Insurers to outsource 3rd party motor cover services

The four public sector general insurance companies -- United India, New India Assurance, Oriental Insurance and National Insurance "� have decided to extend the outsourcing of claim settlement service for third party motor insurance (TPMI) too.

This is in line with the third party administrator (TPA) system introduced for mediclaim policies four years ago.

Sources at United India Insurance Company (UIIC) said that the company had already engaged four firms for outsourcing claim settlement and other related services in third party motor insurance.

One of the firms has already started functioning from Kochi. As per the new system, all the claim settlement for third party motor insurance would be handled by the new firms.

In the case of mediclaim policies, six per cent of the premium is earmarked for TPAs as service charges and to retain this rate, premium too has been hiked.

However, the insurers are yet to announce the sharing of premium for TPMI. Sources said that this would not in any way affect policy-holders as in the case of mediclaim policies.

The decision to outsource services for TPMI claim settlement has drawn flak from employees' organisations of all PSU general insurance companies. They claim that this would impose an additional burden on companies.

P P Mohanan, state general secretary of General Insurance Officers' All India Association, said that the move to entrust private agencies with TPMI claim settlement would not be prudent as the four-year experience with TPA was not very encouraging.

"The TPA firms have not been able to bring down the high claim ratio in the health insurance sector. Instead, it has become an additional burden for PSU general insurance companies," he said.

He added that the claim ratio was very high in TPMI and more than 150 per cent in states like Kerala.

"As all the insurance companies have adequate facilities to handle TPMI claims, the new system would be redundant and a burden on the companies," he said.