Come October 1 and third party administrators (TPA) that service health insurance claims will double the service charges they claim from non-life insurance companies. This may lead to a hike in health insurance premiums if insurers choose to pass it on to consumers.

At an extraordinary general meeting (EGM) of the TPA association on Saturday, 27 TPAs decided to raise their servicing fee, submitting evidence to the insurance regulator on the wrong underwriting practices of public sector insurance companies.

At present, a TPA charges 5.25 per cent of the premium paid by policyholders as service fee. This is the amount insurance companies are charged for processing health claims, storage of data, issuing pre-authorisation for cashless hospitalisation and checking fraudulent claims.

“We will be asking public sector insurers to double service charges from 5 per cent to 10 per cent of the premium, as we will be out of business once public sector non-life insurance companies launch their own TPA. Since we are paid on a quarterly basis, in case the insurers refuse to pay, we will stop servicing new policies from January 1,” said the chief executive officer of a leading TPA who attended the EGM.

SK Mahapatra, a spokes­person for the TPA association, confirmed the development.

TPAs have also sought a meeting with the Insurance Regulatory and Development Authority (Irda) to present a comprehensive report, containing proof and details of wrong underwriting practices used by the public sector insurers, which are causing them losses in the health business. Similar facts were highlighted in a recent report of the Comptroller Auditor General (CAG) of India as well.

“The report will contain names of 200 companies which were charged lower premium on renewals despite bringing huge claims in the previous years. The report will also show employees of insurance companies have been consciously selling health policies to sick people. We will submit this report to the government and the media as well,” said a CEO of a TPA.

“The premium on group policies have increased 25 per cent, but the deficit is 40 per cent,” said the chief executive officer of a Delhi-based TPA.

A TPA acts as an intermediary between the insurance company, hospitals and policyholders and arranges for settling bills with the hospitals from a float fund provided by insurance companies.

The four public sector insurance companies — New India Assurance, Oriental Insurance, National Insurance and United India Insurance — control 60 per cent of the health insurance market. They have blamed the TPAs for rising losses in the health insurance business and decided to launch their own TPA to curtail losses.

The insurers last week floated a proposal to induct a joint venture partner in the TPA company. September 5 is the last date for companies to submit their proposals to act as a joint venture partner.

falaknaazsyed

@mydigitalfc.com