The four state owned General Insurance Companies (GIC) have come together to float a third party administrator (TPA) company to prevent the frauds in claims.
The non life insurance companies dealing with auto insurance, health insurance, fire/industrial insurance etc. have been under a heavy losses primarily in the health insurance segment. To tackle the situation, the companies propose launching a captive TPA to resolve the issues of exaggerated claims.
National Insurance, New India Assurance, Oriental Insurance and United India Insurance which have been struggling with fraudulent claims in health insurance segment, and have therefore planned to create a TPA company to minimize these frauds.
"It has been a long-fought war for us. Still there are over 15 to 20 per cent exaggerated claims," said Mr. G.Srinivasan, Chairman and MD ,United India Insurance TPA is a company which manages the claims and processes disbursement on behalf of the insurer.
At present the four GICs have been outsourcing their claims and settlement to third party TPA, which hasn't resulted in the results the companies had expected. The process to float a TPA had commenced about 2 years back, but due to some technical issues it has not been possible.
The state owned PSU currently own 56% of the market share in the health insurance segment amounting to Rs. 60,000 crore, but are still running in losses.
Mr Srinivasan says the industry is exposed to high risk, and had losses in the range of 140 to 150% a few years back, "But, it has been corrected, and now we managed to bring it down to below 100 per cent." The proposed TPA would reduced the losses further.