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Insurers told to stick to TPA fee ceiling

Sarbajeet K. Sen

NEW DELHI, Aug. 2

WHILE the process for hiring third-party administrators (TPAs) has been decentralised, the General Insurance Public Sector Association (GIPSA) has directed the four non-life general insurance companies to adhere to the cap on fees that the association had earlier negotiated in the now-aborted selection process.

In the selection exercise which begins on Saturday, the four nationalised companies would also be required to stick to the other general criteria set by GIPSA during the exercise it had conducted in June for short-listing the TPAs for the PSUs.

Thus, the insurers would be allowed to offer a maximum of 5.5 per cent fees for TPAs hired in the northern and southern regions, while for east and west the fees would be capped at 5.4 per cent. `The ceiling on the commission rate had emerged through a process of negotiation with the TPAs. That cap would remain even in the new selection process," a top GIPSA official said.

The officials said that the companies would also be required to keep in mind the other norms specified by GIPSA, which include the infrastructure available with the health insurance intermediaries.

Besides the requirement of possession of an IRDA licence, some of norms outlined are that the TPAs would have at least two offices in a zone, with one in a State capital having five hospitals and the other in another city with at least two hospitals.

The TPAs would also be required to have a 24-hour toll free number available for their customers while at the same time maintaining a certain level of computerisation, including Pentium-4 computers.

GIPSA has adopted these criteria to prepare its panel of TPAs from which the four companies were supposed to hire the intermediaries. However, under protest from a section of those left out, the entire panel had to be scrapped and fresh interviews called for.

The interviews of the TPAs begin on Saturday with all of them being required to appear before Oriental Insurance Co Ltd, followed by National Insurance Co Ltd, New India Assurance Co Ltd and United India Insurance Co Ltd on four consecutive days. The interview panel would comprise of the chairman of the company, a Government director and another director on the board.

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