Indian Insurance Industry
Content
Indian Insurance Industry:
Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of Insurance, large number of people exposed to a similar risk makes contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 1
History Of Insurance Sector:
The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost 190 years. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:
• • • •
1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938 - Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956 - 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business in India are:
• • •
1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957 - General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968 - The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 2
•
1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
Functions of Insurance:
1. Primary Functions 2. Secondary Functions 3. Other Functions The primary functions of insurance include the following:
Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.
The secondary functions of insurance include the following:
Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 3
assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. Contributes towards the development of larger industries - Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.
The other functions of insurance include the following:
Means of savings and investment - Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance. Source of earning foreign exchange - Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk Free trade - Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.
General insurance companies in India:
• • • • • • • • • • • • •
Birla Sun Life Financial Services Birla Sun Life Birla Sun Life Insurance Company In India Bajaj Allianz Insurance Company In India Om Kotak Mahindra Life Insurance Company In India Royal Sundaram Alliance Insurance Co. Ltd ING Vysya Life Insurance Co. Ltd Max Life Insurance Co. Ltd HDFC Standard Life Insurance Metlife Insurance Sahara India Life Insurance ANZ Insurance Amsure Insurance
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 4
• • • • • • • • • •
Cholamandalam MS General Insurance Employee State Insurance Corporation Export Credit Guarantee Corporation Of India Ltd ICICI Lombard Agriculture Insurance Company F India Ltd Peerless Smart Financial Solutions IFFCO TOKIO Tata AIG Insurance Reliance Life Insurance SBI Life Insurance
Duties, Powers and Functions of IRDA Mission - To protect the interests of the policyholders, to regulate, promote and
ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include :(a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration. (b) Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance. (c) Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents. (d) Specifying the code of conduct for surveyors and loss assessors. (e) Promoting efficiency in the conduct of insurance business. (f) Promoting and regulating professional organizations connected with the insurance and reinsurance business. (g) Levying fees and other charges for carrying out the purposes of this Act. (h) Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 5
organizations connected with the insurance business. (i) Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938). (j) Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries. (k) Regulating investment of funds by insurance companies. (l) Regulating maintenance of margin of solvency. (m) Adjudication of disputes between insurers and intermediaries or insurance intermediaries. (n) Supervising the functioning of the Tariff Advisory Committee. (o) Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f). (p) Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector. (q) Exercising such other powers as may be prescribed.
Insurance sector-In the view point of corporate’s
Since after the nationalization few decades ago, and now opening up of the Insurance sector to private players, particularly with foreign players (partial participation) the people of India particularly the middle class (about 200-300 million strong) are looking for a bright future and security through the insurance sector. This futuristic hope and expectations are more evident in the field of health Insurance sector, mainly due to the escalating medical care. Hence Health Insurance and its need for appropriate development in all respects is a must now and for future. The role of IRDA is going to be very important in monitoring the activities of insurance at large. It is to be expected and rightly so, that the to-day’s customer /client is gradually becoming aware of his rights and expects ‘QUALITY’ and value added services from his vendor. The Health Insurance sector is no exception. The demands of the policyholders of a health insurance are the same if not more. People may compromise with any service to some extent, but not with his health and his demand for quality is rightly acceptable. Are we to-day ready to face such challenging situation? Yes, provided we act fast and keep pace. Keep up to date. The medical science is self growing and developing fast and very fast. And as such the concepts and functioning of Health Insurance also varies. The current trends in the practice of medical profession, eg; Defensive medicine is going to tell upon the Health Insurance sector too.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 6
However the IRDA is going to be an effective regulator of all activities and also acts as a guiding principle in almost every activity. It is only appropriate to consider here, that the opening up of the insurance sector has raised high hope among people both in India and abroad. There are high expectations about how private insurer will fulfill the aspirations of the customers (clients or the insured) in India by catering to all types of Health insurance including Managed Health care. But the pace at which the privatization modalities, viz., granting of licenses and starting of the insurance operation in the last one year has begun to dilute those expectations. Some of the major Health insurance players of the world like Cigna, Aetna and others are still watching the Indian Insurance market from the fence. Others, who have got the license for the general insurance, are not too keen or enthusiastic about the Health insurance, particularly about the Managed Health Care. If the insurance reforms do not cater to the acute need of the customers for Health care, the rationale for opening the insurance sector to competition may be at state. Hence it is necessary that both the IRDA and the private Insurance should move in quickly to promote the Health Insurance among the needy. Considering the current trends, that are expected to take shape shortly, the private players are expected to consider seriously The Managed Health care systems to look after their clients. As a result the third party Administrators (TPAs) are now going to become a main stay of the Health Insurance Industry. The IRDA recently has notified the draft regulations during May 2001. They are briefly as follows. 1. Third party administrators will be allowed to enter into agreement s with more than one insures for reducing health insurance services; but as TAPs they are barred from becoming directors of an insurance company, insurance agents, or an intermediary. The TPA will be required to start with a minimum working capital of Rs. ONE CRORE. The license will be renewed every Third year by the IRDA. TPAS would also have to maintain and report to the IRDA on transaction carried out on behalf of the insurer. But this would not include trade secrets, including identity and addresses of policyholders. The IRDA has also drawn up a ‘code of conduct’ for the TPAs refraining them from trading in information, submitting wrong information to the insures and making advertisements without prior approval of the insurer among other things. A TPA also has to undergo a training of minimum three months in the field of Health insurance and have access to competent medical professionals to advise the insurance companies and the client on various matters. The TPA has to spell out the scope of services that it will deliver, while getting in to an agreement with a insurance company.
2. 3. 4.
5.
6.
7.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 7
The IRDA is shortly coming out with norms for the policyholder’s protection and also TPAs for the Rs. 90,000 crore Health Insurance Sector by the end of April 2001 (vide supra). According to IRDA chairman, N.Rangachary, the regulators are in the process of drafting several norms and it would be ready by the end of April 2001. Although TPAs initially wanted marketing rights of insurers, he said there has been some amount of understanding between the insurers and TAPs to develop the health insurance sector. As mentioned earlier, the IRDA sources said that the health insurance sector in India was estimated at Rs. 90,000 crore and is, expected to grow by ten percent every year. The TPAs, which may be hospitals or other agencies, can accelerate this growth rate by assisting insurers through faster claim settlement, quality hospital services etc. The following data indicates the status of select Asian Countries, with reference to their National incomes and their Health expenditure both in public and private sectors. The data shows the need for an insight in to the Health care expenditures of those countries and also the necessary steps that may have to be taken to improve the health status of their people. The data may also suggest the improvements that can be envisaged through the Health Insurance sector. It is also hoped that the efficient and active Health Insurance management may bring down the per capita expenditure on Health, both at an individual and group level.
References:1. 2. 3.
http://www.irdaindia.org/ http://business.mapsofindia.com/insurance/ http://www.medvarsity.com/vmu1.2/st/lp/health/hi-homepage/lessen4.htm
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 8
Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of Insurance, large number of people exposed to a similar risk makes contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 1
History Of Insurance Sector:
The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost 190 years. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:
• • • •
1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938 - Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956 - 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business in India are:
• • •
1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957 - General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968 - The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 2
•
1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
Functions of Insurance:
1. Primary Functions 2. Secondary Functions 3. Other Functions The primary functions of insurance include the following:
Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.
The secondary functions of insurance include the following:
Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 3
assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. Contributes towards the development of larger industries - Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.
The other functions of insurance include the following:
Means of savings and investment - Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance. Source of earning foreign exchange - Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk Free trade - Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.
General insurance companies in India:
• • • • • • • • • • • • •
Birla Sun Life Financial Services Birla Sun Life Birla Sun Life Insurance Company In India Bajaj Allianz Insurance Company In India Om Kotak Mahindra Life Insurance Company In India Royal Sundaram Alliance Insurance Co. Ltd ING Vysya Life Insurance Co. Ltd Max Life Insurance Co. Ltd HDFC Standard Life Insurance Metlife Insurance Sahara India Life Insurance ANZ Insurance Amsure Insurance
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 4
• • • • • • • • • •
Cholamandalam MS General Insurance Employee State Insurance Corporation Export Credit Guarantee Corporation Of India Ltd ICICI Lombard Agriculture Insurance Company F India Ltd Peerless Smart Financial Solutions IFFCO TOKIO Tata AIG Insurance Reliance Life Insurance SBI Life Insurance
Duties, Powers and Functions of IRDA Mission - To protect the interests of the policyholders, to regulate, promote and
ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include :(a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration. (b) Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance. (c) Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents. (d) Specifying the code of conduct for surveyors and loss assessors. (e) Promoting efficiency in the conduct of insurance business. (f) Promoting and regulating professional organizations connected with the insurance and reinsurance business. (g) Levying fees and other charges for carrying out the purposes of this Act. (h) Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 5
organizations connected with the insurance business. (i) Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938). (j) Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries. (k) Regulating investment of funds by insurance companies. (l) Regulating maintenance of margin of solvency. (m) Adjudication of disputes between insurers and intermediaries or insurance intermediaries. (n) Supervising the functioning of the Tariff Advisory Committee. (o) Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f). (p) Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector. (q) Exercising such other powers as may be prescribed.
Insurance sector-In the view point of corporate’s
Since after the nationalization few decades ago, and now opening up of the Insurance sector to private players, particularly with foreign players (partial participation) the people of India particularly the middle class (about 200-300 million strong) are looking for a bright future and security through the insurance sector. This futuristic hope and expectations are more evident in the field of health Insurance sector, mainly due to the escalating medical care. Hence Health Insurance and its need for appropriate development in all respects is a must now and for future. The role of IRDA is going to be very important in monitoring the activities of insurance at large. It is to be expected and rightly so, that the to-day’s customer /client is gradually becoming aware of his rights and expects ‘QUALITY’ and value added services from his vendor. The Health Insurance sector is no exception. The demands of the policyholders of a health insurance are the same if not more. People may compromise with any service to some extent, but not with his health and his demand for quality is rightly acceptable. Are we to-day ready to face such challenging situation? Yes, provided we act fast and keep pace. Keep up to date. The medical science is self growing and developing fast and very fast. And as such the concepts and functioning of Health Insurance also varies. The current trends in the practice of medical profession, eg; Defensive medicine is going to tell upon the Health Insurance sector too.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 6
However the IRDA is going to be an effective regulator of all activities and also acts as a guiding principle in almost every activity. It is only appropriate to consider here, that the opening up of the insurance sector has raised high hope among people both in India and abroad. There are high expectations about how private insurer will fulfill the aspirations of the customers (clients or the insured) in India by catering to all types of Health insurance including Managed Health care. But the pace at which the privatization modalities, viz., granting of licenses and starting of the insurance operation in the last one year has begun to dilute those expectations. Some of the major Health insurance players of the world like Cigna, Aetna and others are still watching the Indian Insurance market from the fence. Others, who have got the license for the general insurance, are not too keen or enthusiastic about the Health insurance, particularly about the Managed Health Care. If the insurance reforms do not cater to the acute need of the customers for Health care, the rationale for opening the insurance sector to competition may be at state. Hence it is necessary that both the IRDA and the private Insurance should move in quickly to promote the Health Insurance among the needy. Considering the current trends, that are expected to take shape shortly, the private players are expected to consider seriously The Managed Health care systems to look after their clients. As a result the third party Administrators (TPAs) are now going to become a main stay of the Health Insurance Industry. The IRDA recently has notified the draft regulations during May 2001. They are briefly as follows. 1. Third party administrators will be allowed to enter into agreement s with more than one insures for reducing health insurance services; but as TAPs they are barred from becoming directors of an insurance company, insurance agents, or an intermediary. The TPA will be required to start with a minimum working capital of Rs. ONE CRORE. The license will be renewed every Third year by the IRDA. TPAS would also have to maintain and report to the IRDA on transaction carried out on behalf of the insurer. But this would not include trade secrets, including identity and addresses of policyholders. The IRDA has also drawn up a ‘code of conduct’ for the TPAs refraining them from trading in information, submitting wrong information to the insures and making advertisements without prior approval of the insurer among other things. A TPA also has to undergo a training of minimum three months in the field of Health insurance and have access to competent medical professionals to advise the insurance companies and the client on various matters. The TPA has to spell out the scope of services that it will deliver, while getting in to an agreement with a insurance company.
2. 3. 4.
5.
6.
7.
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 7
The IRDA is shortly coming out with norms for the policyholder’s protection and also TPAs for the Rs. 90,000 crore Health Insurance Sector by the end of April 2001 (vide supra). According to IRDA chairman, N.Rangachary, the regulators are in the process of drafting several norms and it would be ready by the end of April 2001. Although TPAs initially wanted marketing rights of insurers, he said there has been some amount of understanding between the insurers and TAPs to develop the health insurance sector. As mentioned earlier, the IRDA sources said that the health insurance sector in India was estimated at Rs. 90,000 crore and is, expected to grow by ten percent every year. The TPAs, which may be hospitals or other agencies, can accelerate this growth rate by assisting insurers through faster claim settlement, quality hospital services etc. The following data indicates the status of select Asian Countries, with reference to their National incomes and their Health expenditure both in public and private sectors. The data shows the need for an insight in to the Health care expenditures of those countries and also the necessary steps that may have to be taken to improve the health status of their people. The data may also suggest the improvements that can be envisaged through the Health Insurance sector. It is also hoped that the efficient and active Health Insurance management may bring down the per capita expenditure on Health, both at an individual and group level.
References:1. 2. 3.
http://www.irdaindia.org/ http://business.mapsofindia.com/insurance/ http://www.medvarsity.com/vmu1.2/st/lp/health/hi-homepage/lessen4.htm
SIGNATURE OF GROUP MEMBERS 1. Ritesh kumar saha. 4. Ankush raina. 2 .Bishwash agrawal. 5. Samit ajmera. 3.Shreyas saxena. 6. Prateek choudhary. 8
