How A Third Party Administrator Functions in Insurance

TPA, in insurance, stands for Third-Party Administrator. As a term, ‘TPA’ refers to a third-party body that takes the responsibility of processing insurance claims of mediclaim policies. The need for third-party administrators was felt when managing lakhs of insurance papers and policies became challenging for insurance companies. Today, InsurTechs such as Zopper are streamlining and digitising processes to simplify insurance inclusion. As we all know, prioritising health insurance is essential and that’s where TPAs come in. Specifically, in India, the Insurance Regulatory and Development Authority of India (IRDAI)  introduced TPAs to handle the claim settlement process to make the system smoother for both the insured and the insurer. 

Why is TPA important?

The role played by a TPA is significant. Policyholders prefer to buy insurance from insurers that have a wide hospital network as it helps make effective coverage more accessible. TPAs work on behalf of the insurance company to provide quick and easy claim solutions to the policyholders.

 Here are some tasks performed by a TPA:

• Issuance of Health Card

  A health card is issued to each policyholder/insured. As a part of an essential policy document, the health card needs to be presented to the hospital at the time of claim settlement.

• Insurance Claims Processing

  TPA performs one of the quintessential tasks of an insurance company, that is, the claim settlement process. As soon as an insured raises a claim, the TPA assigned collects all the required data and processes the claim. In certain cases, TPA may ask for more documents and information. Depending on the availability and the preference of the insured, a cashless or reimbursement claim is processed.

• Value Added Services Including Ambulance Service

  Third-party administrators also arrange for various value-added services like arranging ambulance service on time besides supporting claims processing and settlements.

• Helpline Facility for Policyholders

  Policyholders can connect at the helpline number of TPA and know the status of their claim or solve other queries.

Insurance Claims: Why use a Third Party Administrator?

A TPA ensures the smooth processing of insurance claims for the policyholders. It acts as an intermediary between the insurance company and the insured/policyholder and regulates the whole process to make it easier for both parties. They simplify the insurance policy wordings and clauses for the insured. 

When the insured raises a claim, it is the TPA that initiates the cashless claim in the chosen network hospital. For reimbursement claims, the TPA confirms all the documents and initiates the reimbursement process. 

Clearly, while InsurTechs are poised to play a transformative role in charting the growth of the insurance sector, TPAs play an important role in the health insurance segment and are likely to continue their dynamic functioning to cater to the requirements of policyholders. It also manages essential tasks including record keeping, claims processing and providing value-added services as part of enabling timely settlements. Simply put, a TPA is the reason for speeding up a policyholder’s claim and for completing the processes as soon as intimation is received.