Four public sector Non-Life Insurers –New India Assurance, United India Insurance, National Insurance and Oriental Insurance are reviving their plans to float Third-Party Administrator (TPA) exclusively for four PSU Insurers.
PSU Insurers had decided to have their own in-house TPA as the performance of existing TPAs which were working with the PSU Insurers were below satisfactory level in handling clients as well as hospitals.
Though, the plans for an exclusive TPA to settle their health insurance claims and to check frauds in their business were initiated two years back, it couldn’t be finalized due to many technical hurdles. They had appointed KPMG to advice on the issue.
Fearing loss of the business, 30 odd existing TPAs were against this move and they even approached the Competition Commission of India (CCI) arguing that it was tantamount to form a cartel. The Plan to rope-in a foreign partner couldn’t also be fructified.
PSU Insurers now have decided to go ahead with their own TPA. They have dropped idea to rope-in a partner. All the four PSU General Insurers will contribute equally to the equity stake of the proposed TPA.
Insurance Companies use TPAs to manage its claim processing, advice customers on network hospitals and approving cashless and reimbursement claims and also dispersing claims to the customer. TPA also handles many aspects of other employee benefit plans such as the processing of the Retirement Plans and Flexible Spending Accounts. TPAs are often independent; their functions are handled by some companies directly as in-house unit in India.
As of now, PSU Insurers which control 60% of the Rs 55,000 crore market are making losses in Health Insurance business with the claim ratio going up to 110%. Insurance Regulatory and Development Authority (IRDA) has proposed that it should come down to 70% to make the business viable.