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Saturday, April 16, 2011

Legal battle brewing on the TPA front

Third Party Administrators (TPAs) have been in the eye of the storm recently during the entire controversy of cashless claims for the health insurance industry. The four public sector general insurance companies have expressed their dissonance at the functioning of the TPAs, claiming that they have contributed directly to higher claims by not managing the claims process efficiently. On the other hand, the consumers are also not happy with the TPAs, claiming there have been inordinate delays in claims processing and claims have been summarily rejected or reduced.

The four public sector general insurance companies have now decided to set up a TPA wherein they have a substantial stake. They had invited expressions of interest from different quarters, and have finally arrived at a shortlist of 2 TPAS. The insurers argue that they will have far greater control on the claims process through this inhouse TPA.

The existing  TPAs have contested this saying that the insurers should not pick up stake as they are in interested party, and the process will lose its independence. The TPAs claim that they will lose more than 50% of their business, and will have to lay off over 10000 people. 

It seems that IRDA might have to intervene finally, else the matter will end up in the courts. The fact of the matter is that the industry is bleeding through excessive claims.

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