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The public sector insurers plan to join forces to set up a common third-party administrator (TPA) to settle medical insurance claims. Earlier, these insurers were mulling in-house TPA with a foreign partner, but it was shelved as they failed to identify a suitable partner.
The promoters of the proposed TPA will be: the four general insurers — New India Assurance, Oriental Insurance, United India Insurance, and National Insurance; General Insurance Corporation (the national re-insurer); and Life Insurance Corporation of India.
The TPA is expected to be operational by October, said G. Srinivasan, CMD of New India Assurance Company. This is aimed at eradicating fraudulent claims and lowering the claims ratio. It will also help boost profitability of the insurers.
Better Claim Settlement
“By coming together, the PSU general insurance companies, which account for 70 per cent of the health insurance premium, can leverage their strengths to negotiate better rates from hospitals, bring in better technology, and provide better services to customers. “If there is better claims management, ultimately the benefits will be passed on to the customer,” said Srinivasan.
The PSU general insurers currently outsource the claims settlement process to different TPAs. However, their experience in this regard has been unsatisfactory. Most private insurance companies such as ICICI Lombard, Future Generali and Bajaj Allianz General Insurance have already shifted to in-house settlement of claims as they feel it enables them to have faster dispute resolutions and ensures that they have a direct connect with their customers.
The PSU general insurers, which control a chunk of the Rs 55,000 crore health insurance market, are making losses with claims ratio over 120 per cent, particularly in the group health portfolio. The insurers admitted that setting up an in-house TPA will result in higher administrative costs, arising from insurance companies having to undertake huge groundwork, entering into tie-ups with hospitals, and maintaining a 24x7 helpline, among other things. However, the cost involved in setting up the TPA can be recovered as the claims drop.
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