Ontario and Quebec TPAs form alliance for mutual expansion

By Donna Glasgow | January 18 2011 04:48PM

RWAM Insurance Administrators Inc., an Ontario-based third party administrator (TPA) has taken a foothold in Quebec through an equity-based alliance with Assurances Dalbec Ltd, a St.Laurent, Quebec-based TPA.

The agreement is aimed at allowing RWAM to guarantee French-language services to its national clients, in particular for its largest client Home Hardware Stores, which has more than 100 stores in Quebec. At the same time, this deal will enable Assurances Dalbec to expand, said Louis Dalbec, President of the company, who took part in an interview with The Insurance and Investment Journal, along with the leaders of RWAM.

“For RWAM, the concept is to really to be national….now they have a foothold in Montreal through the Assurances Dalbec office. For us, it is also a way to expand because it guarantees that we will be able to serve our clients well outside of the province. We have insured plan members across Canada. Our clients have employees everywhere,” explained Mr. Dalbec.

Bruce Burnham, CEO of RWAM says the two companies initially began working together a year ago. In August of this year, RWAM took a small equity stake in Dalbec, and may increase this stake to up to 10% in 2011.

Founded in 1988, RWAM is one of the largest TPAs in Canada with $150 million in premiums, said Carole Yari, President of RWAM. As a TPA, RWAM takes care of various administrative tasks around group plans, including paying out claims. Its target market is groups of 10 to 100 lives.

Ms. Yari explained that TPAs offer employers the opportunity to create customized plans made up of a mix of benefits from different insurance companies. For example, a TPA plan might contain critical illness insurance from one insurer, disability from another and dental benefits from yet another. “When you go directly with a carrier, you can’t do that because you are bound by just the product lines that they offer.”

Dalbec, founded in 1975, has a premium level of $25 million and also takes care of group plan administration and pays out claims to clients on behalf of insurers. Dalbec works primarily with manufacturing companies and its target market is 75 to 100 lives.

Ms. Yari adds that an additional service RWAM offers is underwriting. “We behave like an insurance carrier. The carriers have actually given us the authorization to look at the plan and develop the rates for that business, which is very, very unique across the marketplace.” RWAM employs 12 underwriters for this purpose. RWAM markets its plans as RWAM solutions, she adds.

Mr. Dalbec says that his firm may, in certain cases, take advantage of RWAM’s underwriting expertise. This gives Dalbec access to a new market, he adds.

He also thinks the deal with RWAM should help attract some good new group benefits advisors to Dalbec, advisors who may be looking for “a different way of working.” Mainly, Dalbec prospects its own business, but it also currently works with two outside advisors and is looking to develop more such relationships, he says.

Both RWAM and Dalbec offer web portals for plan members that they say are equal to what insurance carriers offer, such as the ability to check their claims history and other plan information. Ms. Yari adds, “What Dalbec brings to RWAM is they bring these functions and capabilities in a bilingual environment.”

Why do insurers work with TPAs? It is a way to develop new business and gain access to markets they wouldn’t otherwise reach, says Mr. Dalbec. Also they can be confident that TPAs have the experience and expertise to take care of this business, he adds. In addition, it is economical for insurers to work with TPAs since no new infrastructure is required to handle this new business, such as building space.

Mr. Burnham says one example is Quebec insurer La Capitale, which is using two TPAs, including RWAM, to develop business outside of Quebec.