required by the regulating authorities.
With third-party administrators and insurance claims adjusters company, you can afford to partner with other smaller firms that are into insurance related services. The bottom line if that if you are have a robust network and you are well positioned, you can indeed maximize profits with your third-party administrators and insurance claims adjusters company.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographics composition of those who require the services of third-party administrators and insurance claims adjusters company cut across insurance companies, government corporations, corporate organizations, NGOs, business owners cum entrepreneurs who subscribe to various types of insurance policies.
So, if you are looking towards defining the demographics for your third-party administrators and insurance claims adjusters business, then you should make it all encompassing.
3. Decide What Niche to Concentrate On
Most third-party administrators and insurance claims adjusters tend to operate general services such as investigation, appraisal and settle insurance claims; provide third-party administration services of insurance and pension funds; and offer insurance advisory and ratemaking services. That is why it seems that there are no niche areas in the industry.
But on the other hand, some third-party administrators and insurance claims adjusters may decide to major in some key areas like;
- Investigating, appraising and settling claims
- Third-party claims processing
- Third-party insurance and pension fund administration
- Insurance actuarial services
- Insurance advisory services
- Insurance exchanges
- Insurance loss prevention services
- Insurance rate-making services
- Insurance reporting services
- Medical cost evaluation services
The Level of Competition in the Industry
The level of competition in the third-party administrators and insurance claims adjusters industry depends largely on how big and organized your company is.
Bigger firms work for government agencies and larger insurance companies, and smaller third-party administrators and insurance claims adjusters firms usually work for small businesses, employees, insurance brokers and startup entrepreneurs et al
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or services properly, you will always make headway in the industry.
4. Know the Major Competitors in the Industry
Please note that in every industry, there are always brands that perform better or are better regarded by customers and general public than others. Some of these brands have been in the industry for a long time, while others are best known for how they treat their customers and how they choose to brand their business.
These are some of the leading third-party administrators and insurance claims adjusters firms in the United States of America and also in the globe;
- Sedgwick Claims Mgt.
- Crawford & Co./ Broadspire
- York Risk Services
- UMR Inc.
- Gallagher Bassett Services
- CorVel Corp.
- Meritain Health
- ESIS Inc.
- Helmsman Mgt. Services
- HealthSmart Holdings
Economic Analysis
When it comes to starting a third-party administrators and insurance claims adjusters company, you just have to get your economic and cost analysis right before venturing into the business. It is good to mention that the business is not for rookies; it is for professionals who have successfully gathered the required experience and expertise to handle such business.
Starting this kind of business definitely entails that you raise plenty of startup capital to meet up with the huge financial requirements. So also, you need to have good investigation, appraisal and negotiation skills.
You will be expected to hire the services of experts that will help you with comprehensive economic and cost analysis. If you get your economic and cost analysis right before launching the business, you may not have to stay the long before you start attracting big players in the United States of America and break even.
5. Decide Whether to Buy a Franchise or Start from Scratch
If you are looking towards starting a third-party administrators and insurance claims adjusters company, you would have to start from the very scratch because you can hardly get the franchise of a third-party administrators and insurance claims adjusters company to buy.
Despite the fact that starting a third-party administrators and insurance claims adjusters company from the scratch might be stressful, but it is worth the stress.
You should just try as much as possible to secure a good facility, hire competent investigators, negotiators and appraisal specialists, come up with good business strategies and then leverage on every marketing tool within your disposal especially the internet to market your company.
Please note that most of the successful third-party administrators and insurance claims adjusters companies in the United States started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
6. Know the Possible Threats and Challenges You Will Face
The truth is that if you decide to start your own third-party administrators and insurance claims adjusters company today, one of the major challenges you are likely going to face is the presence of well – established third-party administrators and insurance claims adjusters companies and also other related insurance and appraisal businesses who are offering same services that you intend offering.
Other threats that you are likely going to face as a third-party administrators and insurance claims adjusters company operating in the United States are access to highly skilled workforce, undertaking technical research and development, ability to vary services to suit different needs, unfavorable government policies and the arrival of a competitor within your location of operation and global economic downturn which may affect your ability for to attract major players in the insurance industry.
There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
As it relates to starting a third-party administrators and insurance claims adjusters companies in the United States of America, the legal entity you choose will go a long way to determine how big the business can grow. By and large, you can choose a general partnership or limited liability company for your third-party administrators and insurance claims adjusters company.
As a rule, general partnership should have been the ideal business structure for a small – scale third-party administrators and insurance claims adjusters company especially if you are just starting out with moderate startup capital a small market base.
But if your intention is to grow the business and have clients from all across the United States of America, then choosing general partnership is not an option for you. Limited Liability Company will cut it for you. Setting up an LLC protects you from personal liability.
If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your third-party administrators and insurance claims adjusters company; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your third-party administrators and insurance claims adjusters company, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
The truth is that when it comes to upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your third-party administrators and insurance claims adjusters company so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
8. Choose a Catchy Business Name from the ideas Below
When it comes to choosing a name for a business, it is expected that you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. So, if you are considering starting your own third-party administrators and insurance claims adjusters, here are some catchy names that you can choose from;
- Polycarp Ernesto® Enterprise, LLC
- Pro Server® Insurance Claims Adjuster Company, Inc.
- Mike Pence® Third – Party Administrators, LLC
- Andrew Lewis® Insurance Claims Adjuster Company, Inc.
- Silver Roof® Insurance Claims Adjuster, LLC
- Grace Honk® Group
- Everest™ Third – Party Administrators, LLC
- Premier Fund Group.
- W Shannon, Inc.
- Alphonso® Insurance Claims Adjuster Company, Inc.
- Viola Stanton® Insurance Claims Adjuster Company, Inc.
- Stanley Hensel® Insurance Claims Adjuster Company, Inc.
9. Discuss With an Agent to Know the Best Insurance Policies for You
In the United States of America and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from.
So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your third-party administrators and insurance claims adjusters company. Here are some of the basic insurance policy covers that you should consider purchasing for your company;
- General insurance
- Risk Insurance
- Credit insurance
- Deposit insurance
- Financial reinsurance
- Lenders mortgage insurance
- Health insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own third-party administrators and insurance claims adjusters company, usually you may not have any need to file for intellectual property protection / trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
Apart from the results you produce as it relates to carrying out your services as a third-party administrator and insurance claims adjuster, professional certification is one of the main reasons why some third-party administrators and insurance claims adjusters companies stand out.
If you want to make impact in the third-party administrators and insurance claims adjusters industry, you should work towards acquiring all the needed certifications in your area of specialization. These are some of the certifications you can work towards achieving if you want to run your own third-party administrators and insurance claims adjusters company;
- Certified Insurance Claims Investigator
- CPCU: Chartered Property Casualty Underwriter
- CIC: Certified Insurance Counselor
- CRM: Certified Risk Manager
- CIRMS: Community Insurance and Risk Management Specialist.
- Certified Benefits Professional – (CBP)
- Degree in Insurance Related Courses
Please note that you cannot successfully run a third-party administrators and insurance claims adjusters company in the United States and in most countries of the world without acquiring professional certifications even if you have adequate experience cum background in the industry.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.
If you do, it won’t be too long before the long hand of the law catchup with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own third-party administrators and insurance claims adjusters firm in the United States of America;
- Certificate of Incorporation
- Business License and Certification
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Consulting contract documents
- Online Terms of Use
- Online Privacy Policy Document
- Apostille (for those who intend operating beyond the United States of America)
- Company Bylaws
- Insurance Policy
- Memorandum of Understanding (MoU)
13. Raise the Needed Startup Capital
Starting a third-party administrators and insurance claims adjusters firm can be cost effective. Securing a standard office in a good business district, equipping the office and paying your employees are part of what will consume a large chunk of your startup capital.
When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your third-party administrators and insurance claims adjusters management firm;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
Third-party administrators and insurance claims adjusters firm and most alternative financial services based type of businesses requires that you see physically with your clients hence it must be located in good location; a location that is prone to both human and vehicular traffic and a location that is at the epicenter of a business district if indeed you want to attend to loads of clients.
If you have taken your time to study third-party administrators and insurance claims adjusters companies, you will realize that they are willing to pay expensive rents in order to stay in a busy business district; a place where business activities and financial/insurance activities are at its peak.
If you make the mistake of renting or leasing a facility for third-party administrators and insurance claims adjusters company in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business and perhaps giving direction to potential clients.
It is important to note that a business facility in a good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget.
If you are new to the dynamics of choosing a location for a business such as third-party administrators and insurance claims adjusters company, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your third-party administrators and insurance claims adjusters company.
Of course, you would not want to locate this type of business in the outskirts of town. Your clients should be able to drive down and locate your office with little or no difficulty. Vendors also should be able to easily locate your office when they have to come submit their bid/proposals, documents or for background checks et al.
15. Hire Employees for your Technical and Manpower Needs
There is no special technology or equipment needed to run this type of business except for customized investigation and appraisal software apps, financial related software apps and social media management software applications. You will also need computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves).
When it comes to choosing between renting and leasing an office space, the size of the third-party administrators and insurance claims adjusters company you want to build and your entire budget for the business should influence your choice.
If you have enough capital to run a standard third-party administrators and insurance claims adjusters company, then you should consider the option of leasing a facility for your office. As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision.
Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Insurance Investigator, Claims Adjuster, Accountant, Business Development Executive / Marketing Executive, and Customer Service Officer or Front Desk Officer.
Over and above, you would need a minimum of 6 to 15 key staff to effectively run a medium scale but standard third-party administrators and insurance claims adjusters company in the United States of America.
The Services Delivery Process of the Business
The way third-party administrators and insurance claims adjusters companies work vary from one agency to another, but ideally, a third-party administrators and insurance claims adjusters company is expected to first and foremost build a robust company’s profile before sourcing for clients to hire their service.
This is how it works, a third-party administrators and insurance claims adjusters company searches for clients, insurance companies and startups who have business needs as it relates to investigating, appraisal and insurance claims issues, and offer insurance advisory and ratemaking services to their clients based on their request.
It is important to state that a third-party administrators and insurance claims adjusters company may decide to improvise or adopt any business process and structure that will guarantee them, good return on investment (ROI) efficiency and flexibility.
16. Write a Marketing Plan Packed With ideas & Strategies
As a third-party administrators and insurance claims adjusters company operator, you would have to prove your worth before attracting larger corporations to hire your services. So, if you have plans to start your own third-party administrators and insurance claims adjusters company, you should first build a successful career in the alternative financial services industry.
So, when you are drafting your marketing plans and strategies for your third-party administrators and insurance claims adjusters company, make sure that you create a compelling personal and company profile.
Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to the industry and the organizations you have worked for in time past. This will help boost your chances in the market place when sourcing for clients.
Here are some of the platforms you can utilize to market your third-party administrators and insurance claims adjusters company;
- Introduce your business by sending introductory letters alongside your brochure to all the insurance companies, corporate organizations, startups and medium scale business community in the location you intend operating your business
- Advertise your business in relevant financial and insurance magazines, radio stations and TV stations (make yourself available for third-party administrators and insurance claims adjusters and other related insurance services related talk shows and interactive sessions on TV and Radio)
- List your business on local directories / yellow pages
- Attend international third-party administrators and insurance claims adjusters expos, seminars, and business fairs et al
- Create different packages for different category of clients in order to work with them
- Leverage on the internet to promote your business
- Join local chambers of commerce and industries around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing
17. Work Out a Reasonable Pricing for your Services & Products
One key factor that will help you get the right product pricing for a third-party administrators and insurance claims adjusters service is to ensure that you source your working capital from sources that won’t put pressure on you.
Another strategy that will help you offer your services at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products and services.
You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives.
18. Develop an Iron-clad Competitive Strategies to Help You Win
The third-party administrators and insurance claims adjusters company line of business is a competitive industry, and you must come up with a unique and highly creative strategy to be able to outsmart your competitors in the industry.
Part of what you need to do in order to stay competitive in the industry is to continue to create better and faster ways of handling cases under your care. Organizations will always run to you if they know that you have a better option especially as it relates to producing results (helping them get their insurance claims and appraise them faster).
Another strategy that you can adopt is to ensure that your organization is well positioned, key members of your team are highly qualified and certified as it relates to their job roles.
19. Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps attract new customers is to produce results and satisfy your customers always.
If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.
If you can continue to improve on your service delivery, then you won’t struggle to maintain loyal customers and part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands.
When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software.
With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized emails and above all, you can easily receive complaints and feedback from them).
20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting a third-party administrators and insurance claims adjusters company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
In promoting your brand and corporate identity, you should leverage on both print and electronic media and also social media (the internet).
As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and wide reaching. Below are the platforms you can leverage on to boost your brand and to promote and advertise your third-party administrators and insurance claims adjusters business;
- Place adverts on insurance magazines and related newspapers, radio stations and TV stations.
- Encourage the use of word of mouth publicity from your loyal customers
- Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote your business.
- Ensure that you position your banners and billboards in strategic positions all around your city
- Distribute your fliers and handbills in target areas in and around target locations
- Advertise your business in your official website and employ strategies that will help you pull traffic to the site
- Brand all your official cars and ensure that all our staff members and management staff wears your branded shirt or cap at regular intervals.