TPA plans by PSU insurers hit roadblock

Plans to set up a third party administrator (TPA) for managing health insurance claims by the four public sector insurance players appear to have hit a road block with the companies unable to locate a strategic partner.
“We want to quickly roll out the TPA but we are not able to find a suitable partner who can fully understand the complexities of Indian conditions pertaining to the healthcare sector in the context of health insurance,” said G Srinivasan, chairman and managing director of United India Insurance Company Limited.

The four public sector insurance companies —National Insurance, New India Assurance, Oriental Insurance and United India Insurance — have been toying with the idea of establishing their own administrator for the past couple of years to contain fraudulent claims besides gaining a better bargaining power with hospitals. About 20 per cent of the claims are suspect or doubtful, according to Srinivasan.

Though health insurance has expanded rapidly after the entry of TPAs as an interface between insurers and customers, their ability either in bargaining better rates with hospitals or in efficient handling of claims at the ground level is far from satisfactory, he said.

The health industry in the country — both public and private sector — is running into losses as the claims had been over 10 per cent more than the premiums underwritten through health coverage plans till before last year.

The claims ratio is expected to come down to 90 per cent this year from 100 per cent last year. However, the insurance regulator says it should further come down to 70 per cent through proper pricing and claims management to sustain business.

While some of the private companies such as Max Bupa are processing and managing hospitalisation cases and claims through inhouse management, public sector companies also feel it is necessary to have their own mechanism to bring in better customer service and efficient claims management.

The newly-constituted Competition Commission had also ruled in favour of their decision last year even as private TPAs, who number close to 30, argued before the commission that the move by the PSU insurers would eliminate them from business as the four companies control over 60 per cent of the total health insurance business in India.

Speaking to Business Standard, Srinivasan said they hoped to set up the system in place in the next financial year.

The health insurance companies collected around Rs 11,400 crore premium last year while this was Rs 9,661 crore till December, 2011. The industry estimates the growth for the full year to be 25-26 per cent.

United India has set a full-year target of Rs 2,200 crore in the health insurance business as compared with Rs 1,700 crore last year and Rs 8,200 crore from all the non-life streams compared with Rs 6,400 crore achieved in 2010-11.

B Dasarath Reddy / Chennai/ Hyderabad Jan 27, 2012, 00:56 IST
http://www.business-standard.com/india/news/tpa-plans-by-health-insurers-hit-roadblock/462890/