There is considerable confusion on the role and usefulness of third party administrators (TPAs) in India. The Insur- ance Regulatory and Development Authority (IRDA) defines TPA as ‘an insurance intermediary licensed by theAuthority who, either directly or indirectly, solicits or effects coverage of, underwrite, collect, charge premium from an insured, or adjust or settle claims in connection with health insurance, except as an agent or broker or an insurer.’ Basically, a TPA acts as a service integrator between the insurer, the insured and the health service provider.

To provide a brief background, the Insurance Regulatory and Development Bill, which was passed by parliament in January 2000, allowed the insurance sector to open up to private players. IRDA is the apex body that will ensure that the insurance sector operates in a manner that is consistent with interest of consumers. The General Insurance Company was converted into India’s national re-insurer in December 2000, and all the subsidiaries working under the GIC umbrella were restructured as independent insurance companies. Parliament cleared a bill on July 30, 2002 delinking the four subsidiaries from GIC. A separate bill has been approved to allow brokers, cooperatives and intermediaries in the sector.

The TPAs were introduced as intermediaries to facilitate claims settlements between the insurer and the insured. Insurance companies have been searching for ways and means to get their management expenses in line with the specifications laid down by IRDA.¹  Insurers can now outsource their administrative activities, including settlement of claims, to TPAs, who offer such services at a cost. Since the TPAs are paid by the insurers, it is argued that the policy holders should welcome such a move since they receive enhanced facilities at no extra cost. The other benefit of TPAs is that once the policy has been issued, the insurance companies have to pass on all the records to the TPA, and all the information regarding the insured will remain with the TPA. Finally, the new system is supposed to be based on a cashless mode, which is definitely an improvement over the previous system as far as consumers are concerned.

Ultimately, of course, the role of TPAs in the country has to be measured against the basic parameters of a functional health sector, that is, are the TPAs able to make healthcare more accessible and available to the population at large?

This paper is an attempt to understand the role of TPAs in theory and practice in India. Its findings and conclusions are based on a series of meetings, discussions and interviews with various TPAs, insurance companies and providers, and are the authors’ own views. For the sake of confidentiality, names of individuals and organisations have not been mentioned here.

Before IRDA allowed the TPAs to formally enter the market, there were intermediaries who were acting on behalf of the corporates and playing a very similar role to that of present-day TPAs. Corporates were utilising these agencies to help them make the process of claim reimbursement easier and smoother for their employees. Also, these agencies were helping to market the insurance products available – mainly Mediclaim – to corporates.

The IRDA mandated that only an organisation registered under the Companies Act, 1956 with a share capital of at least Rs 1 crore could set up a TPA. Further, a minimum of Rs 1 crore worth of working capital is also mandated by the IRDA regulations.

At the time of inviting applications, it is learnt, the IRDA called a meeting of 108 potential players. With the limit of Rs 1 crore capital, only 23 TPAs remained and got registered. Of these, the Mediclaim business of the public sector insurance companies was allocated among 11 TPAs, but according to some of the TPAs contacted for this research, this list was apparently very different from the one initially drawn up by experts and other selected invitees. The initial misallocation of the Mediclaim business – the reasons for which seem to be not based on any objective criteria – is still seen as a major reason for the subsequent outcome in the market for Mediclaim business, which will be discussed below. It may be mentioned here that most of the health insurance business comes from the four public sector companies; the private companies at present have only about 6 per cent of the medical insurance business, and have given the business to only a couple of TPAs.

The following steps are involved from the time of the policyholder informing the TPA to the latter settling the claims:²  – All the records of medical insurance policies of an insurer will be transferred to the TPA once the insurance company has given the business to a TPA.
– The TPA will issue identity cards to all policyholders, which they have to show to the hospital authorities before availing any hospitalisation services.
– In case of a claim, policyholder has to inform the TPA on a 24-hour toll-free line provided by the latter.
– On informing the TPA, policyholder will be directed to a hospital where the TPA has a tied up arrangement. However, the policyholder will have the option to join any other hospital of their choice, but in such case payment shall be on reimbursement basis.
– TPA issues an authorisation letter to the hospital for treatment, and will pay for the treatment.
– TPA will track the case of the insured at the hospital and at the point of discharge, all the bills will be sent to TPA.
– TPA makes the payment to the hospital.
– TPA sends all the documents necessary for consideration of claims, along with bills to the insurer.
– Insurer reimburses the TPA.

Market for TPAs in India

Health insurance premiums in India have risen from Rs 531 crore in 2000-01 to Rs 1,045 crore in 2002-03, which includes overseas medical policies (IRDA Journal 2003). The four public sector insurance companies have hiked premium by 6 per cent since January 2003, apparently to factor in cost escalation as a result of the appointment of TPAs as mandated by IRDA. However, this revision comes on the heels of another hefty hike of 15 per cent implemented exactly a year earlier (Business Line, December 31, 2002). The TPAs are being paid 5.5 per cent of gross premium as commission. Based on a figure of over Rs 1,000 crore of premiums, this means that the total business for TPAs in India is about Rs 50 crore. Some business is, however, being conducted without TPAs. Based on the rate of growth of insurance premiums in just one year, it is possible that health insurance will grow much more in coming years, giving more business to the TPAs.

Given the current business of about Rs 50 crore, it may seem that even these 23 TPAs are probably too many. The market is already divided among some that have cornered the major part of the business. However, while bigger TPAs are more effective, for pan-Indian operations, some of the smaller TPAs are also doing well in terms of quality of service, in their limited areas of operation. Success or lack of it depends on a fine balance of essentially three parameters: (a) share of total business, (b) availability of capital, and (c) geographic spread of operations. As in any market, the unsuccessful players are expected to exit the business. In the TPA market, the inefficient players, who are not able to satisfy their main customers, would in theory exit the market; however, as will be discussed below, this has not really happened in India. The reason ultimately is that the TPA market is not really like any other market: neither the entry nor the exit of TPAs from the market is really free. As mentioned above, the entry of TPAs was based on rationing of the total business and not a natural entry based on market considerations. Similarly, the exit of inefficient TPAs is also not due to market forces and, in fact, has not taken place at all.

As mentioned earlier, one of the main benefits of a TPA to the customer is a cashless transaction at the time of service delivery. Clearly, this mode of business requires the TPAs to have sufficient working capital to make payments to the hospital. Given the cashless system of settlements being encouraged under the Mediclaim scheme, insurance companies are insisting on bank guarantees from TPAs.

To illustrate how the system works, let us assume that the claims ratio of Mediclaim is 100 per cent. This means that for a premium of Rs 1 crore (Rs 100 lakh) per annum, the claim would also be Rs 100 lakh. Let us also assume that the turnaround time – the time taken from the time of service delivery to the payment by the insurance company to the TPA – for a claim on average is 15 days (presuming efficient turnaround time). For a 15-day period, the claim amount would be around Rs 4 lakh on an annual claim of Rs 100 lakh. Hence if the insurance company insists on bank guarantees, and the turnaround time for claims is on average 15 days, then for each Rs 1 crore of business, the TPA has to arrange for a bank guarantee of Rs 4 lakh. The bank would charge a commission while issuing the bank guarantee. Further, it would also insist on a cash margin. If the margin requirement were 50 per cent of the bank guarantee, then Rs 2 lakh cash margin would have to be provided for the issuance of a bank guarantee of Rs 4 lakh for business worth Rs 1 crore. For business worth Rs 1,000 crore, bank guarantees worth Rs 40 crore would have to be provided. This would require a cash margin of Rs 20 crore, assuming 50 per cent margin. Thus the requirement of working capital for TPAs goes up substantially. This example clearly indicates that pan-Indian operations would require a substantial amount of working capital for TPAs and of bank guarantee in proportion to the size of the business. Initially, some TPAs could not make the reimbursements to the hospitals and/or the customers on time, with resultant confusion and frustration on the part of all the stakeholders. Even now, some hospitals continue to complain about not receiving payment on time.

As for the basic design of the new system of cashless payment, it is clear that the entire system is not as yet cashless; a significant portion of the Mediclaim business is still in the form of reimbursement to the policyholder. One TPA mentioned a 30-70 split between cashless and reimbursement; however, this may vary widely among TPAs. The reason for not moving over to the cashless system could be both a preference of consumers who like to visit their selected hospitals that are not on the TPA network, or the hospitals, who prefer to be paid by patients directly rather than wait for settlement. A third reason is an emergency situation where the consumer does not have much of a choice.

Benefits of TPAs – Theoretical

With the Indian healthcare scenario of high out-of-pocket payment for curative care – both hospital and domiciliary, – limited health insurance for the majority of the population, uncontrolled expansion of the private health sector and falling standards of government healthcare facility, there is understandably a lot of confusion about what should be the ideal set of reforms However, it was clear that the health insurance sector needed to expand for greater coverage, at least for catastrophic illnesses. It was also quite obvious that the four public sector general insurance companies were unable to offer a product that was more useful or consumer-friendly than Mediclaim as it was designed in the beginning.³ Finally, the reimbursement process for even those few who had the policy was arduous and complicated enough to diminish the value of the benefits considerably in the eyes of the customer.

In this scenario, privatisation of the insurance sector and the subsequent creation of the system of TPAs meant that there was a possibility of more efficiency in the insurance market because of more competition as well as the creation of a professional cadre to look after speedy disposal of payments. Thus, outsourcing of the service facility did make eminent sense, especially given the service quality of PSU companies. Average time for claim processing before the TPAs came into existence was apparently much longer than what it is now: some TPAs claim that the settlement is done in a matter of days. Due to lack of adequate data, it is not really clear what the current average turnaround time is.

Secondly, the cashless system is definitely an improvement over the reimbursement scheme, and the choice set for such cashless transactions expanded when the TPAs succeeded in enlisting many more hospitals and nursing homes on the approved list eligible for cashless facility.

From the perspective of the insurance companies, the TPAs benefit them by bringing down the claims ratio, by reducing false claims as well as standardising treatment costs. While the standardisation has still not been completed, if it happens it would benefit the consumers immensely, at least in theory. It appears that the incurred claims ratio of PSU companies in health insurance has been brought down to 91.07 per cent in 2002-03 from 99.21 per cent in 2001-02 [Gupta 2003]. How much of this improvement is on account of TPAs is, of course, a point that needs more analysis.

Finally, the TPAs can play a huge role in making appropriate data available for actuarial calculations, because they are the recipients of morbidity data that are linked with individual characteristics such as age. From a research and policy perspective too, the availability of such data is of immense value.

Experience with TPAs

The initial performance of TPAs has not been up to the mark for several reasons, one of the main being the inability of some of them to deliver the goods. Perhaps the best way to introduce the TPAs was to run a pilot scheme and iron out teething problems, instead of changing the system almost overnight that involved a different mode of functioning for all the stakeholders. With so many TPAs entering the market with different capabilities and capital, it is not surprising that much confusion ensued. Those that had good links with hospitals earlier or who invested in tying up technologically with hospitals seem to be doing better than others. Similarly, TPAs that had not spread out too fast and too thinly across India seemed to have performed better than others. Unfortunately, discussions with insurance companies indicated that despite their non-peformance, the TPAs were not blacklisted due to non-professional considerations.

There are some other features of the new system that need to be taken into account to evaluate the functioning and usefulness of TPAs.
Individual vs corporate business: Firstly, there is no doubt that the individual health insurance business is cross-subsidising corporate business (often known as ‘accommodation business’). The informal nexus among corporate houses, corporate hospitals, insurance companies and TPAs is ensuring that the claims ratio is high on corporate insurance, and low on individual insurance. Insurance companies agreed off the record that there often is pressure from corporate houses on insurance companies to get specific claims settled. This obviously means that ordinary policyholders are being subjected to stricter scrutiny.
Incentive for hospitals: For hospitals that are not also offering TPA or insurance services, there does not seem to be a great incentive to move over to the TPA system with delayed payment in contrast to the earlier system of on-the-spot payment. The discussions did indicate that some hospitals were not getting their payments on time and were reluctant to work with some of the current TPAs. However, as more and more health insurance policies are issued, even leading hospitals have to deal with TPAs. On the other side, some TPAs were of the opinion that the hospitals do not send the requisite information to them in time for them to be able to process the claims. The view is that hospitals have to be given substantial training before they can actually be an efficient part of this new system.

However, discussions with hospitals revealed that demand for hospital care has been increasing substantially with the new TPA system, and that it is in the hospitals’ interests to move over to the TPA system. Nevertheless, it probably continues to be true that demand for insurance-linked hospital care is mostly centred around the upper end of the tertiary care sector, with more expensive and super specialty hospitals benefiting the most from the new system.
Hospital-backed TPAs: there is already evidence that a couple of hospital chains have got TPA licence. This is certainly unethical and against the basic guidelines laid down by IRDA. This system will ensure that the TPA/hospital will work towards its own system, and there is always a possibility of playing favourites, that is, smooth claim settlement towards this hospital, and not to the other hospitals. This kind of system is, therefore, likely to bring in malpractices. Similarly, there are instances where insurance brokers have also ventured into the TPA business through a sister concern. There are implications of conflict of interest in this situation. At present, TPAs are not allowed to market health insurance policies due to a conflict of interest. However, it cannot be denied that a TPA that sells the policy will probably have an incentive to offer better services. Legally, it is difficult not to allow promoters to enter allied businesses as suitable equity structuring can always be done. But, due to the possibility of unethical practices, the IRDA/insurance companies need to ensure that a strict separation is maintained between these businesses.

There are also instances of some TPAs working on behalf of corporates (IRDA Journal, January 2003), which is another area of collusion that is fraught with inefficient outcomes. In fact, a notice from the IRDA to TPAs and general insurers says that “it has been observed of late by the authority that the offices of various insurance companies and licensed third party administrators – health services are entering into agreements at the insistence of their clients for the sake of business considerations allowing TPAs to charge separate fees in addition to insurance premium. These TPAs although licensed by the authority, perforce have to enter into such agreements to ensure the survival of their operations in view of the reluctance by insurance companies to empanel and utilise them. It is hereby clarified that in the case of all such agreements which are out of the scope of IRDA (Third party Administrators – Health Services) Regulations, 2001 adequate precautions must be taken by informing the customer clearly of this fact.” While it is not clear exactly what this entails and how and what the customer should be informed about, the recognition of this phenomenon is an important development within IRDA.

These points indicate that the system of TPAs, while theoretically sound and useful, is in practice fraught with problems. The first issue is that different TPAs face different constraints in terms of capital, capacity and connections. This immediately implies that it is not a level playing field for the functioning of the TPAs. Therefore, there is an incentive among the stakeholders to form liaisons and collude. Almost all the stakeholders, except the policyholders, have a business angle. Given that the total market is limited, each one is trying to grab a major share. Among the TPAs, some hold a major share of the total business, while the smaller players are trying to stay afloat. One sure way of ensuring a greater share of the insurance market, administration of insurance and hospital services is by collusions and mergers, a natural phenomenon of imperfect markets. One method of collusion is informal payment or bribes. Corruption has been mentioned by everyone with whom discussions were held, clearly indicating that the TPA is not functioning as a competitive system with efficient outcomes. Corruption or non-market methods of allocation of business result in distortions and unnecessary system costs, which are then passed on to consumers as higher prices or premiums. Ultimately, in such a system, the policyholders have the most to lose.
Cost to consumer: customers are paying for the extra service being provided by TPAs through a higher premium. If, in fact, the claims ratio is coming down and the insurance companies are being freed of their workload, then the savings in terms of both money and other administrative costs should be passed on to the consumers. This is currently not happening; insurance companies are not passing on the savings made in outsourcing administrative work being done by the TPAs. Of course, the claims ratio may be not coming down as significantly as it seems due to the presence of family floaters that are now being offered by insurance companies.
Marketing the universal health scheme: A new finance ministry initiative has been the universal health scheme, which was targeted at the poor. The premium of Re 1 per day was designed to bring in large sections of the less-well-to-do population under the insurance net. This has not happened for a variety of reasons, one of the most important being that poor families find it hard to pay Rs 365 per person or Rs 548 for a family per annum. Another reason for this scheme not doing well has been the lack of marketability of the product and the difficulty of reaching populations in the rural areas. The margin of profits for TPAs in this business is very low, and the TPAs do not seem to be interested in raising their share of this product. The insurance companies also do not seem to be very aggressive about selling this product to those below the poverty line, only 3,576 families of the 2,50,000 families covered were below the poverty line.⁴ The relevance of this in the context of the TPAs lies in scaling up of insurance for communities that are hard to reach or which are not apparently profitable to the companies. Given the low educational and economic status of communities that do not really understand insurance procedures, the role of TPAs takes on even greater significance. But the incentives are not conducive for them to want to service these policyholders.
Cost of healthcare: Cashless facility increases the capacity of policyholders to incur higher costs at the time of illness, and therefore has a tendency to inflate the demand for high-cost care. This could be limited to a certain extent with the presence of a system of co-payments. In any case, this tendency will be reinforced from the supply side, and there is a real fear that the presence of TPAs will facilitate the inherent cost-increasing nature of the current system, resulting in welfare loss for consumers. The mechanism is as follows: the presence of insurance will result in supplier-induced demand especially in diagnostics and super-specialty treatment. Hospitals would like to shape up for these types of services, which can only be done by accruing additional revenues from higher prices of healthcare. In principle, it is conceivable that: (a) consumers who do not have insurance pay higher costs, (b) consumers who do not have access to such five-star hospitals also pay the same high premiums, and (c) every policyholder may end up paying higher premiums sooner or later, that is, insurance companies may clamour for revision of premiums in the near future. Some of this could be limited if the insurance policies are more flexible in terms of the kind of facilities that can be availed: for instance, with sub-limits, those who pay more can avail of costlier facilities. Of course, with more extensive coverage, and a certain degree of standardisation of services/costs, the increase in premiums can be contained somewhat.

The other reason why premiums may go up would be the inability of TPAs to make enough profits, especially those TPAs that are spread out all over the country. Discussions with many TPAs revealed that there is dissatisfaction with the 5.5 per cent commission. There is a lot of variation in calculating break-even among the TPAs on account of their in-built costs. One player estimated the break-even in metros at Rs 10 crore of premium business and for non-metros at Rs 4 crore, while another estimated the break-even premium at Rs 100 crore for the TPA. Some TPAs frankly admitted that they were making losses as of now, and hoped to turn things around in a few more years. The public sector general insurance companies should be bringing down their total management costs from about 30 per cent to about 20 per cent (as per the Insurance Act).

Do insurance companies have any incentive to control the systemic costs? No. Since corporate clients are keeping the bulk of the business afloat, and also because of the influence they have with insurance companies, their claims are seldom rejected, though some TPAs argue that corporate claims have gone down because they have been able to reject wrong claims. Cost control is not something that they are consciously seeking to do. The TPAs – by turning around payments quickly – will only add to these tendencies of higher prices of healthcare; higher the turnover of patients, greater the incentive for hospitals to make higher per-unit profits.

Thus, while it is too early to say much yet, there is some reason to believe that the system has no in-built mechanism for cost control, and none of the important players seems to be worried about this aspect. The lack of a mechanism for cost control has been mentioned by others [Bhat 2003] and will likely remain an important issue for sometime.

Role of IRDA

The discussion so far indicates that the system of TPAs can work if one tries and avoids the pitfalls. And since regulation and development were the two key functions of the IRDA, it has to play these two roles, instead of letting things take their own course. We list out below some of the areas that need greater attention by the IRDA.
– IRDA could attempt to amend current regulations so that some of the sources of malpractice could be stemmed. For instance, the practice of hospital-backed TPAs is likely to give rise to conflict of interests, which can be taken care of by a right set of regulations.⁵ 
– It must review the performance of each TPA objectively, especially with regard to unethical practices.
– How many TPAs is an optimum number at this juncture? This question needs to be looked at by the IRDA, together with the insurance companies and the TPAs. If necessary, a revision of the list may be undertaken in an objective fashion.
– Review the role of TPA. Should the TPAs be allowed to market health insurance products? Would that be a more transparent system than the one currently in operation,, where side deals seem to be going on, especially since the market is not large enough for everyone.
– One of the main reasons for opening up the sector was to encourage health insurance. That does not seem to be happening, despite the need for it. Allowing individual policyholders to subsidise corporate policyholders goes counter to this line of thinking, and IRDA must intervene to prevent this from happening.
– If private players have been provided insurance licences on the basis of business plans that include health insurance, then IRDA must ensure that the health insurance business plans be implemented and not just remain on paper. IRDA could also think in terms of the approach adopted in the case of rural/social sector insurance businesses, wherein minimum business targets have to be achieved. Private players with foreign partners should be encouraged to introduce innovative health insurance plans they already run in other countries.
– Currently, the requirement of paid up capital of Rs 100 crore is a huge barrier to entry for health insurance companies in India. IRDA must review this provision at the earliest, if it wants the business to expand.
– IRDA needs to conduct studies, with external expertise if required, on various aspects of TPAs’ functioning. On a continuing basis, external auditors need to check on various aspects of health insurance as is being conducted by insurance companies and TPAs. External auditors can also check on any nexus that may develop among TPAs, service providers, corporates and insurance companies.
– Individual policyholders need the support of the regulator as well as the government departments like the health and finance ministries. The insurance ombudsman can play an important role once there is a specific complaint, but the regulator needs to study the aspects of functioning of the entire health insurance operation in order to improve matters.
– Finally, many TPAs mentioned their eagerness to turn themselves into more evolved players like HMOs/health insurance companies after they acquire sufficient knowledge and expertise. Already, a few have started innovating and providing health management services. IRDA needs to give this possibility some serious thought along with other health sector experts, to understand the ramifications of such a system in terms of equity and efficiency of healthcare delivery.

Role of Health Ministry

While the IRDA is supposed to regulate the entire insurance market, it remains the task of the ministry of health and family welfare to oversee the functioning of the healthcare market. There are certain chores for the ministry to atted to.

– Firstly, it must revisit the issue of separating health insurance from other non-health products [Ellis et al 2000, Mahal 2000], due to the social welfare aspects of health. While risk pooling is ideally done across different markets, within the health insurance sector there is enough heterogeneity to ensure adequate risk pooling. Once this is done, the parameters of evaluating the performance of both insurance companies and TPAs can be set against the backdrop of an equitable and efficient health market.⁶
– Accreditation of healthcare providers has been talked about for a long time, much before TPAs arrived on the scene [Nandraj and Khot 2003], and remains a stumbling block in ensuring a functioning healthcare market in India. The ministry must take the lead in ensuring that this happens at the earliest, so that consumers are better able to understand the quality of services availed.
– Similarly, standardisation of services with ratings is important in the context of insurance and TPAs. This again is an area where the ministry has to play a lead role.
– The finance ministry and health ministry need to work closely more together on health insurance products. The fact that the universal health scheme was born in the finance ministry and has not really taken off gives cause for concern. Formulating workable health insurance schemes for the poor is a long drawn-out effort as it will involve data and research in several areas, such as needs assessment, type of healthcare to be offered under insurance, proper costing, arriving at insurance premium based on the ability to pay, identifying the element of subsidy involved, distribution of the product to the identified population, educating the targeted population, and identifying service providers. Clearly, this needs the attention of different ministries, with the health ministry taking the lead. A pilot scheme is the way to begin, after involving various stakeholders. The ministry of health can and should play a much more proactive role in formulating appropriate products for the targeted population.
– The ministry of health and family welfare came out with a report in 2003 the health insurance market, which is worth mentioning here. Among other recommendations, the committee stressed that the government should:
(1) Introduce rating and credentialing of the providers; (2) Create common standards and norms for coding of diseases and treatment procedures; (3) Adopt standard health codes; (4) Create an information bank on insurance, diseases and treatment; (5) Ensure portability across players and schemes.

These recommendations remain valid in the context of this discussion.

The IRDA and the ministry of health should jointly ensure that the TPAs play an active role in community health insurance schemes as well as the universal health scheme. The need for cashless facilities for communities is more significant than corporate or ordinary households, but there is as yet only a limited use of TPAs in such schemes.

In sum, it can be safely said that TPAs can potentially play an important role in making insured healthcare availability smoother, but it cannot be seen as a panacea for all the problems of the health sector, nor can it be blamed for these problems. The functioning of the TPA is limited, but if not regulated and checked, there is some danger that consumer interests may not be as safe under this system as one would wish.

Address for correspondence:
indrani@ieg.ernet.in

Notes

1 http://www.bimaonline.com/cgi-bin/intermediaries/tpa.asp
2 Ibid.
3 It is only lately that the insurance companies are allowing innovations in the original design of Mediclaim. Thus, many tailor-made policies are being designed by the four insurance companies for different organisations, especially for community insurance schemes.
4 Presentation by Praveen Sharma, OSD Insurance division, finance ministry.
5 Employees of insurance companies are accused of mis-utilising the Mediclaim scheme as they are covered by this scheme themselves. In the normal course, it will be difficult for even the TPA personnel to refuse claims of insurance companies. This is a very serious ethical issue that IRDA should look into.
6 This argument can be extended to life insurance as well.

References

Bhat, Ramesh, Babu Sumesh (2003): ‘Health Insurance and Third Party Administrators: Issues and Challenges’. Indian Institute of Management.
Ellis, Randall, Moneer Alam and Indrani Gupta (2000): ‘Health Insurance in India: Prognosis and Prospectus’. Economic and Political Weekly, Vol xxxv, No 4, January 22-28.
Gupta, Aloke (2003): IRDA Journal, December.
Mahal, Ajay (2000): ‘Who Benefits from Public Sector Health Spending in India? Results of Benefit Incidence Analysis’, National Council of Applied Economic Research.
Nandraj, Sunil and Anagha Khot (2003): ‘Accreditation System for Health Facilities: Challenges and Opportunities’, Economic and Political Weekly, Vol xxxviii, No 50, December 13-19.