TPAs to move Competition Commission against PSU Insurance Cos.

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TPAs to move competition panel against PSU insurers

The association of third party administrators (TPA) has decided to move the Competition Commission of India (CCI) against the four public sector non-life insurance companies and their association, called General Insurers Public Sector Association of India (Gipsa), for forming a cartel and abusing their dominant market position in planning their own TPA outfit.

“The TPA floated by Gipsa companies will result in cartelization, market dominance and monopolisation,” the TPA association alleged in its letter to the insurance regulator.

The association said the move would lead to stopping of fresh investments and huge lay-offs by existing TPAs. “The entire business model introduced by the insurance regulator will get destroyed. This is anti-consumer and anti-competition,” Mahapatra said.

When contacted, M Ramadoss, chairman and managing director of New India Assurance, said, “Let us first get the notice. We will then decide what we should do? The TPAs have all the right to do approach the CCI.”

“The move will result in closure of all existing TPA companies. This will give rise to an arbitrary increase of premium, refusal of policies to the elderly, restrictions on cashless network, favouritism under the guise of preferred network of hospitals and corruption,” the TPAs alleged in their letter to Irda.

“How can an organisation owned by the insurers be a TPA to service their clients?” the association asked.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

All four Public Sector Insurance companies coming together & deciding for a single TPA could be interpreted as Cartelisation as these four govt. companies are separate legal entities.

However, the TPAs cannot force an insurance company to use their services & insurance companies have been selecting TPAs for their various offices based on capability, fees charged, claims processing quality & technology implementation. Instead of going for an open tender, all four companies can have a tacit understanding among them & select, may be just one TPA, for servicing all their claims. After-all, we have examples of Pvt. Insurers going in for their own TPAs & hence, you cannot stop Insurers from setting up their own TPA.

So it’s not what is being done that is questioned? It’s about who is doing it & the manner in which this is being done that makes it questionable.

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