The government may ask third party administrators (TPA) that provide cashless medical insurance service to undergo external audit following complaints of delays in settling claims. “We have received number of complaints over delayed settlement of claims. There is also an issue of one TPA working for more than one insurance firm, leading to delay in processing,” said an official who did not wish to be named.
The government opines that audit of TPAs by an external auditor will help to identify the reason for delay and separate the performing companies from non-performing ones. The exercise essentially will entail auditing various parameters of service such as number of claims settled, time taken to settle claims and loss ratio.
“The whole idea is not only to reduce the administrative cost for insurance companies but also provide faster service to improve claim settlement ratio,” the official added.
Incidentally, the proportion of claims settled on cashless basis has increased steadily and is about 50% of the total claims handled by TPAs, according to a report by insurance regulator IRDA.
The regulator has also favoured clearly laying out customer service benchmarks TPA business including maximum time line for different processes. In its report on TPA business and delivery of service it has recommended minimum skill sets for TPA personnel, including training in claim and pre-authorisation process.
TPAs welcome the idea of external audit. “Audit will bring out clearly the quality of service provided by TPAs to settle claims,” said Nayan Shah, director, Paramount TPA.
The public sector insurance companies also opine that the loss ratio had considerably gone up since the introduction of TPAs. Prior to 2001, the four general insurers were managing claims and settlements on their own.
“When we were managing the claims ourselves, the loss ratio was around 80%, in the last four years it has shot up to 120%,” said MD of New India Assurance M Ramadoss. New India Assurance is the largest general insurance company in the country.