Irda Says Rural Presence Key To Tpa Licence

The Insurance Regulatory and Development Authority (Irda) will emphase on the rural network and infrastructure set up of third-party administrators (TPAs) before it issues licences to them this month.

This was made clear to the prospective TPAs at a meeting with the regulator last week in New Delhi. The emphasis on rural presence on the health insurance front follows the political pressure on the Irda to ensure wider reach in rural India.

Irda issued letters to all the TPAs to submit detailed plans on how they will cover rural India -- in terms of the number of tashils covered, the net rural hospitals and the number of people who would fall under the plan.

In the meeting last Wednesday, the Irda stated that the government is of the opinion that not enough has been done for the rural segment since the opening up of the insurance industry. TPA licenses will be issued only if the rural segment is addressed properly, said officials.

Here lies the dichotomy of the entire issue. "Even if we establish the necessary rural infrastructure, where is the source of revenue going to come from if private insurance companies do not intend to sell to the rural masses," questioned an official from a Delhi-based TPA.

According to the Irda regulations, licensed TPAs are not permitted to market any products, including health covers, said a TPA CEO. "The onus of marketing health plans in the rural areas will thus lie with the insurance companies. Should we set up a rural presence, where will the revenue come from unless the insurance company decides to sell its products there," he added.

"The health sector has been neglected so far," said Irda member H O Sonig. Irda has estimated a collection of Rs 75,000 crore from this sector alone by 2005, if things go well, he added.

To date, however, the new players have not sold any health plans directly to the public. Few of the private players have given much of a retail thrust directly through their own agency force. The reliance has been chiefly on corporate tie ups with credit card issuing banks and other similar set ups like auto dealerships.

The Irda is also stressing on the importance of establishing a software for monitoring statistics of policyholders, which would fall under a common platform, whereby each system of individual TPAs could talk to another.

Promoters and directors of the TPA will need to make an affidavit stating that no money will be charged to the customer for services rendered.

The promoters will also need to give an undertaking that the working capital will always be maintained at the stipulated Rs 1 crore, and that they would invest additional funds as and when required to maintain this stipulation.