IRDA can submit draft regulations to House

Written By Unknown on Rabu, 13 Februari 2013 | 22.23

MUMBAI: The Bombay high court on Tuesday allowed insurance regulator IRDA to submit its draft regulations to Parliament. The development came in a PIL filed last year by activist Gaurang Damani to challenge the absence of regulation to govern insurance in the medical industry. The PIL highlighted the plight of seven crore consumers who paid Rs 13,000 crore annually as medical insurance after third party administrators (TPAs) stopped offering cashless mediclaim benefits.

Earlier last month, the high court had observed that insurance companies that gave incentives to TPAs to reduce claims worked against consumer interest. The IRDA had informed the court that it would take such insurance companies to task.

Hearing the PIL, a division bench headed by Chief Justice Mohit Shah had earlier allowed IRDA to finalize its draft regulations. IRDA in June published draft regulations in response to the HC order.

Earlier, the petitioner submitted that TPAs were supposed to process claims and not settle these, which is what they were doing. Settling claims is the job of the insurance company, said Damani. In practice, the insurance company offers incentives to TPAs depending on the amount of claim reduced, Damani had pointed out.

At the last hearing, Chief Justice Mohit Shah said, "If given incentives, TPAs will be biased in favour of insurers. There is nothing wrong in TPAs being given a percentage of the premium, but if incentive is given to reduce percentage of claim then there will always be a conflict of interest."

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