Insurers must take cover off TPA holdings: Panel

KOLKATA: An insurer can hold over 26% stake in only one third-party administrator (TPA) ��� an independent body which settles health insurance claims ��� while TPAs must disclose the holdings of insurers and re-insurers to clients, as per the recommendations of an Insurance Regulatory and Development Authority (IRDA) panel.

The IRDA Committee to Evaluate Performance of TPAs has also recommended enhancing paid-up capital of TPAs to at least Rs 2 crore, which has to be increased by Rs 1 crore when their revenues cross every Rs 10 crore.

The committee���s recommendation on transparency in the shareholding pattern is aimed at giving ���an informed decision in this matter��� to clients.

���If a hospital group gets into TPA business, there can potentially be a conflict of interest. This could be phased out over time, or this could be addressed by due disclosures to insurers, there not being any common directors or employees in the hospital and the TPA, and separate reporting of claims emanating from related/group hospitals,��� the report mentioned.



Further, TPAs cannot have a common shareholding interest, directorship, employees in unlicensed companies in the business of health claims processing or health benefit administration. Likewise, insurers should not be permitted to engage in the services of unlicensed companies in the business of health claims processing or health benefit administration or other activities.

As for the fresh capital infusion, the committee said this ���must be effected in the financial year subsequent to the year in which the billings cross the thresholds specified. Existing organisations may be given time till March 31, 2010, to comply with these conditions���.

���There is a necessity to ensure entry of serious, long-term & pan-India organisations. There needs to be regulations to ensure proper investments in TPA infrastructure,��� the committee recommended.