The general insurance companies have finally decided to bring an in house solution to the mounting pressure of Third Party Administrator (TPA) that’s curbing their profits drastically. The claims ratios or the percentage of claims to the premium earned of the public sector companies is over 120% and the insurers blame the TPA for these figures.
State run general insurance companies like New India Assurance, National India, United India and Oriental India Insurance have partnered with the country’s largest life insurer “Life Insurance Corporation of India” (LIC) and reinsurer “General Insurance Corporation of India” (GIC) to set up the TPA. Although there is an initial set up cost, the insurers are optimistic that the investment would eventually lead to profitability. Moreover the 5% commission which is collected by the TPAs would now be transferred to the policyholders. This would help bring down the insurance premium. The new TPA could also result in market dominance by state-owned companies, which together account for over 80% of the TPA business
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