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Insurance Regulatory and Development Authority (Irda) has backed the decision of state-owned insurers to jointly set up a TPA.

Irda will shortly write to the Competition Commission of India that sought the regulator’s view after the TPA Association (a body of 27 TPAs in the country) filed a complaint in June last year.

It told CCI that the new TPA would result in cartelisation and monopoly. TPAs said they would have to stop investments in business, IT and lay off 10,000 people they have employed over the years.

J Harinarayan, chairman, Irda, told Financial Chronicle, “The CCI has sought our comments on the petition filed by TPA Association. We don’t see a problem in allowing public sector insurance companies to set up their own TPA company, but the CCI may see a problem.”

“The existing TPAs will still continue to get business from private insurance companies,” he said.

When it was pointed out that many private insurance companies too have begun settling claims in-house, Harinarayan said, “There should be fair play. If the private insurers are allowed to settle claims in-house then why should the government insurers be stopped from having their own company? The public sector insurers are not duty bound to give business to TPAs.”

Four public sector non-life insurance companies -- New India Assurance, Oriental Insurance, National Insurance and United India Insurance — control 60 per cent of the health insurance market. They have been blaming TPAs for their spiralling losses in health insurance business and last year announced the decision to float their own TPA.

The insurance companies in their request to induct a joint venture partner in the TPA said they would be diverting all claims to their TPA in the next five years.

The TPA model was introduced by Irda in 2000 to facilitate hospitalisation for policyholders and keep a tab on claims cost for insurers. A TPA acts as an intermediary between the insurance company, the hospital and the policyholder. It arranges for hospitalisation and settles bills with hospitals from a float fund provided by the insurance company.