Your TPA told you they don't charge broker commissions. That's technically true. It's also one of the most misleading claims in the benefits industry.
TPAs — Third Party Administrators — manage group benefits plans for small and mid-size businesses. They handle service, claims, adding and removing employees. Some offer proprietary software to make plan administration easier. On the surface, it looks like a good deal.
But once you understand how the model actually works, the math tells a different story.
What is a TPA and what do they actually do?
A TPA administers your group benefits plan. They handle day-to-day service — processing claims, managing enrollment, dealing with employee changes. In that sense, they do many of the same things a brokerage does.
Some TPAs have proprietary platforms that centralize plan administration. Adding a new employee, removing someone who left, checking claims status — it's all in one system. That software is often a big part of their pitch.
But the administrative function is where the similarity ends. The difference between a TPA and an independent broker shows up in three places: how they get paid, what data they share with you, and who's actually in your corner at renewal.
How does a TPA actually get paid?
Here's where the "no broker commissions" claim falls apart.
TPAs earn a margin as the administrator. They also pay their internal advisors — the people who manage your account — through additional margin built into the book of business. That cost is embedded in what you pay. You just never see it broken out.
So when a TPA says "we don't charge broker commissions," what they mean is: we don't call it a commission. The cost is still there. It's just labeled differently and buried in the overall rate.
An independent broker earns a commission on your plan. That commission is also embedded in your premium. The difference is that an independent broker can disclose that commission — and at RiskX, we do, in writing, every year.
With a TPA, you typically get zero disclosure on what they're earning from your plan. You have no way of knowing if the margin is 3%, 8%, or 15%. There's no transparency and no benchmark.
Why don't TPAs share your claims experience data?
This is the part that should concern you the most.
When you're with a TPA, your company is part of their large block. Your claims get pooled into the collective. And because of that, most TPAs don't provide your company's individual claims experience data.
Some won't share it even when you ask.
That's a problem for one very specific reason: if you ever want to leave and go to the open market through an independent broker, that broker needs your claims data to quote you properly. Without it, they're quoting blind — and insurers won't give competitive pricing on a company with no claims history.
This isn't an accident. It's a structural lock-in. The harder it is to get your data, the harder it is to leave. And the harder it is to leave, the less pressure the TPA has to perform.
If TPAs offer pooling, why are their rates so high?
TPAs sell stability. They pull together a large block of companies and promise that spreading risk across the pool smooths out rate increases.
That's how pooling is supposed to work. But the results don't match the pitch.
Some TPA pools in Canada are delivering annual increases of 10% or more. The industry average on the open market is 7.5%. So companies that went to a TPA specifically for stability are actually paying more than they would have on the open market.
When a pool is delivering increases above group health and dental inflation, something is off in how the pool is being managed — whether it's how companies are being quoted coming in, how the block is being priced, or how the margin is being set.
And because you don't get claims data and don't get margin disclosure, you have no way of knowing what's driving the increase. You just get the number and have to accept it.
What happens when your TPA raises your rate?
With an independent broker on the open market, a high renewal is the start of a conversation. The broker can challenge the insurer, get competing quotes, negotiate the rate, or move you to a better option.
With a TPA, a rate increase is a take-it-or-leave-it number. The TPA sets the rate for the block. There's no independent advocate reviewing that number on your behalf. There's no one pushing back.
Your options are: accept the increase, move to a different TPA, or find an independent broker and go to the open market.
And if you choose that last option, remember — you probably don't have your claims data. So the transition is harder than it needs to be, by design.
What does an independent broker with pool access give you that a TPA doesn't?
The difference comes down to four things:
Commission transparency. An independent broker can disclose exactly what they earn. At RiskX, we do this in writing every year. A TPA typically discloses nothing.
Claims data access. Your claims experience belongs to your company. An independent broker provides it. A TPA often withholds it.
Renewal advocacy. When your rate comes in high, an independent broker goes to work — challenging the number, getting competing offers, negotiating. A TPA hands you the number and expects you to accept it.
Product flexibility. An independent broker can access multiple carriers, pool options, and plan designs. A TPA locks you into their block with their pricing. If the pool underperforms, your only option is to leave entirely.
RiskX clients in the pool have averaged approximately 3% annual rate increases over the last several years. The industry average is 7.5%. Some TPA pools are running above 10%.
The structure of the relationship matters more than the pitch.
How do you know if you should leave your TPA?
Ask yourself a few questions:
Has your TPA ever disclosed their margin or what they earn from your plan?
Do you have access to your company's claims experience data?
Have your annual rate increases been consistently below the industry average of 7.5%?
Has anyone reviewed your renewal on your behalf and pushed back on the number?
If the answer to most of those is no, it's worth having a conversation about what an independent broker with pool access could look like for your company.
RiskX is a family-owned Canadian group benefits brokerage with over three decades of industry experience. If you're with a TPA and wondering whether you're getting a good deal, book a call with Gordon Smith,Founder.