The final draft of the TPA regulations will be drawn on the basis of the talks between the regulator, the insurance companies and 10-12 TPAs. Irda chairman N Rangachary has earlier said the guidelines will be ready in early March, and the first TPA licences will be issued from April.

Among other proposals expected to be discussed are those relating to a clubbed fee to be paid by the insurer to the TPA and not based on claims; an easily realisable, minimum asset base of Rs 25 lakh; a cover for at least Rs 1 crore to be taken by a TPA to cover its own business risks and; solvency requirements that have yet to be decided.The health insurance market alone is estimated at a whopping Rs 500 crore.

The draft regulations put on the Irda website define a TPA "as an insurance intermediary...who either directly or indirectly, solicits or effects coverage of, underwrite, collect, charge premium from an insured, or adjust or settle claims in connection with health insurance, except as an agent or broker or an insurer".

However, though the TPAs have interpreted this to mean that they will be allowed to distribute insurance products, insurers - especially the public sector undertakings (PSUs) - have objected to this provision.

Interestingly, though the formal regulations have not yet been worked out, at least two PSUs - New India Assurance and United Insurance Company - have shortlisted four and eight TPAs, respectively, for empanelment.

A number of TPAs have been working as intermediaries between insurers and corporate groups for a few years now.

Though Irda is inclined to allow TPAs to propagate their network by marketing their services and the products of their clients, if acceptable to them, the insurers contend that TPAs should be confined to processing of claims and co-ordination with the service providers.Ministry officials said there seems to be a distinct conflict of interest.

There is also a latent fear of staff being rendered surplus if the function of even selling products is hived off to intermediaries.

The TPAs' argument in this regard is that Irda ought to impose strict penalties, including revocation of licence, but permitting TPAs to sell policies along with their own specialised services will only prop up insurance revenues all-round.