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Mediclaims should be settled by insurance co and not TPAs: HC

High-CourtThe Bombay High Court Thursday asked the Insurance Regulatory and Development Authority to ensure that insurance companies did not involve Third Party Administrators (TPA) in the claim settlement.

The TPAs act as intermediaries between hospitals, insurers and consumers.

“IRDA shall inform insurers to implement (Health Insurance) Regulation 12 in letter and spirit to see that the decision for rejecting or allowing claims are taken by the companies and not the TPAs,” a division bench headed by Chief Justice Mohit Shah said on a PIL.

Gaurang Damani, the petitioner, has highlighted the problems faced by mediclaim policy holders and lack of transparency in claim settlement. He had argued that despite the regulation 12(b), the TPAs settle the claims. He also referred to IRDA’s affidavit admitting to lapses by four insurers and five TPAs.

The Association of TPAs admitted that some of its members may still be doing it and added that they were in the process of complying with the regulations.

The court asked IRDA to direct the insurance companies to strictly follow regulation 12(b).

The lawyer of General Insurance Council, which represents 25 non-life insurance companies, admitted that “this is a grey area which has to be looked into as there are cases where the TPAs have outsourced work. We want decision-making to be restricted only to insurance companies. It is a core activity which cannot be outsourced.”

Damani also argued that on account of stopping of cashless claims, the overall claim settlement ratio had come down. Data compiled by Insurance Information Bureau (IIB) showed that claims ratio had dropped from nearly 100 percent to 68 percent in 2012-13.

The court directed IIB to state the overall ratio of cashless versus non-cashless claims settled in 2013-14 and also average claim amount settled for a particular ailment between cashless and non-cashless for the same period on April 7, the next date of hearing.

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