Financial Daily from THE HINDU group of publications
Thursday, Oct 13, 2005
Financial Daily from THE HINDU group of publications Thursday, Oct 13, 2005 |
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Money & Banking
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General Insurance Industry & Economy - Health Rising health claims force insurers' rethink on TPAs Sarbajeet K. Sen
New Delhi , Oct 12 BARELY three years after third party administrators (TPAs) came into the health insurance sector, insurance companies are of the opinion that the experiment may be backfiring with health claims showing steep and unprecedented annual increase during the period. "Our losses after the introduction of TPAs have been mounting each year. It appears to be more than pure coincidence," Mr M. Ramadoss, Chairman and Managing Director, Oriental Insurance Co, told Business Line. Oriental Insurance's claims on the health portfolio show that claims have gone up from Rs 180 crore in 2002-03 to Rs 243.80 crore in 2003-04 and Rs 314.03 crore in 2004-05. More importantly, in 2004-05 claims exceeded the premium collected on the health portfolio for the first time in the past three fiscals. The incurred claims ratio was 114.35 per cent of the premium of Rs 274.64 crore collected during the year. In 2003-04, the incurred claims ratio was 98.10 per cent against a premium of Rs 248.43 crore, while during the year before it stood at 78.24 per cent against premium of Rs 230.05 crore. The first of the TPAs were issued licences by the Insurance Regulatory and Development Authority (IRDA) in March 2002. The main task of TPAs is to process and settle health insurance claims after authenticating the bills and other medical documents. Mr Ramadoss said that the high claims ratio may be due to the insured taking undue advantage of the cashless insurance services being provided by the TPAs. "The insured do not have to pay from their pocket any more and wait for reimbursement from the insurance companies. Also, we removed the sub-limits on maximum amount to be paid per day for a particular type of illness. "As a result, they are checking into high-end hospitals and into the high-end rooms that many would otherwise not go to." The health insurance figures of ICICI Lombard General Insurance Co show similar trend in the claims figures. Claims have risen from Rs 7 crore in 2002-03 to Rs 30.86 crore in 2003-04 to Rs 61.55 crore in 2004-05. However, ICICI Lombard was more guarded in putting the blame of the rising claims entirely on the TPAs. "TPAs are still an emerging industry. The higher claims are also due to the fact that we are writing more business on our health portfolio each year," said Mr Karan Chopra, National Manager. He added that placing restrictions on the type of hospitals where an insured can seek treatment might result in compromising on the quality of healthcare.
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