Non-life insurers opting for in-house claims cell

April 25th, 2008 - 12:46 pm ICT by admin  

By Venkatachari Jagannathan
Chennai, April 25 (IANS) Private non-life insurance companies are setting up their own cells with qualified doctors to process claims as opposed to outsourcing the services in a bid to protect their goodwill and customer base. “Doing it in-house will work out economical for insurers having a sizable health insurance portfolio,” said K.N. Bhandari, secretary general, General Insurance Council - the representative body of Indian non-life insurers.

The move among private non-life insurance companies also comes in the wake of complaints against what are called the third party administrators who have often been found to leave customers dissatisfied and angry.

“An insurer who hires a third-party administrator would end up as a loser. From the beginning we decided not to outsource claims activity,” said V. Jagannathan, chairman and managing director of Star Health.

Last week, Cholamandalam MS General Insurance Co Ltd announced its decision to cancel its arrangements with its administrator - who is licensed by the industry watchdog, the Insurance Regulatory and Development Authority (IRDA).

And according to industry sources, similar plans were being looked at by some of the other non-life insurers like ICICI Lombard General Insurance. Similarly, Bajaj Allianz also does not use the services of third-party administrators.

For processing claims and issuance of identity cards to policyholders the third-party administrators - called TPAs in insurance jargon - get 5.5-6.5 percent of the policy premium and also handsome deposit to settle claims upfront.

But volumes and lower costs are not the real reasons as Chola expects the health insurance administration costs to increase by 3.5 per cent to 10 per cent.

The main reason for the new trend is that none of the other three parties in the health insurance chain - the insurers, policyholders and hospitals - is happy with the administrators.

The complaints of non-life insurers include undue delay in claims settlement, misuse of funds provided for claims payment, profiteering at the cost of the insurer and policyholders and conflict of interest.

The policyholders and empanelled hospitals often complain of delayed and short settlement of bills, unfair denial of cashless treatment facility at hospitals and reimbursement claims and bouncing of claim cheques.

“We wanted to own our policyholders. The TPAs take anything between 30 and 45 days to settle a claim, affecting our other business lines, reputation and the policy renewal ratios,” explained S.S. Gopalarathnam, managing director of Chola.

“A health insurance claimant should always be dealt with empathy,” says Shreeraj Deshpande, head of health and travel insurance at Bajaj Alliance.

“The claimant or his family members approach their insurer after a traumatic experience. Unfortunately the TPAs are not even sympathetic towards them.”

Bajaj Allianz set up its own health insurance claims cell in 2004 and has seen several beneficial results in terms of customer satisfaction and the retention of policyholders.

“In three hours, we advise the hospitals on cashless treatment while the TPAs took three days. We process and settle the health insurance claims in 14 days flat,” said Deshpande.

According to a hospital official, who preferred anonymity, the TPAs took around 90 days to settle the bills. “Many a time, there is short payment and we find it a waste of time pursuing them for the balance money.”

As a result, hospitals have differential rates for TPA and normal patients - the former obviously charged higher.

In others cases, TPAs that negotiated special rates with the hospitals were claiming higher sums from the insurers, instead of passing on the benefits to them or policyholders.

Related Stories

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Business |