Health Insurance TPA to Start Functioning on July 1

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Health sector is about to witness another big leap as Health Insurance Third Party Administrator (TPA) of India is going to begin its operations on July 1. The main role of the division is to exclusively manage health claims of public general insurers.

When asked about the company, the senior officials said the company was accumulating its resources, hiring employees and setting up software processes. At the end of the first year, it is expecting to get around 100 employees. Moreover, public general insurers have also lent their hand in the launch of this company by deputing people.  

“In the first year, we shall do 15-20 percent of the business from the four public general insurers. This will be scaled up, depending on the how the TPA takes shape,” an official said.

TPA got its license from the Insurance Regulatory and Development Authority of India (IRDAI) last year and is valid for three years from the date of issue or renewal. Earlier, TPA had got a setback when Director-General of Competition Commission of India (CCI) ordered an inquiry for alleged anti-competitive practices of General Insurers’ (Public Sector) Association of India.

Most of the stocks of TPA are controlled by public general insurers as it is the TPA that has to process their health claims. National Insurance Company, New India Assurance Company, United Insurance Company, Oriental Insurance Company have 23.75 percent stake each while General Insurance Corporation of India has five percent.

TPA has been set up to rule out large-scale leakages, whilst settling insurance claims in the health segment. Moreover, instead of handling by an external agency, it facilitates the in-house environment to process the claims of public general insurers.

Health Insurance TPA shall provide continuous health services including call centre, member enrolment, pre-authorization and claims processing, customer service and grievance management. Some other functions that TPA plays important role are provider network empanelment, pre-policy health check-up, verification and investigation, facilitate customer wellness and awareness programs.

Depending upon the size of the company, health insurance loss ratios varies from 95-100%. Loss ratio is the ratio between premiums collected and claims paid. However, in the present time losses has reached new heights, perhaps due to stiff competition in group health portfolio with aggressive discounts. Although, after the launch of TPA the losses can be curbed down a little but till then, losses are expected to continue.

Health Insurance Third Party Administrator (TPA) shall offer services to support all types of health insurance policies such as individual, group covers, family floater, mass schemes, fixed benefit and indemnity.

With the launch of TPA, the claim-settlement process will speed up and the claims ratio of insurance companies will be reduced, according to the field experts. What’s more, this move is likely to trim down the costs for the insurance companies which pay a commission of approximately 6% of premiums to TPAs to settle claims.

Source: This article has been adapted from the article "Health Insurance TPA to begin operations on July 1" that appeared on April 4, 2015 in business-standard.com.

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