Fair trade regulator Competition Commission of India (CCI) has started a probe against various public sector general insurers, including New India Assurance, for alleged unfair business practices with regard to third party administrators (TPAs).
Besides New India Assurance, Oriental Insurance, United Insurance and National Insurance, among others, have come under the scanner of the fair trade regulator.
It has been alleged that the four companies dealing in health insurance business were not allowing third party administrators or TPAs to work independently.
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The CCI, which keeps a tab on unfair business ways across sectors, has recently ordered a probe by the Director-General, its investigation arm.
Cases are referred to the DG for detailed probe only if the watchdog is prima facie of the opinion that there is violation of competition norms.
The investigation has been ordered against “General Insurers’ (public sector) Association of India (GIPSA) and other public sector general insurance companies for alleged anti-competitive practices”, according to CCI.
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Queries sent to New India Insurance remained unanswered while Oriental Insurance, United Insurance and National Insurance could not be contacted immediately for comments. These four companies make up GIPSA.
Details of other companies against whom probe has been ordered by CCI could not be immediately ascertained.
“The Commission after considering the matter was prima facie satisfied that a case was made out under Section 3 of the Act,” CCI said in its latest quarterly newsletter.
“It was observed that the opposite parties have floated in-house TPAs to reduce their claim ratio which may potentially result into rejection of claims on ad-hoc basis,” “The said practice was found by the Commission to not be in alignment with prevailing global practices where the TPAs and insurers are operating independently,” it said.
Among others, it was alleged that GIPSA is providing a platform to the insurance companies to share sensitive information with each other, which not only affects competition in the market, but also provides space to them for exchanging information regarding claims ratio, and terms and condition of TPAs.