The association of third party administrators (TPA) has decided to move the Competition Commission of India (CCI) against the four public sector non-life insurance companies and their association, called General Insurers Public Sector Association of India (Gipsa), for forming a cartel and abusing their dominant market position in planning their own TPA outfit.

“We will be filing a complaint with the CCI this week against the four PSU non-life insurers and Gipsa,” said SK Mahapatra, a spokesperson of the TPA Association.

The association is a body of 27 TPAs, which act as intermediaries between insurers and customers in the health insurance sector.

As a prelude, the association has raised the issue with the Insurance Regulatory and Development Authority (Irda).

“The TPA floated by Gipsa companies will result in cartelisation, market dominance and monopolisation,” the TPA association alleged in its letter to the insurance regulator.

The association said the move would lead to stopping of fresh investments and huge lay-offs by existing TPAs.

“This is an instance where the first party (insurance company) is trying to become a third party, which defeats the very purpose of consumer protection and neutrality, which the third party ensure,” the association pointed out.

“The entire business model introduced by the insurance regulator will get destroyed. This is anti-consumer and anti-competition,” Mahapatra said.

When contacted, M Ramadoss, chairman and managing director of New India Assurance, said, “Let us first get the notice. We will then decide what we should do? The TPAs have all the right to do approach the CCI.”

The four government-owned companies — New India Assurance, Oriental Insurance, National Insurance and United India Insurance — control 60 per cent of the health insurance market.

They have invited expression of interest from interested parties to partner them in setting up a TPA company. The insurance companies in their request for proposal said they would be diverting their claims business to their own TPA company over the next five years.

“The move will result in closure of all existing TPA companies. This will give rise to an arbitrary increase of premium, refusal of policies to the elderly, restrictions on cashless network, favouritism under the guise of preferred network of hospitals and corruption,” the TPAs alleged in their letter to Irda.

“How can an organisation owned by the insurers be a TPA to service their clients?” the association asked.

Irda had introduced the TPA model in 2000 to facilitate the cashless hospitalisation process for policyholders and also to keep a tab on claims cost for insurers.

A TPA arranges for the cashless hospitalisation of policyholders and settles bills with hospitals from a float fund provided by the insurance companies. The health insurance business has grown at a CAGR of 37 per cent after the TPAs took over the claims administration.

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