IRDA

How to Become a Third-Party Administrator?

Third Party Administrator

A Third Party administration, or TPA, is a company that has been authorised by India’s Insurance Regulatory and Development Authority (IRDAI). Having a Third Party Administrator License is required for businesses. A third-party administrator aids in processing insurance claims for business and retail insurance. In addition to this, the TPA serves as an insurance company outsourcing entity.

Third Party Administrator

The Insurance Regulatory and Development Authority of India (IRDAI) has granted a licence to an organisation known as a Third Party Administrator (TPA) to process health insurance claims. TPAs serve as a middleman between the insured and an insurance company. Therefore, insurance companies, policyholders, and healthcare providers are the parties.

For the purpose of serving as the policyholder’s administrator, a TPA license is necessary. In order to assist the policyholder in resolving insurance claims, health insurance firms (both life and health insurance) engage third-party administrators. To resolve insurance claims, third-party administrators analyse policyholders’ medical records and hospital bills. Insurance claims are not subjected to approval or denial by Third Party Administrators.

Some of the most crucial facets of health insurance are handled by TPAs. Processing health insurance claims (accepting requests, approving cashless claims, and disbursing the claims) is just one of them. Others include provider network, utilisation review, enrollment, premium collection, cashless processing (if the treatment is received at a network hospital), value-added services like ambulance services, availability of beds, specialised consultation, wellbeing programmes, medicine supplies, 24-hour toll-free helplines, lifestyle management, and health facilities.

Who Regulates Third Party Administrator Licenses?

The Insurance Regulatory and Development Authority of India is the principal regulatory body in relation to the Third Party Administrator License (IRDAI). The Insurance Act of 1938 and the Insurance Regulatory and Development Authority Act of 1999 are the two pieces of legislation that support the Third Party Administrator License. The Insurance Regulatory and Development Authority of India (Third Party Administrators – Health Services) Regulations, 2016, is the primary regulation.

Eligibility requirements

To obtain a third-party administrator license, the applicant has the fulfill the following:

  • To operate as a TPA, a firm must have a share capital and be registered under the Companies Act of 2013 (18 of 2013) from time to time.
  • When the TPA registers with the authority, its main and only purpose is to conduct business in providing health services exclusively. A TPA is not permitted to operate any other businesses.
  • Every TPA and applicant seeking registration as a TPA from the authority must have the words “Insurance TPA” in their name to show that they are now engaged in or want to start a TPA for the purpose of providing healthcare services.
  • A TPA must keep its minimum paid-up equity share capital, not below four crores.
  • A TPA’s net worth may not at any moment during the registration term be less than one crore. Foreign investment in the TPA must adhere to the policies and guidelines established in this regard by the Indian Government as well as any rules, directives, or instructions issued by the authority.
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Requirements for Minimum Capital and Working Capital

  • A third-party administrator can be a company with a specific share capital. However, the business must be registered in accordance with the 2013 Companies Act’s requirements.
  • The TPA is required to maintain a minimum paid-up share capital of 4 crores.
  • Already registered TPA must adhere to this rule for one year.
  • The TPA must maintain a minimum of one crore in working capital. Working capital is referred as the difference between aggregate assets and total liabilities.
  • A TPA is permitted to invest internationally. The amount of the investment, however, would need to meet specific standards established by the Government and the authority.

Application for License

The application procedure for the grant of a certificate of registration is as follows:

  • A business must first register on the IRDAI BAP Portal1 in order to request a certificate of registration as a TPA from the authority.
  • The authority must submit the online registration application, along with a non-refundable processing cost of Rs. 1,000,000 and any other taxes that may be necessary, paid through the payment gateway service offered by the portal.
  • The authority has the right to request the submission of any documentation it sees fit. The candidate will be required to submit the information online within the allotted period.
  • When the applicant satisfies the requirements and conditions, the authority may award the applicant with a Certificate of Registration after reviewing the application and the information provided by the applicant.
  • Prior to being granted a Certificate of Registration, each applicant who has been authorised by the authority for the award of a Certificate of Registration must also pay the authority a registration fee of Rs. 2,00000 plus any other taxes that may be applicable.
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Grant of Certificate of Registration

  1. After reviewing the application and the information provided by the applicant, the authority will decide whether or not the applicant satisfies the regulations’ requirements and conditions.
  2. The authority has the right to impose any other condition as it thinks fit for granting the registration certificate.
  3. Before receiving a certificate of registration, each applicant who has been granted approval by the authority must pay a registration fee to the authority of Rs.30,000 plus any applicable service tax.
  4. A TPA which has been given a certificate of registration must launch business activities within a year from the date of grant of certificate of registration.
  5. Every TPA who has received a certificate of registration must display and publicly identify themselves using their registered name, IRDAI registration number, certificate of registration validity, registered office address, corporate office and the insurers they are authorised to represent.

Required Document for Third-Party Administrator License

The authority must consider all factors related to the operation of TPA’s business when evaluating the submission for a certificate of registration.

  • Form TPA- 1.
  • Memorandum of Association and Article of Association of the Company or Limited Liability Partnership Agreement.
  • Certificate of Registration of the Company or Limited Liability Partnership as granted by the ROC.
  • A copy of the company’s PAN card.
  • Profile of the company’s partners or directors or LLP.
  • Profile of the principal officers along with the certificates of educational qualification.
  • A brief summary of the website’s contents as proposed for the License.
  • Information about the Chief Executive Officer (CEO), Chief Administrative Officer (CAO), and Chief Medical officer (CMO).
  • Documents from medical officers.
  • Information about the location where the website is hosted. 
  • Information about the individuals in charge of creating the website’s content.
  • Chartered Accountant’s certification of the company’s shareholding structure and net-worth value.
  • Financial statements that have been audited, either the most recent as of the date for a new firm or the last three years for an existing company.
  • Information about the IT infrastructure that the applicant has access to.
  • The form is used to notify people of a director, chief executive officer, chief administrative officer, or chief medical officer appointment or modification.
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Validity of TPA Registration Certificate

The third-party administrator will be given a certificate of registration that is valid for three years. The authorities or the applicant have the right to revoke, cancel or suspend the validity of the certificate of registration.

Renewal of a TPA license

  • The application must be made to the authority for third-party administrator license renewal.
  • The application must be submitted at least 180 days and not later than 30 days before the certificate of registration of the TPA expires.
  • The TPA license application must be submitted with a non-refundable fee of Rs.15,000 with any relevant service tax.
  • Suppose the renewal application is submitted after the time frame mentioned above before the registration certificate expires. In that case, a fee of Rs.100 must be paid as a penalty for the application’s delay.
  • Suppose the applicant can show that events beyond the applicant’s control brought on the delay in applying. In that case, the authorities may accept the application after the registration certificate has expired at Rs. 750.
  • The applicant will be given a certificate of renewal for three years, provided they meet all the requirements.

Conclusion

From the understanding of the requirements mentioned above and the work of Third Party Administrator, You can get TPA’s help when needed. If you recently purchased a health insurance plan and are having trouble filing a claim. You can enlist the aid of third-party administrators and get the benefits of their services to handle your health insurance claim quickly and affordably.

Also Read: Increasing InsurTech Opportunities for Insurers

References

  1. https://irdai.gov.in/

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