The association of third-party administrators (TPAs) has decided to formally complain to the ministries of finance and health about general insurance companies terminating services of some of its members without any showcause notice.
The association, which is of the opinion that contracts should only be terminated for lack of services or fraud, is seeking transparent guidelines from the insurance firms for dealing with TPAs.
Such TPAs maintain databases of policyholders and handle all post-policy issues, including claim settlements. They were introduced by the insurance regulator to speed up what was typically a very long-drawn-out settlement procedure for claims filed by individuals. With TPAs, policyholders can use their insurance ID card at authorized hospitals to get cashless treatment, with the TPAs taking over claims settlement.
But with large corporate players, which have insurance interests, taking financial stakes in TPAs, at least four public sector insurance companies have removed the administrators from their panel of service providers. These four insurance providers are National Insurance Company Ltd, The New India Assurance Co. Ltd, United India Insurance Co. Ltd and Oriental Insurance Co. Ltd. Last year, the Anil Dhirubhai Ambani Group bought a major stake in Bangalore-based Medi Assist. The Apollo Group owns a stake in Family Health Plan, and Munich Re, the world’s largest reinsurance company, has acquired a stake in Paramount. Similarly, Swiss Re, a leading reinsurer, has taken a stake in TTK Healthcare Services.
The four insurance firms view these administrators as competitors since their parent firms are also in the business of health insurance. As a result, the insurance giants don’t want to share their client database with the administrators.
“Around 75% of the business is controlled by four TPAs,” says Rahul Aggarwal of Optima Risk Management, a Delhi based insurance broker. “Though their depanelization has given more business opportunities to small administrators, most of them do not have proper infrastructure and are inadequately staffed.”
As a result, consumer grievances are starting to increase and insurance companies are gradually moving to have their own administrators, he says.
Pawan Bhalla, president of the association of TPAs, declined to comment on the decision, but an executive working closely with the association, said that in addition to complaining to the two ministries, the association was also of the opinion that administrators should start sharing problems with hospitals with all TPAs.