""NEWS ITEM""FOR THE GENERAL INFORMATION OF MEMBERS
The General Insurers’ Public Sector Association of India (GIPSA), an association of all the four public sector general insurance companies, is planning to float its own third party administration (TPA) service jointly with a company in India or abroad. TPA is one of the core functions of general insurance business, especially for health insurance. TPAs help the subscribers in availing cash-free hospitalisation and other services by tying up with hospitals. They get a fee from insurance companies for carrying out these activities.
The yet-to-be-floated consortium, comprising National Insurance Co, New India Assurance Co, Oriental insurance Co and United India Insurance Co, would forge a joint venture (JV) with either an existing TPA in India or abroad. In case, GIPSA partners with a foreign TPA, the foreign capital in the JV would be restricted to 26%, which is the current FDI cap in the insuarnce sector. Foreign general insurers will have an opportunity to access some lucrative business currently in the domain of the government-owned insurance companies.
GIPSA is already in the process of finalising the consultant for choosing the JV partner. Companies such as KPMG, Boston Consulting Group (BCG) and Ernst & Young have given the expression of interest (EoI) for working as the consultant for the proposed JV.
The consultant will advise the general insurer’s association on the type of companies that they should look for the proposed JV as well as the equity partnership that the association should pursue.
At present GIPSA members offer the health insurance services through tieup with any India-based TPA. They form the tieup with the TPAs on an annual basis. They have to give about 5% to 6% of the premium collection as fee for availing the services of the TPA. However, insurance companies cannot pass on this burden to the subscribers of insurance policies according to prescribed norms by the Insurance Regulatory and Development Authority (Irda).
Forming its own TPA would help these companies save on some extra expenditure. The yet-to-be formed TPA can also offer services to other private insurance companies for revenue generation.
FROM OUR EDITORS DESK
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