What is the Role of IRDAI?
The functions of the IRDAI are defined in Section 14 of the IRDAI Act, 1999:
- Protecting policyholders’ interests
- Specifying qualifications, the code of conduct, and training for intermediaries and agents
- Specifying the code of conduct for surveyors and loss assessors
- Promoting efficiency in the conduct of insurance businesses
- Promoting and regulating professional organizations connected with the insurance and re-insurance industry
- Issuing, renewing, modifying, withdrawing, suspending, or cancelling registrations
Understanding Third-Party Administrators (TPAs)
- As per IRDAI Regulations, the TPAs’ function is to provide health services to insurance companies, excluding soliciting the insurance business for them
- Their services include hospital admission assistance, providing cashless claims settlement facility, and preparing detailed claims date for use of insurance companies
- They need to be licensed by IRDA, which remains valid for three years and is required to be renewed thereafter, for which the application has to be submitted to IRDAI 30 days prior to their license expiry date
- The TPAs’ fees should be specified by agreements entered into separately with each insurance company
- TPAs can work with multiple insurance companies and insurance companies are also authorized to work with multiple TPAs
- The services offered by TPAs are not mandatory and many private sector insurers work with in-house claim teams for health claims processing
Know Your Insurance
- Risk: A term that is used to refer to the chance of suffering a loss as a result of uncertain events
- Perils: The events that give rise to such risks
- Hazard: A condition that increases the severity of loss, e.g., a poorly maintained fire alarm system
- Moral hazard: Dishonesty or character defects in an individual that increase the chances of loss, e.g., setting fire to your own house
- Morale hazard: Carelessness or indifference to a loss because of existence of insurance
- Catastrophic hazard: A type of risk that could cause a large no of policyholders to file claims at the same time, e.g., earthquake