Bombay High Court Verdict - Insurers to settle medi-claim (Not TPA)

Most insurers do engage a TPA to process claims to save administrative costs.  It was widely believed that the TPAs were paid incentives by the insurance companies for cutting down claims.  Many complaints were filed with various consumer forums against the functioning of the TPAs. In the instant case, one Mr. Gaurang Damani filed a PIL in the Bombay High Court last year, seeking clarity on the role of TPAs. His argument was the TPAs are hired to only process the claims and not to settle the claims. More often than not, the TPAs were paid incentives to reduce the total outgo the claims. This, the Bombay High Court observed, “ worked against consumer interest”. The Insurance Regulatory and Development authority of India too has informed the court that, “the TPAs cannot not settle claims, only insurers can” and that  no incentives will be paid to the  TPAs. 

 

It all started with Dr. Ansuh Agarwal of Janakpuri,  Bareilly filing a  petition under to RTI Act with United India Insurance Company to seek information about the inordinate delay in  uploading the policy renewal information with the TPAs.  In the process he came to a clause in the contract between   the  insurance company and the TPA in respect of the incentives paid to the TPAs by the Insurance Company for  keeping the claims ratio within a certain limit.  This clause, obviously, makes the TPAs overzealous in rejecting  or  partially paying the claims on flimsy grounds totally ignoring the interests of the insured.

 

It is not an isolated case and Mr. Gaurang Damani too came across such a clause in the contracts between New India assurance and their TPAs which   prodded him to file the  Public  Interest Litigation.  During the course of hearing the court asked IRDA to clarify the role of TPAs in settling claims. According to IRDA, new guidelines are being finalized and they are waiting for the Finance Ministry’s approval for the same to be announced soon. These guidelines are available at the IRDA website.