SECP moves to promote health insurance

Issures third-party administrator for related regulation.

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has issued the third-party administrator (TPA) for health insurance regulations 2014 to develop the health insurance market in Pakistan.

According to a press release on Thursday, the TPA regulations provide a legal framework to address registration, eligibility requirements, code of conduct and operational model for TPAs, fit and proper criteria for the senior management, and the written agreement between a TPA and an insurer.

TPAs enable insurance companies to offer innovative health insurance products with improved service and lower costs. A TPA is an entity that processes medical insurance claims for insurance companies and self-funded pools. It can also be regarded as a form of ‘outsourcing’ for insurance companies for farming out certain tasks and administration activities, which are not part of their core competencies.

While the insured is benefited by quicker and better service, insurers benefit from a reduction in their administrative costs, fraudulent claims and ultimately bringing down the claim ratio.

The regulations have addressed consumer protection as well as market development aspects. Consumer protection aspects have been addressed through various requirements. For example, these regulations require that the compensation structure of a TPA cannot be linked to the claim loss ratio. Similarly, introduction of a code of conduct for TPAs will ensure that they will be functioning within the role envisioned in the new regulatory framework.

The market development aspects have been addressed through requiring an online health benefit system and not imposing a regulatory cap on the compensation of TPAs. The newly-introduced regulations also clarify the role of a TPA as an administrative service provider, and not a risk carrier.

Total health insurance premiums stand at Rs3.6 billion.

Published in The Express Tribune, March 14^th, 2014.

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