Third Party Administrators (TPA) are not Dominant Players

The Competition Commission of India (CCI) held that the requirement of routing transactions through Third Party Administrators (TPAs) does not result in TPA becoming dominant vis-a-vis a policy holder

The Competition Commission of India (CCI) held that the requirement of routing transactions through Third Party Administrators (TPAs) does not result in TPA becoming dominant vis-a-vis a policy holder. Medical Insurance is a different product compared to other insurance products provided by various general insurance companies. It has no substitute available in the market and can be sold as a product to an individual buyer or to a group of person under group health insurance scheme. As per the informant, the (TPA) in the instant matter failed to fulfil its obligations stated under various clauses of the agreement with Insurer which benefited the policy holders, in particular pertaining to renewal/termination of the policy, denial of preauthorization, claim intimation, repudiation of claim etc. The insurer accordingly was alleged of abusing its dominant position it being the only and dominant service provider to CanCard Group Medi insurance policy holders, as all CanCard holders who opted for these mediclaim    policies were necessarily required to carry out all the transactions through the Insurer and its appointed TPA.

TPAs were introduced by Insurance Regulatory and Development Authority (IRDA) in the year 2001 to ensure better services to policy holders and their basic role is to function as an intermediary between the insurer and the insured and facilitate cashless service at the time of hospitalization as well as processing of claims. The selection of TPAs and terms and conditions of the Agreement between the Insurer and TPAs are decided by the respective Insurance Companies only and IRDA has no role to play in this except that IRDA issues the license and their conduct is governed by The IRDA (Third Party Administrators-health services) Regulation 2001.
 
The relevant geographic market was stated to be whole of India as medical insurance of a company can be sold to any person residing in any part of the country and a policy holder can avail the mediclaim benefits anywhere within India where the services are available. CCI held that the relevant market, as presumed by the informant was incorrect as dominance was defined not on the basis of any relevant product market or geographic market but was supposed on the basis of the fact that all CanCard Group Medi insurance policy holders were necessarily required to carry out their transactions through the insurer and its TPA. If the TPAs fail to bring to the notice of the insurance company with whom it has an agreement, any adverse report or inconsistencies or any material fact that is relevant for the insurance company’s business, then IRDA can initiate action for cancellation or revocation of TPA’s license. An insurance company can engage more than one TPA and similarly, a TPA can serve more than one company.

The insurer as per the recent IRDA’s report holds around 15.09% market share and presence of other health insurers in the market prima facie indicates that this market is competitive. Further as per the material available in the public domain, it does not seem to hold a position of strength in the relevant market which can enable it to operate independently of the competitive forces prevailing in the relevant market or affect its competitors or consumers or the relevant market in its favour.
Accordingly, the Commission did not find Insurer to be dominant in the relevant market for the services of medical insurance in India. Further, as per the latest information available in the website of IRDA, there are 31 TPAs working in India and none of these TPA was dominant in the relevant market within India.

Conclusion:

• If the act of insurer and TPA affects policy holders’ interest adversely, they have the option to shift to other available options in the competitive market.
• If TPA is not fulfilling its obligation under the contract between it and Insurer, the Insurance Company can have terminate the contract or take legal remedies available under the different statutes.
• The policy holders can also complain to the IRDA in case the TPA is not following the directions and the guidelines of the IRDA
• The conduct of insurance companies and TPAs are regulated by IRDA.

        In re: V. Senthilnathan  and M/s. United India Insurance Co. Ltd.
        (Case No. 27 of 2013) By CCI dated 01.07.2013