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IRDAI Takes Action Against TPAs

July 14 2015

The Insurance Regulatory and Development Authority of India (IRDAI), has issued a strict guideline instructing Third Party Administrators (TPAs) to keep out of claims. Several TPA services have been terminated by companies after discovering their fraudulent practices.

IRDAI in its guidelines has clarified that Health Services by TPA refer to services provided to insurance companies under an agreement. It has stated that rejecting claims and procurement of insurance business is not a part of TPA services.

The TPAs aid insurers in the settlement of claims. These TPAs can be in-house as well as external. If any claims are being rejected by the TPAs, then the IRDAI has demanded the exact policy clause and the condition number or numbers on which the claim is denied. It is also required that the discounts obtained by hospitals should be passed on to policyholders and be included in the final bill.

Some TPAs try to mislead customers by rejecting their claims. Some unlicensed organizations have also attempted to deceive policyholders by soliciting cash in exchange of settling claims. The TPAs will be required to devise a system that keeps a check on fraudulent practices.

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