Third Party Administrators (TPA)
Insurance industry in India has seen lot of changes since the opening of the sector for private participation. Industry has witnessed entry of a plethora of companies and is to witness many more to foray. There has been a lot of innovation both on the products front and also on service front. Innovation on the service front include providing call centre facilities, providing personalized financial planning tools and the best thing to happen on the service front is introduction of Third Party Administrators.
TPA’s are the new breed of intermediaries in the sector, introduction of whom will benefit both the insured and the insurer. While the insured is benefited by better service, insurers are benefited by reduction in their administrative costs.
Introduction of TPA comes as a succor to the insurance companies which have been searching for ways and means to reduce management expenses. Insurers are outsourcing their administrative activities, including settlement of claims to TPA’s, who offer such services at a cost. It may be noted that TPAs are remunerated by the insurers and so policy holders should welcome such a move since they receive enhanced facilities at no extra cost.