The Insurance Regulatory and Development Authority (IRDA) has stuck to its stand of not allowing third-party administrators (TPAs) to market health products.
This was decided at a meeting of TPAs and general insurance companies today prior to the finalisation of the TPA regulations. IRDA has, however, said it would "reconsider the provision in the next three to six months".
It has also been decided that a sub-committee would be formed later this week of TPAs and insurance companies, including a member of the IRDA. The committee would look into the core parameters of the agreement between the two parties, as well as look into the accreditation and regulation of hospitals.
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On the revenue structure, insurance companies offered to pay TPAs 11 per cent of the premiums. This is under consideration, but few of the TPAs are expected to take up the offer. It was further discussed at the meeting that TPAs ought to make the payments upfront and then expect insurers to settle the claims.
This was not accepted by most as they had earlier yesterday decided for the need of a common, revolving fund pooled by the insurance companies for the settlement of claims. This would ensure that TPAs' funds are not at stake. TPAs are expected to press for better returns as software cost alone would be in excess of Rs 7,50,000 to Rs 1 crore.
At the meeting, the IRDA chairman, N Rangachary, decided to keep the minimum capital at Rs 1 crore for TPAs, said insurance sources. He further relented that TPAs would be allowed to apply for a licence from the regulator. On being issued one, they would then sign agreements with the insurance companies. The earlier draft regulations had proposed that the application for a licence ought to be made only after signing up with insurance companies.
Even as TPAs had the support of the private insurance companies for the sale of managed health products, state insurers continued to raise the issue of there being a conflict of interest. This took precedence in the meeting, especially after one of the leading state insurers professed that sale of health insurance products would increase from the present Rs 300 odd crore to over Rs 1,200 crore.