IRDA Limits Third Party Administrator Services to Insurers

The Insurance Regulatory and Development Authority (IRDA) has implemented new regulations restricting the services of Third Party Administrators (TPAs) in the health insurance industry. TPAs are now only allowed to offer their services to insurance companies, and the IRDA has revoked the permission formerly granted to TPAs in 2005 to offer their services to other organizations, such as the Central and State governments.

New Circular from IRDA

Chairman of the IRDA, Mr. J. Hari Narayan, issued a circular on Tuesday, informing licensed TPAs that they are not allowed to enter into agreements to service health schemes promoted, sponsored, or approved by non-insurance bodies. Any TPA who wishes to offer services to organizations other than insurance companies must first surrender their license to the IRDA.

Growth in Premium

From 2005 to March 2011, the gross written premium of health insurance in India grew from Rs 1,535 Crore to Rs 11,145 Crore. As the health insurance sector continues to progress, effective and dynamic systems must be in place to ensure the industry’s growth in India, according to Mr. Hari Narayan, the IRDA Chairman.

Existing Contracts

TPAs are permitted to continue serving their existing contracts until the end of the contract period, without any further renewal. Organizations with existing contracts must inform the regulator of the details according to the circular.
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