The plan to set up a captive third-party administrator (TPA) company jointly by all the four public sector general insurance companies is gathering momentum, as fraud claims still remain a big challenge.
In order to minimise, if not eradicate, fraud claims in the health insurance sector, the four companies – United India Insurance, National Insurance, Oriental Insurance and New India Assurance, have come together to float a separate third-party administrator (TPA) company for captive purpose. “It has been a long-fought war for us. Still there are over 15 to 20 per cent exaggerated claims,” said G. Srinivasan, Chairman and Managing Director of United India Insurance Co.
The insurance companies currently outsource the process to different third-party administrators, and results have not beensatisfactory. According to sources in the industry, the plan to have a captive TPA was initiated two years ago. However, it could not materialise due to several technical challenges. The companies had appointed KPMG to advise on the issue.
TPAs manage the insurance company’s claim processing and disbursement of claims to the insured. Currently, the PSU insurers control 56 per cent of the close to Rs 60,000 crore health insurance market, and are still making losses in this segment. Srinivasan says though the health insurance sector is registering strong growth year on year, and shaping up well in terms of market expansion and product innovation, it is a major area where there is an element of exaggeration leading to big losses for the industry.
It used to be 140 to 150 per cent till a few years ago. “But, it has been corrected, and now we managed to bring it down to below 100 per cent.” He hopes the proposed captive TPA would help in reducing the losses to a great extent.