PSU insurers steer clear of TPAs with own health plans

MUMBAI: Managed healthcare in India is set to face an upheaval, with several third-party administrators (TPAs) getting into health insurance. Three of the biggest third-party administrators — intermediaries who manage health insurance documentation and claims for insurance companies — are now planning to get into insurance business on their own. This has prompted state-owned insurers to discontinue outsourcing claims management to these TPAs.

One of the public sector companies — United India Insurance — has already taken a view that it will not appoint third-party administrators who do health insurance businesses as well. The company has also circulated a note to the members of the General Insurers (Public ector) Association raising its concerns.

The third-party administrators, who have interest in health insurance, include Munich Re’s Paramount Healthcare, ADAG’s Medi Assist and Apollo’s Family Health Plan. Paramount Healthcare, a leading player, was acquired by German insurer Munich Re a few years ago. But, in recent months Munich Re has announced its intention of getting into the non-life insurance business in the country.

While Munich Re is scouting for a partner for its general insurance business, it has already established a health insurance partnership with Apollo Hospitals through group company Deutsche Krankenversicherung (DKV). The partners have together set up Apollo DKV Insurance Company in October 2006.

Incidentally, Munich Re’s joint venture partner Apollo Hospitals has its own third-party administrator Family Health Plan which has been signed on by most of the general insurance companies to manage their health insurance. In May last year, the Anil Dhirubai Ambani Group (ADAG) acquired 80% stake in Medi Assist — a third-party administrator firm which was originally promoted by a private equity fund owned by NS Raghavan, former MD and co-founder of Infosys. ADAG-promoted Reliance General Insurance is the fastest growing general insurance company. The company recently launched a health product and has sold over one lakh health policies since launch.

PSU insurers are concerned that if they continue to outsource, they risk losing client database. After the insurance company has issued the policy, the TPAs acquire all personal data pertaining to the client, including medical reports. They also have a medical and claims history of the individual. With this data, it is possible for them to identify healthy policyholders, who are unlikely to claim and offer them insurance at a discount.

TPAs are used by almost all insurance companies to manage their health insurance. However, Bajaj Allianz General Insurance has decided not to outsource and is managing health insurance in house through a health insurance team.