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Continuing on our quest to simplify the workings of the Indian insurance industry, this article will go into the role of Third Party Administrators or TPAs. But before we do that, its best to reiterate how the insurance industry works… It goes something like this: What is a TPA?
For starters, the Third Party Administrator (TPA) is not a person. It is a company that acts on behalf of an insurance company to deliver the services of the insurance company to the insured. This mechanism enhances the quality and range of services as well as the geographical area that can be covered by an insurance company.

What was the necessity of introducing TPAs?
Outsourcing has been the buzzword for over a decade now. Businesses ranging from the Software Industry to the Medical fraternity have been outsourcing their tasks to agents, so that the mainstream specialists are free to do what they do best–specialize!

Outsource agents serve as very efficient secretaries. Their main work is to assist the larger entity in providing quality service. The outsource agencies started hiking up their service quality too, because now there was across–the–board competition among outsourcing agencies!

We now have professionals giving better service because their mechanical jobs are taken over by outsourcing companies. We also have excellent quality and infrastructure being given by the provider of the outsourcing service, lest the completion eat them up! Between the two professionals pulling themselves up, the winner is the consumer, who gets better service.

Let’s illustrate the concept with an example That’s called round-the clock efficiency!
With the opening up of the insurance sector to private players, competition in India became fierce. Insurance companies started looking around for ways to add value to their services. Voila! The stage was set for the advent of the Third Party Administrator.

What are the criteria for becoming a TPA?
The regulatory agency for all TPAs is the Insurance Regulatory and Development Authority (IRDA). The IRDA grants and revokes licences to the TPA. It also lays down the guidelines and minimum criteria in terms of finance and infrastructure to be met before applying for a TPA licence. The detailed guidelines for TPA’s are provided at the site http://www.irdaindia.org/tpareg.htm. The salient points are Who are the TPAs currently licensed by the IRDA?
As on 16th June 2008, the IRDA has listed the following TPAs on the page www.irdaindia.org/tpalist.

With the organizational framework in place, we can now move on to the TPA’s functions. Third Party Administrators are your point of interaction with your insurance company and it is important that you have a clear view of how they operate. You can learn more about them in our article on TPAs: The Hows, Whys and Whats…