The Missing Operating Layer in Insurance Vendor Risk

Insurance is structurally dependent on third parties. Claims administration, policy servicing, actuarial modeling, fraud analytics, and customer communications are routinely outsourced to TPAs, insurtechs, cloud platforms, and offshore operations. The global insurance TPA market alone exceeds $400 billion and is growing at over 7% annually. That dependency is not a weakness in itself — it is an operating model. But it creates a TPRM obligation that most carriers, brokers, and insurtech firms are not staffed to meet.

Regulators have noticed. The NYDFS October 2025 Industry Letter made clear that covered entities cannot delegate compliance responsibility to a third-party service provider, even if operations are outsourced. NYDFS examiners will assess due diligence practices, contractual controls, and ongoing monitoring — and will consider the absence of adequate TPRM practices in enforcement actions. The NAIC Insurance Data Security Model Law, now enacted in the majority of U.S. states, requires licensees to exercise due diligence in selecting third-party service providers and to require appropriate administrative, technical, and physical safeguards. The final phase of NYDFS Part 500 amendments, effective November 1, 2025, further tightened MFA and asset inventory requirements that ripple directly into vendor oversight.

Meanwhile, third-party breaches keep escalating. A July 2025 breach of a cloud CRM platform used by a major U.S. insurance subsidiary exposed data for 1.4 million customers. Cyber insurers are now pursuing subrogation claims against the very cybersecurity vendors their policyholders contracted, scrutinizing vendor contracts during underwriting as indicators of risk management maturity. For insurance organizations, weak TPRM is no longer just an audit finding — it is an underwriting, litigation, and enforcement liability.

Many insurance organizations already own a GRC platform. The natural instinct is to extend its vendor risk module to cover TPRM. In theory, this consolidates risk data. In practice, it creates execution gaps.

GRC platforms were not purpose-built for TPRM. They typically require significant customization to handle vendor-specific workflows like questionnaire distribution, evidence validation, tiering, and remediation tracking. Implementation timelines are long, user adoption is slow, and the third-party risk data often does not sync well with other risk categories — leading to fragmented insights rather than centralized visibility.

The operational pattern is predictable. Teams rely on consultants to run periodic assessment sprints, then lose momentum between engagements. Follow-through on findings is inconsistent. Remediation timelines slip. When the examiner arrives, the program looks complete on paper but cannot demonstrate execution discipline — the continuous, documented lifecycle that regulators like NYDFS now explicitly expect.

An execution engine is not a replacement for GRC. It is the layer that turns policy into operational reality — the difference between documenting that a vendor risk program exists and proving it runs.

Thirdsentry operates as this execution layer. It automates questionnaire distribution, validates vendor evidence using AI, generates risk scores in hours rather than weeks, and drives remediation workflows to documented closure. Its model spans AI-first automation for teams with internal capacity through fully managed oversight where Thirdsentry analysts handle validation, outreach, remediation, and board-ready reporting end to end. This is the distinction between a managed service and a platform — and Thirdsentry is built to deliver both, scaling with an organization's maturity rather than forcing a single operating model. Continuous monitoring surfaces emerging risk signals in real time, and Clio, its AI-powered risk companion, provides context-aware answers drawn directly from centralized vendor data.

This approach directly addresses the capacity gap that plagues insurance TPRM. Automation reduces per-vendor assessment effort from 12–16 hours to 3–5 hours, and at a scale of 100 vendors, that frees 700–1,300 analyst hours annually. Assessment cycle times compress from 30–45 days to 10–14 days. Audit preparation effort drops from 40–60 hours to 5–10 hours when evidence is continuously linked and framework mappings are maintained in real time.

The value case is not theoretical. Organizations deploying TPRM execution engines report:

These are operational metrics, not marketing claims. They compound over time: broader coverage surfaces risks earlier, faster remediation reduces exposure windows, and continuous documentation reduces the cost and disruption of every subsequent audit cycle.

That is the gap an execution engine closes.