Hyderabad:
In a surprise move,the insurance regulator IRDAI has banned the entry of- any insurer or insurance broker or any entity having interest in insurance into Third Party Administrator (TPA) business.TPAs function as intermediaries between the insurance provider and the policyholder and its key function is processing of claims and settlement.
It is not immediately known in what ways new regulations will be applicable to four PSU general insurance companies , National Insurance Company, New India Assurance Company, United Insurance Company, Oriental Insurance Company and General Insurance Corporation of India, which are promoters of the Health Insurance TPA of India(HITPA), the common in-house TPA for the four companies to handle their health insurance claims.While the first four have 23.75 per cent stake each, GIC has five per cent in the in-house PSU TPA..
However, a top official of a psu general insurance company said the new rules wouldn;t be applicable to HITPA as it is an in-house TPA and licensed by the IRDAI,
`It is not a commercial entity to serve the entire industry but to provide services to only four PSU general insurnace companies'' he said
Also,promoters of TPAs like Vipul Medcorp Insurance TPA, Safeway Insurance TPA , Alankit Insurance TPA ,Heritage Health Insurance TPA have insurance broking firms..
The new TPA norms as finalised by the IRDAI have been notified on Tuesday and has allowed a policy holder of a health policy to choose his/her third party administrator(TPA),.
The minimum capital for setting up of a TPA has been increased to Rs 1 crore and the new regulations have stuck to the old stand that prohibits TPAs canvassing for business of rendering health services directly from policyholders or prospects
According to the new regulations, each of the promoters of a TPA has to satisfy the following criteria.
– Must be carrying on business not related to insurance or engaged in offering professional services not related to insurance for a period of not less than three years to the date of application
-The promoters will have a lock-in period of three years for the funds proposed to be invested in the applicant. The lock-in period of three years willreckon from the date of granting certificate of registration by the IRDAI.
,- Have positive net worth in all the immediately preceding three financial years to the date of application, and
– Have net worth of not less than the respective capital contribution in the immediately preceding two financial years to the date of application
In case of more than one investors in any TPA , any investor holding more than ten percent of the paid up equity capital will be considered as promoter of the company. Also, Indian investors, other than promoters can’t hold more than twenty-five percent of paid up equity capital of a TPA.
The new regulations have also stipulated that where TPAs maintain files, data and other related information pertaining to the settlement of claims in electronic form, maintenance of the same by the TPAs again in physical form is dispensed with.
TPAs will have to submit or handover all the files, data and other related information pertaining to the settlement of claims to the respective insurers within 90 days after close of every quarter commencing from April of every financial year and the insurer will have to accept it. Any information or data relating to the group insurance policies of one insurer will not be shared with any other insurer or any other third party. For the purpose of underwriting, a TPA, with the explicit written approval of the concerned insurer and the Group Insurance Policyholder, may share information or data to any other insurer, said the IRDAI.
Further, the insurer will explicitly provide the names of the TPAs amongst whom the policyholder may choose the TPA of their choice at the point of sale. The Policyholder may be allowed to change the TPA of their choice only at the point of renewal.The policyholder will have no right to seek dispensing the services of the TPA and request the insurer to undertake rendering the health service directly.
However, the insurer will have the prerogative of whether or not to engage any TPA or to terminate the services of the TPA or not to engage the services of the TPA for a particular health insurance product or discontinue the services of the TPA to service a particular health insurance product.