The Insurance Regulatory and Development Authority (IRDA) has said that Third Party Administrators (TPAs) in health insurance will now have to confine their services only to an insurance company.
IRDA has withdrawn permission given to TPAs in 2005 to offer their services to bodies such as the Central and State governments - other than insurance companies.
In a circular issued early this week, Mr J. Hari Narayan, Chairman, IRDA, said licensed TPAs could not enter into arrangements for servicing health schemes promoted, sponsored or approved by any non-insurance body, including Central, State, local governments, corporates, and so on.
A TPA desirous of offering services to schemes other than that of an insurance company, should first surrender its licence to the IRDA.
Since 2005, the gross written premium of health insurance in India has increased from Rs 1,535 crore to Rs 11,145 crore as on March 2011.
"Given the growth of the health insurance sector, it is important that the systems in place for servicing health insurance should be dynamic and effective in order to ensure the orderly growth of the health insurance business in India," the IRDA Chairman said.
With respect to existing contracts, TPAs can continue to service them till the expiry of the contract period without any further renewal.
The details of such contracts should be informed to the regulator, as per the circular.