Insurance cos will be required to pay medical insurance claims directly to the consumers, says a Bombay High Court judgment delivered on a public interest litigation. Earlier, such claims of cashless settlements were done through intermediaries called third party administrators (TPAs).
Most insurers outsource the job of processing claims to TPAs to save costs. As TPAs get a commission on cutting down claims, they often question the treatment and the tests the policyholder underwent.
Consumer rights activist Gaurang Damani had filed a PIL last year, seeking clarity on their role. There is no tri-partite agreement among the policyholder, the insurer and TPA. While TPAs are hired only to process claims, in reality, they often settle claims, said the petition.
The industry watchdog Insurance Regulatory and Development Authority (IRDA) has assured the court of necessary steps to bring such insurance cos to task.
Incidentally, the four state-run public sector insurers — New India Assurance, Oriental Insurance, United India Insurance and National Insurance — which control 70 % of the Rs 13,000-crore health-insurance market, pan to have their own TPAs to reduce complaints. Private cos such as ICICI Lombard, Future Generali and Bajaj Allianz have switched to in-house claim settlement.