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United India Insurance Company expects that an in-house ‘third party administrator’ for managing its health insurance portfolio will help the company bring down claims pay-outs.
The public sector non-life insurer’s health portfolio grew 18.42 per cent last year over the previous year, and fetched premium income of Rs 2,642 crore. However, 99.38 per cent of the premium collected was paid out as claims, compared with 97.68 per cent the previous year.
Health insurance has been a non-profitable line of business for most insurance companies. It is generally believed that this is because the hospitals, once they know that the patient’s tab will be picked up by an insurance company, tend to inflate the bills. Third-party administrators (TPA) are intermediaries who manage the claims on behalf of insurance companies. But the experience with TPAs has not been good. Hence the four PSU insurers have been toying with the idea of a ‘captive’ TPA.
United India Chairman and Managing Director, Milind Karat, believes captive TPAs will come into being by September.
The company, which today announced its annual results for 2012-13, said that it earned premium income of Rs 9,266 crore, up from Rs 8,179 crore in the previous year. Its net profit increased to Rs 527 crore, from Rs 387 crore previously.
Net profit, however, comes from investment income. Like the other insurance PSUs, United continues to make an underwriting loss. Karat said he expects the company to make an underwriting profit in a couple of years. The company is in the process of engaging consultants to advise it on controlling claims and improving employee productivity.
The company is in favour of deregulation of motor third-party tariffs, Karat told a press conference here today. ‘Motor third-party’, or the insurance liability that may devolve upon the owner of a vehicle if the vehicle injures or kills somebody, has been bugbear of the insurance industry, and has caused immense losses to the insurers.
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