Public sector insurers to outsource motor claims

The country's four public sector general insurance companies have decided to extend the system outsourcing of claims settlement to motor third party insurance.

The general insurers have been making use of third party administrators (TPAs) for claims arising from health insurance policies for the last four years.

United India Insurance Company has already engaged four TPAs for outsourcing claim settlement and other related services in third party motor insurance and one of them has started functioning in Kerala's commercial city of Kochi, insurance sources said.

The other three public sector general insurers "" New India Assurance, Oriental Insurance and National Insurance "" have also decided to outsource claims settlement in motor third party insurance to TPAs.

TPAs handling claim settlement in health insurance get 6 per cent of the premium as service charges. It is not known how much service charges would be paid to TPAs for handling motor third party claims.

Unions in the four general insurance companies are protesting against outsourcing of claims settlement in motor third party insurance claiming it would put additional burden on the insurers.

P P Mohanan, state general secretary of General Insurance Officers All India Association, said the general insurers have had bitter experience with TPAs in health insurance and following the same model for motor insurance would not be prudent. He said the claims ratio is the highest in motor third party insurance and in states like Kerala it is more than 150 per cent.