The German re/insurance market has seen a shift towards using TPAs as strategic partners: Pro Global

During a recent interview with Reinsurance News, Stilianos Kalaitzidis, Head of Business Development, Pro Global Germany, discussed how the role of Third Party Administrators (TPAs) has evolved as a maturing model within the German-speaking reinsurance and insurance market.

“In the past, German insurers only used TPAs in emergencies, as they were reluctant to relinquish control. However, in recent years, there has been a shift towards using TPAs as strategic partners,” Kalaitzidis said.

“Many insurers have realised that a strong partner can lead to a win-win situation and support their growth plans.”

Staying on the subject of TPAs, we asked Kalaitzidis why German re/insurers have traditionally always been cautious about outsourcing claims handling to TPAs.

“German re/insurers have been cautious about outsourcing claims handling to TPAs due to concerns over regulation, data protection, and the potential loss of control and quality,” he added.

Further, it also appears that the shortage of experts across Germany’s re/insurance market is impacting the adoption of TPAs in claims handling.

With demographic changes taking place across the industry, including a number of experts shifting towards retirement in the next few years, combined with a shortage of incoming talent, this is making it increasingly difficult to recruit skilled staff to fill the expertise gap, noted Kalaitzidis.

In terms of talent, a key topic across the global re/insurance sector throughout recent years has been the shortage of talent within certain lines of business.

Focusing on Germany specifically, Kalaitzidis addresses how the talent drain is influencing the claims landscape, particularly in terms of expertise and efficiency.

“The talent drain is causing significant backlogs in claims processing, and insurers are struggling to meet the expectations of policyholders in terms of customer experience (CX). Reviews that could offer cost savings are either delayed or not conducted, resulting in financial losses for insurers and policyholders alike,” he said.

Moving forward, we then asked Kalaitzidis how he foresees the relationship between re/insurers and TPAs evolving in the future, given the increasing complexity of claims and industry pressures.

“For large insurers, the relationship is shifting away from ad hoc solutions towards true strategic partnerships. This evolution offers mutual benefits: insurers can rely on TPAs for support during unforeseen situations (such as terminations, parental leave, or long-term illness) and can leverage TPAs’ technical solutions. TPAs, in turn, can develop long-term, customised solutions and benefit from the insurer’s know-how.”

He continued: “For smaller insurers, the question is whether they will be able to maintain the necessary expertise for complex products like disability insurance in the coming years. With only a few claims handlers on staff, the loss of even one employee can have a significant impact. As a result, TPAs are likely to play an even more important role in supporting smaller insurers going forward.”

Focusing solely on complex claims now, Kalaitzidis named some of the current trends the German re/insurance market is currently seeing, especially in those related to disability and employment.

“The shortage of skilled workers is a significant issue, particularly because the market is still largely analogue, which exacerbates the problem. In Germany, the disability insurance product is highly technical and not easy to navigate. While the importance of disability insurance is often emphasised by politics and consumer protection organisations, the market remains stagnant, with only about a quarter of German households having such coverage. There is, however, movement in the area of occupational pension provision (Betriebliche Altersvorsorge), where employers are increasingly offering disability insurance directly to employees, which could broaden coverage.

“In terms of new products, basic ability insurance (Grundfähigkeitsversicherung) is being explored as an alternative to the traditional German disability insurance (Berufsunfähigkeitsversicherung). Over the years, the classic disability product has become more complex and comprehensive, but this has also made it less affordable, especially for those in physical jobs who need it most. The search for simpler and more affordable alternatives is gaining momentum,” he added.

He concluded: “Regarding reviews, German disability insurance contracts often span 30 years or more, with regular payments made to claimants. Insurers have the right to conduct annual reviews to check for improvements in health or changes in occupation. These reviews, which were often neglected due to lack of resources, are becoming a focus again. Portfolio analyses and technical solutions for these reviews are increasingly in demand as they offer potential cost savings for both insurers and policyholders.”

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