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United India Insurance doles out incentives to TPAs to reduce claims ratio!

The third part of the United India series, it has been found out through RTI that TPAs are given incentives by United India Insurance to reduce the claims ratio, thus making a mockery of the Insurance Act!

Moneylife subscriber Dr Anshu Agrawal from Janakpuri, Bareilly filed a Right to Information (RTI) application to uncover the incomprehensible delay in policy renewal information, sent from United India Insurance Company (UIIC) to E-meditek, a TPA (Third Party Administrator), also stumbled upon a bizarre clause in the contract between the insurer and the TPA. Apparently, there is an incentive given to E-meditek for keeping the claims ratio within a certain range. This is completely detrimental to the interest of the policyholder whose genuine claims can also be partially paid or rejected just so that the TPA is able to get incentives from UIIC.

Claims ratio means claims payable as a percentage of premium income. The lower the ratio, the better it is for the insurance company. Government insurers have claims ratio in the range of 100% to 120%, which means they are paying more in claims as compared to the income from premium collection. By putting this incentive clause, the TPA will obviously do everything possible to limit the claims outgo.

The UIIC contract with the TPA states that if the incurred claims ratio is 70% to 90%, then there is an incentive of 10% of the amount by which incurred claim is reduced as against the previous financial year. If the incurred claims ratio is 50% to 70%, then there is an incentive of 20% of the amount by which incurred claim is reduced as against the previous financial year.

These clauses would be between UIIC and all their TPAs. Moreover, it is not just restricted to UIIC. Gaurang Damani, a social activist who has filed number of public interest litigations (PILs), has found by RTI that the same clause is present between New India Assurance and its TPAs. It seems to be something common to government insurers and their contract with TPAs.

According to Mr Damani, “This is a violation of Section 52(1the) of Insurance Act – Dividing Principle. A claim of one person cannot be used to offset the claim of another person. In short, the insurer/TPA cannot offset losses from one policy against another policy.” Interesting, Insurance Regulator and Development Authority (IRDA) has chosen to ignore or keep quiet on this important point in the PIL filed by Mr Damani.

The other interesting point in the contact was about SMS sent by TPAs to the insured about despatch of mediclaim cards and renewal of cards. This is simply not done today. In the case of UIIC, the policyholder renewal information may be updated on the TPA’s system after couple of months due to delay by the insurer or the TPA. While the CIC decision to make all branches of UIIC to put data on date of the policy renewal and despatch date to the TPA on the UIIC website from 16 August 2012, mandating SMS by the TPA to the insured about despatch of cards and renewal of cards will be something UIIC should ensure. This is in the contract and should be complied by the TPA.

Read first part of the article: CIC asks United India Insurance to disclose information that may help close a loophole - I

Read second part of the article: United India CPIO defies CIC order, gives irrelevant data to RTI petitioner
 

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COMMENTS

nagesh kini

5 years ago

The fourth para should read -
They have succeeded in sabotaging the setting up the in house Joint Claims Settlement.

nagesh kini

5 years ago

In a reply to a RTI query New India stated that they have paid to the TPAs in 2010 Rs.28 crores!
I've always held that all insurers should revert to the good old Claims Department and totally scrap the TPA by sending the packing lock stock and barrel. They have been a source of constant harassment to the millions of insured - their phone lines not responding, not clearing the hospital treatment, denying claims on flimsy grounds of delay etc. They employ under-qualified quacks not knowing anything to scrutinize claims. They harass the service providing hospitals by collecting large sums from the companies keep back large sums as their own float and pass on only a fraction.
They are solely behind the unilateral abrogation of the cashless.
They have successfully setting up of the Joint Inhouse Claims settlement process by the PSUs.
Even today private insurers have done away with TPAs and working fine. Get rid the whole lot of the rotten TPAs that have corrupted the Health Insurance. Here and now.

MK Gupta

5 years ago

This is the true character of a PSU Insc. Co.! Will CVC and CBI take action?

RBI wants government to provide investment stimulus, cut subsidies

Citing that low investments cannot be attributed to high interest rates only, the RBI said in the pre-crisis period investments were high even as interest rates remained at elevated level

 
Mumbai: Concerned over falling growth, the Reserve Bank of India (RBI) on Monday asked the union government to provide investment stimulus and take aggressive steps, like increasing petroleum prices, to curtail subsidies, reports PTI.
 
"Corporate sales decelerated along with continued decline in profits and could adversely impact investments ahead. In this situation, crowding-in of private investment demand by public investment spending stimulus while aggressively cutting expenditure on subsidies hold the key to growth revival," the RBI said in Macroeconomic and Monetary Developments report.
 
Citing that low investments cannot be attributed to high interest rates only, the RBI said in the pre-crisis period investments were high even as interest rates remained at elevated level.
 
It said sustained fall in investment has impacted India's growth potential and there is a need to improve the investment climate by 'moving quickly' to address bottlenecks in infrastructure space and removing constraints on foreign direct investment (FDI).
 
India's economic growth fell to a nine-year low of 6.5% in 2011-12 after clocking over 8% GDP growth for three consecutive fiscals.
 
Government has been unable to raise FDI cap in insurance and pension sector to 49% from 26% and also open the multi-brand retail sector to foreign players because of opposition from its coalition partners.
 
RBI further said it was not possible for the government to provide any fiscal sops to the industry as was given at the time of 2008 crisis.
 
Pointing out that high deficit could further impact weak private investment demand, RBI said, "it is critical to return to a credible and durable fiscal consolidation path.
 
"As such, fiscal space would need to be created by controlling revenue expenditure to provide more resources for capital expenditure which could crowd-in private investment," the apex bank said.
 
It said there was a need for curtailing subsidies and the government should take "steps to allow pass-through of international crude oil prices to domestic prices, failing which it would be difficult to achieve the deficit target".
 
Fiscal deficit, which is the gap between the revenue and expenditure, had ballooned to 5.76% in 2011-12, from 4.9% a year ago. The government targets to bring it down to 5.1% in the current fiscal.
 
RBI said the budgeted petroleum subsidy of Rs43,500 crore for the current fiscal "appears inadequate".
 

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Narang wins bronze in 10m air rifle to open India's account

Narang's bronze medal is only the third in shooting on the World's biggest sporting event after Rajyavardhan Singh Rathore's silver in double trap in Athens 2004 and Bindra's gold in the last Games at Beijing

 
London: Ace marksman Gagan Narang on Monday opened India's account in the London Olympic Games by clinching the bronze medal in the men's 10m air rifle event, reports PTI.
 
Narang shot 103.1 in a gripping ten-shot finals for an aggregate of 701.1 after scoring 598 in the qualifying round in which also he stood third.
 
The gold was won by Romania's Moldoveanu Alin George who tallied 702.1, that included 103.1 in the final, to upset world no1 Niccolo Campriani of Italy who stood second with 701.5 at the Royal Artillery Barracks.
 
After a good start when he shot 10.7, Narang was off target with his second shot that fetched him 9.7. But he gathered his wits and steadied his aim to collect 10.6, 10.7, 10.4 and 10.6 in the following four shots to at one stage remain on course for bagging even a silver.
 
However, he slipped a bit and had to fight for the bronze medal with China's Wang Tao who finished fourth with 700.4.
 
After returning poor scores of 9.9 and 9.5 in the seventh and eighth attempts, Narang pulled up his socks to seal the bronze with impressive scores of 10.3 and 10.7.
 
Narang's compatriot and defending champion Abhinav Bindra had, however, suffered a shocking exit with his dismal show in the preliminaries in which he stood 16th out of 47 contestants with a score of 594 out of 600.
 
Narang's bronze medal is only the third in shooting on the planet's biggest sporting event after Rajyavardhan Singh Rathore's silver in double trap in Athens 2004 and Bindra's gold in the last Games at Beijing.
 
This was also India's eighth individual medal in the Olympic Games.
 
With Alin George and Campriani able to maintain their grip on the top two positions, the competition for the bronze medal had boiled down to a tense contest between the Indian and his Chinese rival over the last few shots in which Narang prevailed.
 
There was stage when Campriani's poor efforts of 9.9 and 9.4 in the eighth and the penultimate series gave Narang a whiff of chance of winning the silver, but the Italian fired a 10.4 in his last shot to dash the Indian's hope of finishing second.
 
Earlier, Narang had kept alive India's hopes by advancing to the medal round after Bindra crashed out.
 
Bindra, who scripted history four years ago by becoming the country's first-ever individual gold medallist in the Olympics, shot 594 out of 600 to finish a shocking 16th out of 47 competitors and lost the golden chance of becoming the world's first shooter to win two successive gold medals at the mega event.
 
However, Narang kept India in the hunt by finishing third with 598, a point behind Campriani and Alin George who both shot an Olympic record-equalling 599 to stand first and second in the qualifying round.
 
Narang was bang on target from the beginning, scoring two successive 100s, but a 98 in the third series somewhat let him down.
 
The 29-year-old Hyderabadi, however, kept his cool and fought his way back into the reckoning for the medal round with a perfect 100 in the fourth series and then clinched the spot as the third best performer by notching two more 100s in his last two rounds.
 
Narang, a two-time world record setter, had won four gold medals in the 2010 Delhi Commonwealth Games and followed that up with two silver in the Guangzhou Asian Games a month later.
 
He had also won four yellow metals at the 2006 Commonwealth Games in Melbourne.
 
Bindra, on the other hand, started with two 99s in the first two series before coming back strongly by getting two perfect 10s for consecutive 100s in the third and fourth rounds.
 
The two 100s gave Bindra the lift and the belief he badly needed after dropping a point each in the first two sets.
 
However, a 99 in the fifth and an even poorer outing in the last series where he could score just 97 dashed Bindra's chances of earning a berth in the eight-man finals.
 
This was the only event the 29-year-old Bindra from Chandigarh was taking part in, thereby cutting short his campaign in the ongoing Games.
 
Narang will be competing in two more events at the Games.
 

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