Claim settlement process of health insurance: TPA Vs In house claim department

In the in-house claim settlement process, instead of taking the services of a TPA, insurers set up an entire department within their own company to provide claim services. 

The claims settlement process is one of the most important aspects of an insurance policy, especially if it is a health cover. A policyholder’s health insurance claim can get settled by an insurer in two ways: third-party administrators (TPA) and through the insurer’s in-house claims processing department. 

You should know that TPAs are available only for processing of health insurance claims, i.e., there are no TPAs for other kinds of claims like life or motor. There are advantages as well as disadvantages of both methods of claims processing. 

What is a third-party administrator? 
A TPA is basically a middle man who facilitatesthe settlement of a health insurance claim. A TPA is appointed by the insurer. TPAs help you (the insured) process your health insurance claim using various hospital bills and documents. However, they are not responsible for claims rejection or acceptance. 

Vaidyanathan Ramani, Head Product and Innovation, says, “You need to contact the TPA as soon as the claims process starts. All kinds of assistance related to claim settlement is provided to you by the TPA from the process perspectiveuntil the claim is done/settled. Here what you (policyholder) should know is that the acceptance and rejection of the claim is the job of the insurance company and not of the TPA.” 

Many insurers have a tie-up with a TPA company. Ramani said that there are 26 companies in India authorised by the Insurance Regulatory Development Authority of India (IRDAI) to act as TPAs. Health insurance companies can have a contract with any one of these TPAs and the insurer’s claims processing department would then be associated with the contracted TPA, Ramani added. 

Among the TPAs, Health Insurance TPA of India is the one that caters solely to claims relating to policies issued by public sector insurers. One can directly visit their website and find out the network hospital providers and TPAs.

What is an in-house claims processing department? 
In the in-house claim settlement process, instead of taking the services of a TPA company, insurers set up an entire department within their own company to act as in-house claims processing department. The in-house claims processing department is also known as HAT (Health Administration team).

Rakesh Goyal, Director, Probus Insurance, a Delhi- based online insurance broker, said that one of the major advantages of having an in-house claim settlement process is that the turnaround time (TAT) for resolving a query or claim is faster and hassle-free as the decisions are directly taken between insurers and policyholders since there is no TPA in between. “So, for instance, if you are getting your health insurance claim processed through a TPA you need to submit all the details to the TPA and then they will get your claims settled by the healthinsurer. However, in case of the in-house claim settlement process, the health insurer will directly deal with you and the concerned hospital and settle the claim probably within a few hours or a day itself,” Goyal said.

Nowadays, many insurers have their own in-house departments to handle the claims process, especially for the retail health portfolio. But, there are some points to consider as to what can work better under different circumstances, Ramani explains: 

Advantages of in-house claims processing department over TPAs 

·       The insurer builds a key differentiator on the claims handling front, around TAT and other facilities. Building an in-house claims processallows the insurer to provide special offerings to their policyholder from time to time.

·       TPAs cannot take any judgement on claims and are only allowed to process them. So, if there are a large number of cases requiring a formal judgement (on applicability or quantum of cover), a TPA may be inefficient and will end up escalating most cases to the insurer only. So, in case of in-house claims processing department where the entire process is done within the insurance company itself, claim process is more hassle-free and takes less time as compared to TPAs.

TPAs are dependent on the insurer for getting the health insurance claim settled for the policyholders.

Thus, the efficiency of a TPA depends on how tight its terms of operations are and how clearly the processes are defined for them by the health insurer to process the claims they receive.

Advantages of TPAs over in-house claims processing department 

·       According to Ramani, TPAs have their own hospital networks which is mostly larger than an in-house claim settlement department of an insurance company. The extent of coverage provided by some of the largest TPAs for cashless is higher than most insurance companies in India.

·       TPAs are focused toward claim management process and have streamline processes for it.

·       “While in case of in-house claims settlement, policyholders have to go through the customer care route, it may take time in explaining the complete scenario to the insurer,” added Ramani.

Comparative analysis 
According to Ramani, one may expect a difference between claims settlement process in health insurance by in-house department and TPA to be in terms of TAT, which is important from the policyholder’s perspective. 

This is likely to be the reason why many large private insurers like Religare Health Insurance, Apollo Munich Health Insurance, Max Bupa Health Insurance, Bajaj Allianz Health Insurance, and HDFC Ergo General Insurance have in-house claims processing department. But there are still many private health insurers who do not have their own in-house claims processing department. Further, none of the PSU health insurers havein-house departments to process claims. 

However, at an overall level, there is not muchdifference between the outcomes from a TPA and the insurer’s in-house claimprocessing department. This is because both implement the process that has been set up by the insurance company, in favour of its policyholders. Both help in processing health insurance claims as per IRDAI rules and regulations. Goyal said, “Even if we look at health insurance claims handled through TPAs and directly by insurers (in-house claims processing department) there is not much difference. 

The data from IRDAI shows that, in the financial year 2017-18, both TPAs and insurers (in-house claims processing department) have settled around 91 percent and 91.6 percent, respectively, of claims received by them within three months. However, one thing that policyholdersshould know is the claims settled in-house took much lesser time as compared to TPAs,” said Goyal. 

What should policyholders of PSU insurers do? 
If you have a policy from a public sector health insurance company like National Insurance, The Oriental Insurance, The New India Assurance, and United India Insurance, then you have to process your health insurance claim through their TPAs. 

A PSU insurance agent who did not want to get quoted said, “You don’t have to pay any additional charges for the TPA services.” 

Anand Shrikhande, CEO, Quickinsure, a Mumbai- based insurance broker, said PSU insurance companies do not have in-house claims processingfacilities. They rely on TPAs for all claim settlements. For providing claim settlement services, the TPA generally charges the insurance company 6 percent of the claim amount. “However, PSU insurers’ policy pricing takes care of this and does not pass the premium charges to the policyholder. Hence, as apolicyholder, TPA charges does not affect you directly,” he said. 

The insurance agent quoted above said that the TPA of a public sector health insurer has a larger hospital network as compared to a private insurer and all PSU policy holders have to route their claims through a TPA. He also said, “You should not compare both claims process because both have advantages over each other. For instance, mostly the premium pricing of a policy taken from a PSU health insurer is slightly lesser than the policy taken from a private insurer. However, on the other hand, the private insurer settles claims slightly faster than TPAs of PSU health insurance companies.” 

What policyholders should do 
Be it an in-house claims processing department or TPA, both have effective claim settlement process. You should ideally not base your decision on which policy to buy on these two factors rather, you should buy health insurance as per your need and consider policy features, exclusions, waiting period, claim settlement ratio, etc. Not only this, one should always take advice from a financial adviser before buying health insurance.

Source: Economic Times

Date: 28th May 2019

After IT, fear of layoffs hits telecom space; 10,000 jobs at risk

Dark clouds of job cuts loom over the telecom sector. The risk running with mergers is that as many as 10,000 employees may lose their jobs over the next year.


With many telecom companies joining hands to beat competition and cut costs, some industry employees are having restless nights out of fear they may lose their jobs.

A report in thHindu BusinessLine today, quoting industry sources, says that thanks to the spate of consolidation recently, as many as 10,000 employees may lose their jobs over the next year.

A large merger, such as the one announced between Idea and Vodafone earlier this week, tends to many job roles redundant at participating companies due to duplication.

“Some departments may have surplus employees. Jobs like telecallers or ground-fleet salesmen would be too many in number and a good portion of them might have to be let go,” Dinesh Goel, Co-Founder & CEO, Aasaanjobs, told Moneycontrol.

Telecom companies are generally bottom heavy with a lot of entry level staff for sales and back office operations, he added.

Other support teams like finance and legal may also see surplus of employees, which will result in layoffs.

Companies that are coming together

Analysts say the Vodafone and Idea merger announced Monday could be a step that could change the face of the telecom industry — in that it would also change the employee needs of these companies.

In particular, the merger could take away 7,000 jobs, according to the HBL report, while another 3,000 could be from Reliance Communications and Aircel merger.

Idea and Vodafone are looking at saving around USD 2.1 billion through synergies and the obvious way to cut costs would be let go of employees as human resources cost a significant amount to the telecom companies.

Quantum of job cuts the industry may see

Goel expects a 20 percent job cut in the industry. “This will help the merged entity reduce the cost pressure and showcase better Earnings before interest, tax, depreciation and amortization (EBITDA) numbers,” he said.

While joining forces, companies look at better usage of the available workforce. The merger also slows down business development activities as the combined entity will have access to more markets, compared to any individual entity.

The timeframe that Goel expects for the layoffs is anywhere between 6 to 12 months post mergers. “It would generally take companies up to 6 months to consolidate the new teams and measure their performance as a combined entity,” he added.

Will consolidation leave employees with no jobs at all?

Goel has a positive outlook for the telecom industry as India is on the cusp of mobile and internet penetration.

He says that demand for experienced workforce in the sector is far greater than the supply of talent.

“Mergers should not render people unemployed, as the market would be able to absorb the laid off talent,” he added. Also, employees in tier-2 cities can be less worrisome as telecom companies are aiming to expand there.

Source- Livemint

Date- 27/04/19

Cognizant to layoff about 300 top executives

The job cuts will be initiated with a ‘voluntary separation’ program at the director level and above in June.

To keep the pyramid lean to improve its margins and accelerate revenue growth, Cognizant would be laying off at least 300 top executives. The NASDAQ listed company is said to have identified executives it will layoff in India, the US and other geographies, as per the report.

The company has initiated rationalization of its top deck with a ‘voluntary separation’ program at the director level and above for June. The program involves a generous severance payout of up to a year’s salary and other stock benefits based on the respective tenures of the employees leaving the company.

The voluntary separation program is for around 300 executives from about 3,00,400 executives holding the title of a director, including assistant vice-presidents and VPs. And as per the report, these executives have already been identified from various geographies including, India and the U.S.

These senior executives would be counseled and offered outplacement services as well.

The new CEO is taking a two-pronged approach—strengthening execution and improving the cost structure. These layoffs seem to be a consequence of such an approach.

A few weeks back Cognizant had announced that the job cuts will be focused on the middle levels, but now even the top executives will be laid off. When the company shared the realignment program in early May, is said that its headcount growth has outstripped revenue growth in the past two quarters. And job cuts seem to be of the ‘pyramid actions’ for lowering the cost of delivery.

The IT company looks forward to focus on getting fit for growth and providing opportunities for growth to their more than 285,000 associates around the globe.

Whenever any organization goes through cost restructuring, the jobs are first to get impacted. Especially in IT firms like HCL, Cognizant and IBM, layoffs are a usual drill. Last week, IBM sacked around three hundred employees from its services division. And this time at Cognizant it is the top executives who will get affected. How far will the outplacement services and counseling help the employees who will leave is uncertain but these measures are considered to be good means for them to find more opportunities and sustain their career.

Source- People Matters

Date- 27/04/19

“Buy ICICI Lombard General Insurance with target Rs 1,210: Anand Rathi”

In the retail health insurance segment, the company sees significant opportunity in Tier II and Tier III cities as the loss ratio in these cities has been substantially lower than the rest of the portfolio.

ICICI Lombard General Insurance Company is 4th largest non-life insurance company and the largest private player in the industry.

The company, which has substantially leveraged on its strong brand, offers a wide range of insurance solution including motor, travel, health, fire, crop/weather, property & casualty, marine, engineering, aviation and liability through extensive distribution network.

ICICIGI issued 23.5 million policies in FY18 and its gross direct premium income (GDPI) increased 15.2% year over year(y/y) to Rs 123.57 billion.

 GDPI increased 16.7% y/y, outpacing the industry growth rate of 13.1%. Focusing on retail health, ICICIGI grew its retail indemnity new business by more than 50% during 9M2019.

With focus on SME insurance market and cross selling opportunities, ICICIGI looks to drive growth on the back of several initiatives – expanding distribution network, enhancing product offering and bolstering technology to improve overall operational efficiency and customer service.

In the retail health insurance segment, the company sees significant opportunity in Tier II and Tier III cities as the loss ratio in these cities has been substantially lower than the rest of the portfolio.

Given ICICIGI’s impressive underwriting performance, diversified product mix and favourable macro traits, we believe the company is well positioned for long term growth and initiate our coverage on ICICI Lombard General Insurance Company Ltd. with a buy rating and a target price of Rs 1,210 per share.

Source: Money Control

Date: 20th May, 2019

Warm Regards,

After Cognizant, IBM sacks 300 employees

After Cognizant, IBM sacks 300 employees

In order to reinvent themselves and to fulfill the changing demand of the customers, IT services company; IBM has sacked around three hundred employees from its services division.

In order to reinvent themselves and to fulfill the changing demand of the customers, IT services company; IBM has sacked around three hundred employees from its services division.

Bulks of these employees were working in software services roles. They were let go as IBM focuses on emerging technology capabilities and reduces exposure to traditional services.

business daily quoted, “This is in accordance with IBM’s strategy to re-invent itself to better meet the changing requirements of our business and to pioneer new high-value services,” an IBM spokesperson said.  The spokesperson also added that IBM remains committed to being an essential part of its (India’s) growth.

Jobs cut are becoming often in the IT sector, A few days back Cognizant announced that as part of their realignment program, the management is evaluating various strategies, including additional employee separation programs.

While the timing, nature, and magnitude of the layoffs were not finalized before, the latest update is that Cognizant’s job cuts will be focused on the middle levels.

This is not the first time Teaneck, New Jersey-headquartered Company is cutting jobs. Last August, the company said it was cutting 200 senior jobs to make way for juniors to grow. In 2017, it had offered employees a voluntary separation program.

Pic Source- Internshala


Pune, one of the least insured cities: Survey

A survey by Max Life Insurance has revealed that only 58 per cent of Pune’s population owns life insurance, making it one of the least insured cities in the country.

Protection Quotient

According to the ‘India Protection Quotient’ survey conducted by Max Life and Kantar IMRB, Pune stands at a Protection Quotient of 27 out of 100, lesser than the national average of 35 for urban India.

The three-dimensional survey determined policyholders’ level of financial preparedness to face future uncertainties by studying their life and term-insurance awareness, ownership and primary fears, and preferences when purchasing policies.

Pune’s protection quotient ranks the city lower when compared to other cities such as Ahmedabad, Bhubaneshwar, Chennai, Delhi, Jaipur, Lucknow, Mumbai, Patna, and Vishakhapatnam.

Source: The Hindu Business Line

Date: 9th May 2019

Insurers Want 100% Stake in InsurTech Startups

Insurers Want 100% Stake in InsurTech Startups

TECH EDGE Companies discover potential of new technologies to disrupt the sector and seek control

Fintech, long a buzzword in banking, has reached the shores of insurance companies who are lobbying the regulator to have a bigger say in stake holding. Insurance companies want to own and nurture startups with 100% stake from the current 10% cap the regulator has put on holding.

“We want to buy all 100% in InsurTech companies, which align with our business,” said Prashant Tripathy, CEO, Max Life Insurance.

“We, as an industry, have made a presentation to Irdai to allow us to own 100% in these companies.” Many insurancecompanies still rely on legacy software.

Lately, though, they have dedicated teams to monitor new technologies to be able to understand their true potential for disruption and are keen to invest in technology companies that they perceive can disrupt the insurance industry.

Companies in the insurance innovation space are focused on building digital platforms, which are aggregators and robo advisors using machine learning and usage-based selling.

Insurers are using technology that aids fraud detection at the point of underwriting and also for assessing risk — for example, the use of wearables in the context of ‘diagnostics’ for better underwriting. There are a dozen insuranceaggregators that help customers compare policy features and assist in buying. Others use sensors that stick to the skin and are used for fitness monitoring, glucose level monitoring to track health.

In life insurance, companies are using either in-house or outsourced big data or artificial intelligence for underwriting.

Regulator Irdai has said in the past that when it comes to product design and pricing, details of cognizance of usage of wearable/portable devices should be part of the product filing and such products should first be tested in the sandbox environment or on a pilot basis.

It is working on the aspect of creating a regulatory sandbox to encourage InsurTech in the Indian landscape.

Source : Economic Times

Date: 09-05-2019