Money & Banking

Top public sector insurers, GIC to set up new third-party administrator soon

N. S. Vageesh Mumbai | Updated on March 12, 2018

Move aims at putting in place better service standards, including benchmark for processing and settling claims

A joint venture third party administrator (TPA) company, made up of four public sector general insurance companies and the national re-insurer GIC, is finally set to be incorporated early next month.

The new company will have a share capital of Rs 200 crore, which will be contributed by the four companies. The four public sector general insurance companies — New India Assurance, United India Insurance, National Insurance and Oriental Insurance — will pick up about 95 per cent of the equity between them, while GIC will take 5 per cent.

TPAs are agents of insurance companies who facilitate speedy processing and settlement of claims — especially to enable cashless treatment at the time of hospitalisation.

The health insurance segment is the fastest growing segment in the general insurance market.

The premiums collected on this account were about Rs 15,000 crore last fiscal.

The idea of starting a joint venture TPA was first proposed over four years ago as insurance companies grappled with charges of poor service, delays and disputes with customers. Some of this was due to problems at the TPA end although the customer would often hold the insurance company responsible.

To address this issue, these four companies got together and floated the proposal of a forming new JV TPA. But this remained on the backburner for a number of reasons, including a failed attempt at roping in foreign partners.

More recently, the public sector companies had to fight off a legal challenge from other TPAs at the Competition Commission of India.

Dr R. K. Kaul, Project Director of the JV, said the basic role of the new TPA will be to set benchmarks in the delivery of health insurance claims service to customers.

The process of appointing a consultant to guide the new venture is currently on, he added.

Regulatory clearance from the Insurance Development and Regulatory Authoritywill be sought after incorporation of the company, he said.

The company is expected to commence operations within a year after obtaining the necessary approvals.

Published on July 16, 2013

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