Health Insurance TPA of India, the in-house third party administrator (TPA) of the state-owned general insurance companies might begin operations only by December 2014, instead of the scheduled April 2014, since the entity is yet to get a license from the insurance regulator.
The common TPA of the four public general insurers has already applied for a TPA license to the Insurance Regulatory and Development Authority few months ago. However, it is yet to receive the license.
Officials from the regulatory office said that on an average, it takes a longer time for a TPA license to be processed and that the process has already begun.
“We are waiting for the license and expect to begin functioning from December 2014. Meanwhile, the team is already in place and we are setting up all the software-systems in place,” said an official of the TPA.
This common TPA to process health claims has National Insurance Company, New India Assurance Company, United Insurance Company, Oriental Insurance Company and General Insurance Corporation of India as stakeholders.
According to details sourced from company filings with the ministry of corporate affairs, the incorporation document said the parties shall at all times be committed to increase the share capital of the company till at least Rs 200 crore, if the board of directors so decides.
Subject to regulatory approvals, Health Insurance TPA shall provide end-to-end ‘Health Services’. This would include member enrolment, call centre, customer service and grievance management, pre-authorisation and claims processing. Further, it would also be involved in provider network empanelment, verification and investigation, pre-policy health check-up and facilitate customer awareness and wellness programmes.
Health insurance loss ratios range from 95 to 100 per cent, depending on the size of the company. Loss ratios refer to the ratio between premiums collected and claims paid. However, with stiff competition in group health portfolio with aggressive discounts given to retain customers, the losses have been on the rise.
An external TPA handling claims will add to the costs, hence public general insurers went in for a common TPA. However, till it is operationalised, losses are expected to continue.
The company shall provide services to support all types of health insurance policies sold by insurance companies in India. This includes individual, family floater, group covers, mass schemes, indemnity, fixed benefit among others. The common TPA has been proposed to prohibit large-scale leakages while settling insurance claims in the health segment.
Those in the sector said this common TPA was expected to speed up the claim-settlement process, as well as reduce the claims ratio of insurance companies. This move is expected to reduce costs for these insurance companies, which pay a commission of approximately 6 per cent of premiums to TPAs to settle claims.
P K Bhagat has been appointed the first managing director and chief executive officer of Health Insurance TPA (third-party administrator) of India for a period of two years or till the time he attains superannuation.
When the TPA comes into operation, the claims handling and processing from external agencies will gradually be transferred to the new entity. Health Insurance TPA of India has been formed with an authorised capital of Rs 300 crore and paid-up capital of Rs 10 crore.