GIPSA to meet with firms shortlisted for joint venture partner on Monday; association of TPAs insists regulatory nod for TPA licence in doubt
Public sector insurers are close to deciding on a joint venture (JV) partner to set up their own third party administrator (TPA) entity, even as the association of TPA companies is continuing to challenge the legality of the proposed new venture.
"We are in the final rounds of discussion and are having a meeting on 18th April. We will soon finalise the JV partner," said M Ramadoss, chairman and managing director, The New India Assurance Co Ltd.
According to TPA sources, the General Insurers Public Sector Association (GIPSA) has shortlisted four entities-two of them Indian and two foreign-from the 24 applications it had received to partner in their TPA venture. But the sources believe that there is still uncertainty over the regulatory approval for a TPA licence for the venture by the four PSU insurers.
This is the first time that PSU insurance companies are attempting to set up a TPA entity and the process has been going on for over six months now. The regulator has so far not permitted private insurers to take a stake in the TPA business. Given this stance, TPAs say that the regulator cannot grant permission to PSU insurers. (Read, "TPAs' case in Competition Commission against PSU Insurers may be weak" )
However, Mr Ramadoss says, "There should not be any problem with getting licences as each of the four PSU insurers will only be minority stakeholders in the new entity."
Last October, TPAs, the intermediaries who handle insurance claims, had moved the Competition Commission of India (CCI) to block a move by the PSU insurers to float a captive company to manage claims. The case is stuck in limbo with neither CCI nor the Insurance Regulatory and Development Authority (IRDA) giving any clear direction.
According to TPA sources, "The CCI has referred the case to IRDA, passing on all the documentation to seek the regulator's advice. There was a meeting with the IRDA chairman on 13th January. The issue about whether any insurer can apply for a TPA licence has been referred to its legal cell."
"IRDA has taken the stance that there has been no application from PSU insurers, so why give any opinion or apply our mind? It is a hypothetical question for IRDA," the sources said.
According to GIPSA sources, "The TPA association cannot force us to use their services. The existing TPAs will be phased out over a period of a few years, based on the performance of the new entity."
The proposal by the PSU insurers to set up a new TPA entity arose from problems that have come up with existing TPAs. TPAs have been accused by hospitals and medical consultants of delaying payments; policyholders have been unhappy because of rejection of claims on frivolous grounds and these issues have only worsened over the past couple of years.
But TPAs refute these complaints saying that they are not responsible for the problems arising from insurance products and payments.
"The product has to be designed with proper underwriting to get results," a TPA source argued. "Mediclaim is not a TPA product. We are just involved with settlement of claims, after being picked for outsourcing by the insurer. The agents sell policies saying everything is payable. The buyers also have half-baked knowledge about the policies and neither of them bother to read the policy documents."
The source said, "Buyers don't even know that they have to intimate the TPA-they don't do it even in the case of a planned surgery. When the claim comes, it is then that the policy is put to test. And the TPA is made the villain even if there is genuine claims repudiation. The insurer hides behind the TPA."
Obviously, TPAs fear that the captive company will result in cartelisation, market dominance and monopolisation by the state-owned companies, who provide over 80% of the TPA business.
The TPA association has also alleged that through the new TPA entity, insurance companies would become third parties themselves and that this would defeat the very purpose of consumer protection and neutrality that is supposed to be served by a third party. Besides, existing TPAs would have to stop their investments in the business and lay off the more than 10,000 people employed.
Come 1st June, all large companies would require to seek the CCI's approval before going ahead with merger and acquisitions. Also, the maximum time limit the CCI would take to vet mergers has been reduced to 180 days from the earlier 210 days
New Delhi: Indicating softening of merger and acquisition (M&A) regulations, corporate affairs minister Murli Deora today said that industry would be heard first before the Competition Commission of India (CCI) finalises the regulatory provisions in the new competition regime, reports PTI.
"We will be holding consultations with industry in Mumbai, Bangalore, Hyderabad etc, to get their feedback on the merger regulations. We don't want industry to say that they have not been allowed to give their views. If someone has a better alternative, we will change," Mr Deora said.
Mr Deora's statement comes ahead of his scheduled meeting with industry representatives and other stakeholders on 25th April in Mumbai.
It is to be noted that the CCI is already working with corporate law experts to draw a "more acceptable" M&A regulation. Late last week, MCA secretary DK Mittal and CCI chairman Dhanendra Kumar had met industry representatives and competition law experts to get their feedback on the draft merger regulations.
The minister further ensured the industry that the new competition regime will not disrupt the activities of corporate India.
Come 1st June, all large companies would require to seek the CCI's approval before going ahead with merger and acquisitions. The CCI has been empowered to do so with the notification of sections 5 and 6 of the Competition Act, 2002.
The issues concerning impact of merger of MNCs over their Indian subsidiaries was also raised by industry, which wanted that such mergers be kept out of the purview of the norms.
Another matter was concerning issuance of bonus shares and transfer of equity in case of mergers.
According to the provisions in the Act, companies with a turnover of over Rs1,500 crore will have to approach the CCI for approval before merging with another firm.
Among other things, CCI would take a prima facie view on proposed combinations within a month of filing by companies, addressing a major concern of industry about the time limit the body would take to vet mergers.
Also, the maximum time limit the CCI would take to vet mergers has been reduced to 180 days from the earlier 210 days, after facing opposition from the industry.
Besides, only those proposals would need the CCI's nod where the companies have combined assets of Rs1,000 crore or more, or a combined turnover of Rs3,000 crore or more.
Also, the target company's net assets have to be a minimum of Rs200 crore or it should have a turnover of Rs600 crore for CCI intervention.
The mobile payment solution is called CorpMcash
Corporation Bank has launched CorpMcash, an easy and secure mobile payment platform from eMudhra Consumer Services.
The mobile payment solution is called CorpMcash. The process is simple and convenient for both consumers and merchants for making and receiving payments through their mobile phones without having to divulge any information such as phone numbers or account numbers.
Under CorpMcash, a customer has to apply for registration with the Bank and subscribe for a virtual prepaid account. After processing the application the customer will get an SMS on his mobile to download the mobile application and activate it. As per the subscription, a prepaid virtual account will be opened with the Bank. He can recharge the prepaid account either online or through the Bank's branch.
For payment at merchant terminals the customer has to invoke the application on his mobile phone which will generate a unique 2D bar code. The merchant who has this facility will scan the barcode through his mobile phone (camera) and transmit it to the processing server. The server will check/authenticate and process the transaction and confirm both the customer & the merchant by sending a confirmation SMS.