IRDAI allows policyholder to choose their own health insurance TPA

Instead of solely depending on the insurer, policyholders can now choose third-party administrator at the time of buying a health insurance policy or at the time of renewal.

According to a circular issued by the Insurance Regulatory and Development Authority of India (IRDAI) on Tuesday, “For the purposes of this sub-regulation, the choice of the policyholder to choose a TPA for rendering health services is limited to the TPAs with whom the insurer is having Service Level Agreements in place. Based on the health insurance product and geographical location of the policyholders, the insurer may also limit the number of TPAs amongst whom the policyholder may choose a TPA of their choice. The insurer explicitly shall provide the list of the TPAs engaged, from amongst whom the policyholder may choose a TPA of their choice, at the time of proposal or the renewal as the case may be.”

Amit Chhabra, Head- Health Insurance, said, “This initiative by the regulator will allows the customer/policyholder more flexibility and at the same time, keeps the entire health insurance ecosystem on toes, to ensure customer/policyholder gets best service experience.” He further explained, let’s say a policyholder has had a prior good experience with a specific TPA, they may choose to use the same TPA for any health insurance claim. “So that gives the customer flexibility,” he added.

Here is a look at how this will benefit a policyholder.

These regulations may be called the Insurance Regulatory and Development Authority of India (Third Party Administrators – Health Services) (Amendment) Regulations, 2019.

What is a third-party administrator?

A TPA is a middle man appointed by a health insurance company who facilitates settlement of a health insurance claim. TPAs help you (the insured) process your health insurance claim using various hospital bills and documents. However, they are not responsible for claims rejection or acceptance.

What the IRDAI circular states

According to the IRDAI circular, the policyholder can choose a TPA of their choice from a list of TPAs engaged by the insurer.

Here is what the IRDAI circular states:

(a) Where the services of the TPA are terminated during the course of health services rendered by the said TPA, every insurer shall allow the policyholder to choose an alternate TPA from amongst the TPAs engaged by it.

(b) The insurer shall explicitly provide the names of the TPAs amongst whom the policyholder may choose the TPA of their choice at the point of sale. The Policyholder may be allowed to change the TPA of their choice only at the point of renewal. Provided that the policyholder shall have no right to seek to dispense the services of the TPA and request the insurer to undertake to render the health service directly.

Provided further that the insurer shall have the prerogative of whether or not to engage any TPA or to terminate the services of the TPA or not to engage the services of the TPA for a particular health insurance product or discontinue the services of the TPA to service a particular health insurance product.

(c) Where the policyholder did not choose any of the TPAs, the insurer may allow the policy servicing to a TPA of its choice.

(d) Where the insurer engages the services of only one TPA, no option need be provided to the policyholder.

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