Third Party Administrator (TPA) and IRDA Norms

Insurance Regulatory and Development Authority of India (IRDA), which licenses and regulates the Third Party Administrator (TPA) has specified some entry norms:

1. The primary objective of the company shall be to carry on business in India in health service. The minimum capital of the company shall be in equity shares amounting to Rs.1 crore.

2. At no point of time of its functioning the TPA shall have a working capital of less than Rs.1 crore.

3. At least one of the directors of the TPA shall be a qualified medical doctor registered with the MCI.

4. The aggregate holdings of equity shares by a foreign company shall not at any time exceed twenty-six percent of the paid up equity capital of a third party administrator.

License is usually granted for a period of 3 years to a TPA. TPA ties-up with the hospitals and the hospitalization services are provided on cashless basis.

Procedures for Issue of License

TPA shall obtain from the IRDA Authority a license prior to commission of functions.
The application for license shall be accompanied by a non-refundable fee of Rs. 20,000/- payable to the IRDA Authority.
Approved TPA shall pay a further sum of Rs.30,000/- as license fee by way of a crossed demand draft.
A TPA whose application has been rejected by the Authority shall not apply once again for a period of two years from the date of such a rejection.