Last week, the Insurance Regulatory and Development Authority of India (IRDAI) cancelled the certificate of registration of E-Meditek insurance TPA and further directed that the company will no longer be allowed to do business as a Third Party Administrator (TPA). This is perhaps first of its kind incident wherein a TPA has been asked to shut shop because of several violations which the regulator found detrimental to the interests of policyholders and insurers.
But, does that leave the policyholders whose claims are still in the pipeline and yet to be settled by the TPA? And, what about those policyholders of various insurers where E-Meditek insurance was the authroised TPA? The regulator has asked E-Meditek to continue servicing the existing health insurance policies based on the discretion and direction of the respective insurers for a period not exceeding three months from the date of the order (10th Jan 2019). “There are specific sections in IRDAI (Health Insurance) Regulations, 2016 and IRDAI (Third Party Administrators – Health Services) Regulations, 2016 dealing with servicing of such policies or claims. The insurer has to ensure that it does not impact the customers including managing pending claims or cashless requests,” informs Parvathi Singh, Executive Vice President & Chief of Claims, Tata AIG General Insurance Company. Understandably, IRDAI has directed that going forward, no insurer shall entrust servicing of new policies or servicing of new lives under the existing group schemes / policies to E-Meditek TPA.
TPAs are the intermediaries between the insurance companies and the policyholder in the claims settlement process of health insurance policies. They are supposed to process claims and provide cashless facilities to the insured at the time of hospitalisation.
Some insurance companies have in-house claims settlement department while others may have it outsourced through a TPA. A single TPA may handle claim settlement of more than one insurer while the in-house team of an insurer will anyhow manage its own claim settlement. But, is one better than the other? “While in-house capability empowers you to deliver integrated and differentiated services, the servicing of a TPA would be generic and same across all insurers,”adds Singh.
The option to choose between the two doesn’t rest with the buyer. “The choice is available and used in corporate accounts but not in retail policies,” says Singh. Of late, there have been several complaints against the working of the TPAs. Regulatory steps taken in the past have also curtailed the role of the TPA. Most importantly, TPAs decision to settle or reject a claim has always been in the limelight. The TPAs have to follow the claims settlement guidelines as set by the insurer. “The decision on claims settlement and rejection cannot be taken by the TPA, which restricts independent assessment of claims by a third party,” adds Singh.