Third party administrator (TPA), an independent body which settles health insurance claims, should disclose about the holdings by insurer and re-insurer in it to their clients, said a report submitted to insurance regulator IRDA.
"An insurer or re-insurer owns a stake in any TPA should clearly be disclosed to all clients of the TPA so that the clients have an informed decision in this matter," according to a report of the committee for evaluation of performance of TPA.
It further said that if a hospital group gets into TPA business, there can potentially be a conflict of interest and so such an arrangement be phased out over time.
The committee also recommended that claims processing for health or life insurance companies should not be done by the same TPA which has done pre-insurance health check as it would lead to conflict of interest.
It further said that insurers or the group which holds stake in the insurance company should be allowed to hold 26 per cent stake in one TPA only and not in more than one TPA.
The committee also recommended to increase the paid-up capital to Rs 2 crore for the start-up TPA business.
The report further said that TPAs cannot have common shareholding interest, directorship or employees in unlicensed companies in the business of processing health claims.
