KOLKATA: Insurance regulator Irda does not want third party administrators to service health schemes floated by either states or the central government since these do not fall within its regulatory regime and the government is not subject to regulatory oversight of the regulator.
The third party administrator (TPA) processes insurance claims and handles payment for health cover policies on behalf of insurers. It is basically outsourcing of the administration of the claims processing because the TPA is performing a task traditionally handled by an insurer.
The Insurance Regulatory & Development Authority (Irda), in a draft circular said: "Lately, some governments have issued tenders calling for the direct servicing of health schemes by TPAs. Given the growth and likely future growth of the health insurance industry, there would be a regulatory burden with considerable reputation risk to the institutions and the industry, in the event of any act of omission and commission by any intermediary if acting directly as an agent of the government."
In 2005, some TPAs requested Irda to allow them to service government health insurance schemes. The regulator allowed TPAs to such health cover schemes through a circular issued in December 2005. However, it now intends to withdraw the circular since governments are directly offering health schemes without involving any insurer.
Licenced TPAs, thus, cannot enter into arrangements for servicing health schemes promoted, sponsored or approved by any non-insurance body, including central, state, local governments, firms and corporates, during the subsistence of the TPA licence granted by Irda.
To this effect, the regulator will ask all TPAs to furnish details of such schemes they are servicing. TPAs not reporting such contracts, if found to be operational at a later date, will have their licences cancelled.
However, if any TPA intends to offer such services for government schemes, sponsored or approved by any body other than insurance companies, it will have to first surrender its licence and remove itself from Irda's regulatory purview. Only then can it service such schemes. The entity will also have to remove the word TPA from its name.
Nevertheless, existing contracts, if any, will have to be serviced till the expiry of the contract period only without any further renewal. Irda will also direct insurers against renewing contracts with TPAs who are servicing government schemes.
The third party administrator (TPA) processes insurance claims and handles payment for health cover policies on behalf of insurers. It is basically outsourcing of the administration of the claims processing because the TPA is performing a task traditionally handled by an insurer.
The Insurance Regulatory & Development Authority (Irda), in a draft circular said: "Lately, some governments have issued tenders calling for the direct servicing of health schemes by TPAs. Given the growth and likely future growth of the health insurance industry, there would be a regulatory burden with considerable reputation risk to the institutions and the industry, in the event of any act of omission and commission by any intermediary if acting directly as an agent of the government."
In 2005, some TPAs requested Irda to allow them to service government health insurance schemes. The regulator allowed TPAs to such health cover schemes through a circular issued in December 2005. However, it now intends to withdraw the circular since governments are directly offering health schemes without involving any insurer.
Licenced TPAs, thus, cannot enter into arrangements for servicing health schemes promoted, sponsored or approved by any non-insurance body, including central, state, local governments, firms and corporates, during the subsistence of the TPA licence granted by Irda.
To this effect, the regulator will ask all TPAs to furnish details of such schemes they are servicing. TPAs not reporting such contracts, if found to be operational at a later date, will have their licences cancelled.
However, if any TPA intends to offer such services for government schemes, sponsored or approved by any body other than insurance companies, it will have to first surrender its licence and remove itself from Irda's regulatory purview. Only then can it service such schemes. The entity will also have to remove the word TPA from its name.
Nevertheless, existing contracts, if any, will have to be serviced till the expiry of the contract period only without any further renewal. Irda will also direct insurers against renewing contracts with TPAs who are servicing government schemes.