Settlement of medical insurance claims for those who have policies issued by public sector general insurers is set to get easier. Instead of running to multiple intermediaries for processing medical insurance claims, policyholders may soon be able to approach the Health Insurance TPA of India.
This is the common third-party administrator that will process health insurance claims for the four public sector insurers. It is likely to be fully operational by the end of next year. The venture was incorporated in August.
Insurers currently outsource processing of claims to various external administrators. However, their experience in this regard has been unsatisfactory. Insurers feel that the move to settle claims through their own administrator will enable them to check fraudulent claims and resolve disputes in claim settlements faster, eventually helping them bring down losses in this portfolio. The claims ratio in this business is said to be 120 per cent — implying that for every Rs 100 of premium collected, insurers pay claims of Rs 120.
P.K. Bhagat, Director of Health Insurance TPA of India, said the company is currently in the process of finalising a management consultant, recruiting staff and putting IT systems in place.
“There is a lot of work to be done. We are awaiting the certificate of commencement of business after which we will apply for TPA licence from the Insurance Regulatory and Development Authority,” Bhagat said. The promoters of the proposed administrator will be the four public sector general insurers — New India Assurance, Oriental Insurance, United India Insurance and National Insurance and the national re-insurer General Insurance Corporation.
The four public sector general insurers currently control 70 per cent of the Rs 15,000-crore health insurance market.
Setting up an in-house TPA will entail higher administrative costs initially for the insurers, arising from groundwork, including entering into tie-ups with hospitals and maintaining a 24x7 helpline, among other things. However, on a long-term basis it is expected to save costs for these insurance players, who pay a commission of around 5 per cent of premiums to TPAs to settle claims and cut fraudulent claims.
New India Assurance, the country’s largest general insurance company, has a tie-up with 14 external TPAs and United India Insurance with 13.
While the public sector insurers are likely to continue using the services of the external TPAs, it is expected that eventually most of the claims processing business will be done by the common TPA.