Obtain Third Party Administrator (TPA) License with IRDAI

Obtain Third Party Administrator (TPA) License with IRDAI . IRDAI (Third Party Administrators – Health Services) Regulations, 2016
A Third Party Administrator (TPA) occupies a very major position in India’s health insurance ecosystem by functioning as the operational bridge between insurance companies, hospitals, and policyholders. TPAs are entrusted with end-to-end servicing of health insurance policies, including claim processing, coordination of cashless hospitalisation, issuance and management of health cards, verification of medical documents, and continuous liaison among all stakeholders to ensure timely and accurate settlement of claims. By streamlining administrative and operational workflows, TPAs significantly improve efficiency, transparency, and customer experience within the health insurance structure.
Given the sensitive nature of health data, financial transactions, and policyholder interests involved, TPAs are subject to strict regulatory oversight. Any entity intending to operate as a TPA in India must obtain a Certificate of Registration from the Insurance Regulatory and Development Authority of India (IRDAI) in accordance with the applicable regulations. Operating without such registration is not permitted under Indian insurance law.
This CCL article provides a complete overview of the regulatory framework governing TPAs, including eligibility conditions, capital and net worth requirements, documentation, step-by-step licensing process, timelines for approval, and ongoing compliance and renewal obligations. The objective is to offer a structured and practical guide for entities seeking to establish and operate a Third Party Administrator business in India in full compliance with IRDAI regulations.
Importance of Third Party Administrator License
Obtaining a Third Party Administrator (TPA) License is a mandatory statutory requirement for any entity intending to provide health insurance administration and claims management services and license authorises the entity to operate lawfully within the insurance regulatory structures and ensures that claim servicing is carried out in a structured, transparent, and accountable manner.
A valid TPA license safeguards policyholder interests by standardising processes for hospital coordination, cashless treatment, and claims settlement, while also mandating strict compliance with data security, governance, and confidentiality norms. In the absence of an IRDAI-issued TPA License, no entity is legally permitted to administer or process health insurance claims on behalf of insurance companies.
Functions of a Third Party Administrator
Intermediary Role
A TPA functions strictly as an administrative and service intermediary between insurers and policyholders. Core responsibilities include:

Issuance of Health ID Cards to insured persons

Entering into agreements with network hospitals

Issuance of authorization letters for cashless treatment

Collection and verification of hospital bills and medical documents

Coordination between hospitals, insurers, and insured persons

Services Offered
As per IRDAI regulations, Third Party Administrators are permitted to provide a defined set of health insurance administration and servicing functions which include cashless and reimbursement claim servicing, where the TPA coordinates between the insurer, hospital, and policyholder for smooth processing of claims. TPAs also conduct pre-policy and pre-authorization medical examinations to support underwriting and treatment approvals.
In addition, TPAs facilitate medical claims under overseas travel insurance policies and provide servicing support for foreign health insurance policies issued in India. All such services are performed strictly within the administrative framework prescribed by IRDAI, without extending to claim approval or payment authority.
Regulatory Limitations on TPAs
A Third Party Administrator (TPA) is not an insurance company and does not have independent decision-making authority. Under IRDAI regulations, the role of a TPA is clearly restricted to administrative and facilitation functions. A TPA cannot:

Pay insurance claims — all claim payments are made solely by the insurance company

Approve or reject claims independently — final claim decisions rest with the insurer

Handle non-health insurance claims — TPAs are limited strictly to health insurance services

Sell, solicit, or procure insurance policies, whether directly or indirectly

In simple terms, a TPA acts as a support and coordination arm. It assists with documentation, hospital coordination, cashless treatment processing, and communication between the insurer, hospital, and policyholder. However, it does not decide claims or make payments, ensuring a clear separation between administration and insurance risk-bearing functions
Regulatory Structure
The licensing and functioning of Third Party Administrators (TPAs) in India are governed by a well-defined statutory and regulatory framework. This Structure is primarily derived from the Insurance Act, 1938, which lays down the foundational principles for insurance operations, and the Insurance Regulatory and Development Authority Act, 1999, which empowers IRDAI to regulate insurance intermediaries. In addition, the specific operational, licensing, and compliance requirements for TPAs are prescribed under the IRDAI (Third Party Administrators – Health Services) Regulations, 2016, which comprehensively regulate the scope of activities, responsibilities, and obligations of TPAs in the health insurance ecosystem.
Eligibility Criteria for TPA License
To obtain a Third Party Administrator (TPA) in Health Services License, an applicant must satisfy the following eligibility conditions prescribed by Insurance Regulatory and Development Authority of India (IRDAI):
1. Legal Entity Requirement

The applicant must be incorporated as a Company under the Companies Act, 2013.

LLPs are generally not permitted for TPA licensing unless specifically allowed by IRDAI in exceptional cases.

2. Name and Business Restrictions

The name of the company must necessarily include the words “Insurance TPA”.

The company must be exclusively engaged in health insurance administration activities and cannot undertake any other unrelated business.

3. Financial Requirements

Minimum paid-up equity share capital: Rs.4 Crores

Minimum working capital: Rs.1 Crore (to be maintained on an ongoing basis)

Foreign investment is permitted, subject to compliance with IRDAI regulations and FEMA guidelines.

4. Director and Management Requirements

At least one Director must be a qualified MBBS doctor, registered with the appropriate Medical Council in India.

All Directors and Key Management Personnel must satisfy the fit and proper criteria and must not be disqualified under any applicable law.

5. Infrastructure and Operational Readiness

Adequate office infrastructure with trained and qualified manpower

Robust IT systems for secure handling of sensitive health and policyholder data

Hospital network tie-ups with hospitals having the required medical facilities to support cashless treatment and claim servicing

6. Other Key Regulatory Expectations (Additional Points)

Appointment of a Chief Executive Officer (CEO) with relevant healthcare/insurance administration experience

Strong data confidentiality, cybersecurity, and information governance framework

Ability to comply with IRDAI reporting, audit, and ongoing compliance requirements

Documents Required for TPA License
The following documents are required to be submitted to IRDAI:

Form TPA-1 (Application Form)

Certificate of Incorporation issued by ROC

MOA & AOA / LLP Agreement

PAN of the applicant entity

Detailed profiles of Directors / Partners

Profiles and qualification documents of Principal Officers

Proposed website content overview

Details of CEO, CAO, and Chief Medical Officer

Medical Officers’ registration and qualification records

Website hosting and cybersecurity details

Website content responsibility declaration

Net Worth Certificate and shareholding pattern (CA-certified)

Audited financial statements (last 3 years or latest)

IT infrastructure details

Director / KMP appointment or change intimation forms

Application Process for TPA License
Step 1: Application Filing

Submission of Form TPA-1 with supporting documents

Payment of non-refundable application fee of Rs.1,00,000

Step 2: IRDAI Review & Clarifications

IRDAI may seek additional documents or clarifications

Applicant must respond within prescribed timelines

Step 3: Grant of Certificate

Upon satisfaction, IRDAI grants Certificate of Registration

Registration fee of Rs.30,000 payable

Step 4: Commencement of Operations

Business operations must commence within 12 months from registration

Shareholding & Ownership Changes
Any transfer of shares, change in shareholding pattern, or change in control of a licensed Third Party Administrator (TPA) requires prior approval of the Insurance Regulatory and Development Authority of India (IRDAI). TPAs are not permitted to effect such changes without regulatory consent.
Further, all approved changes must be formally reported to IRDAI within 30 days of occurrence. This requirement ensures continued regulatory oversight, transparency in ownership, and protection of policyholder interests.
Renewal of TPA License
A Third Party Administrator (TPA) license is granted for a validity period of three years. To continue operations without interruption, the TPA must apply for renewal not earlier than 180 days and not later than 30 days before the date of expiry of the existing license.
The prescribed renewal fee is Rs.15,000. Applications submitted beyond the stipulated timeline may attract additional fees or penalties, as determined by IRDAI. Further, if the TPA fails to meet the required financial, operational, or compliance benchmarks, IRDAI may refuse renewal unless the deficiencies are satisfactorily explained and rectified.
How Compliance Calendar LLP Will Help
A Third Party Administrator (TPA) License is among the most regulated and compliance-intensive approvals in the insurance ecosystem, requiring strong financial capacity, qualified medical leadership, sound governance, and secure IT systems. Any gap in planning, documentation, or regulatory coordination can lead to delays or rejection.
Compliance Calendar LLP provides end-to-end support throughout the TPA licensing lifecycle. Our assistance covers entity structuring and eligibility assessment, preparation and vetting of all statutory and regulatory documentation, coordination and follow-ups with IRDAI, and support in addressing regulatory queries or clarifications. Post-licensing, we also assist with ongoing compliances, renewals, reporting, and governance requirements, ensuring that the TPA remains fully compliant and operationally stable on a long-term basis.
Difference Between TPA License and Other Insurance Registrations
A TPA operates as a back-end health insurance administrator focused on claims and hospital coordination, not sales.
A Broker, IMF, or Agent focuses on selling and advising on insurance products and does not handle claims. Among all, the TPA license is the most compliance-intensive and operationally demanding, due to its role in handling sensitive medical data and claims processes.

Parameter

TPA (Third Party Administrator)

Insurance Broker

Insurance Marketing Firm (IMF)

Individual Insurance Agent

Core Function

Administration and servicing of health insurance claims

Advisory and distribution of insurance products

Distribution and servicing of retail and MSME insurance

Sale of insurance policies

Authority to Sell Insurance

Not permitted to sell or solicit insurance

Permitted to sell and advise across insurers

Permitted to sell retail and MSME insurance

Permitted to sell products of tied-up insurer

Role in Claims

Processes and coordinates claims administratively

No role in claims processing

Decision-Making Power

Cannot approve, reject, or pay claims

No claim decision powers

Scope of Insurance

Health insurance only

Life, General, and Health (as licensed)

Retail and MSME insurance only

Limited to insurer appointment

Capital and Infrastructure

High capital, medical expertise, strong IT and data security required

Moderate capital and compliance requirements

Low to moderate net worth and compliance

Minimal regulatory requirements

Medical Expertise Requirement

Mandatory MBBS-qualified Director

Not required

Regulatory Intensity

Very high due to health data and claims handling

High

Medium to high

Low

Frequently Asked Questions (FAQs)
Q1. What is a Third Party Administrator (TPA)?
Ans. A TPA is an entity authorised by IRDAI to administer and service health insurance claims on behalf of insurers.
Q2. Is a TPA License mandatory?
Ans. Yes, operating without an IRDAI-issued TPA License is prohibited.
Q3. Can TPAs approve or reject claims?
Ans. No. TPAs only facilitate claims; final decisions rest with insurers.
Q4. What is the minimum capital requirement?
Ans. Rs.4 Crores paid-up capital and Rs.1 Crore working capital.
Q5. How long is the license valid?
Ans. The license is valid for three years, subject to renewal.
Q6. Is medical expertise mandatory at the board level?
Ans. Yes, at least one Director must be an MBBS-qualified medical professional.
Q7. Are hospital tie-ups mandatory?
Ans. Yes, TPAs must enter into agreements with network hospitals.
Q8. Can TPAs solicit insurance business?
Ans. No, solicitation is strictly prohibited.
Q9. When should renewal be applied for?
Ans. Between 180 and 30 days prior to expiry.
Q10. What happens if renewal conditions are not met?
Ans. IRDAI may reject renewal unless valid reasons and corrective steps are demonstrated.

IRDAI (Third Party Administrators – Health Services) Regulations, 2016

A Third Party Administrator (TPA) occupies a very major position in India’s health insurance ecosystem by functioning as the operational bridge between insurance companies, hospitals, and policyholders. TPAs are entrusted with end-to-end servicing of health insurance policies, including claim processing, coordination of cashless hospitalisation, issuance and management of health cards, verification of medical documents, and continuous liaison among all stakeholders to ensure timely and accurate settlement of claims. By streamlining administrative and operational workflows, TPAs significantly improve efficiency, transparency, and customer experience within the health insurance structure.

Given the sensitive nature of health data, financial transactions, and policyholder interests involved, TPAs are subject to strict regulatory oversight. Any entity intending to operate as a TPA in India must obtain a Certificate of Registration from the Insurance Regulatory and Development Authority of India (IRDAI) in accordance with the applicable regulations. Operating without such registration is not permitted under Indian insurance law.

This CCL article provides a complete overview of the regulatory framework governing TPAs, including eligibility conditions, capital and net worth requirements, documentation, step-by-step licensing process, timelines for approval, and ongoing compliance and renewal obligations. The objective is to offer a structured and practical guide for entities seeking to establish and operate a Third Party Administrator business in India in full compliance with IRDAI regulations.

Importance of Third Party Administrator License

Obtaining a Third Party Administrator (TPA) License is a mandatory statutory requirement for any entity intending to provide health insurance administration and claims management services and license authorises the entity to operate lawfully within the insurance regulatory structures and ensures that claim servicing is carried out in a structured, transparent, and accountable manner.

A valid TPA license safeguards policyholder interests by standardising processes for hospital coordination, cashless treatment, and claims settlement, while also mandating strict compliance with data security, governance, and confidentiality norms. In the absence of an IRDAI-issued TPA License, no entity is legally permitted to administer or process health insurance claims on behalf of insurance companies.

Functions of a Third Party Administrator

Intermediary Role

A TPA functions strictly as an administrative and service intermediary between insurers and policyholders. Core responsibilities include:

Issuance of Health ID Cards to insured persons
Entering into agreements with network hospitals
Issuance of authorization letters for cashless treatment
Collection and verification of hospital bills and medical documents
Coordination between hospitals, insurers, and insured persons

Services Offered

As per IRDAI regulations, Third Party Administrators are permitted to provide a defined set of health insurance administration and servicing functions which include cashless and reimbursement claim servicing, where the TPA coordinates between the insurer, hospital, and policyholder for smooth processing of claims. TPAs also conduct pre-policy and pre-authorization medical examinations to support underwriting and treatment approvals.

In addition, TPAs facilitate medical claims under overseas travel insurance policies and provide servicing support for foreign health insurance policies issued in India. All such services are performed strictly within the administrative framework prescribed by IRDAI, without extending to claim approval or payment authority.

Regulatory Limitations on TPAs

A Third Party Administrator (TPA) is not an insurance company and does not have independent decision-making authority. Under IRDAI regulations, the role of a TPA is clearly restricted to administrative and facilitation functions. A TPA cannot:

Pay insurance claims — all claim payments are made solely by the insurance company
Approve or reject claims independently — final claim decisions rest with the insurer
Handle non-health insurance claims — TPAs are limited strictly to health insurance services
Sell, solicit, or procure insurance policies, whether directly or indirectly

Regulatory Structure

The licensing and functioning of Third Party Administrators (TPAs) in India are governed by a well-defined statutory and regulatory framework. This Structure is primarily derived from the Insurance Act, 1938, which lays down the foundational principles for insurance operations, and the Insurance Regulatory and Development Authority Act, 1999, which empowers IRDAI to regulate insurance intermediaries. In addition, the specific operational, licensing, and compliance requirements for TPAs are prescribed under the IRDAI (Third Party Administrators – Health Services) Regulations, 2016, which comprehensively regulate the scope of activities, responsibilities, and obligations of TPAs in the health insurance ecosystem.

Eligibility Criteria for TPA License

To obtain a Third Party Administrator (TPA) in Health Services License, an applicant must satisfy the following eligibility conditions prescribed by Insurance Regulatory and Development Authority of India (IRDAI):

1. Legal Entity Requirement

The applicant must be incorporated as a Company under the Companies Act, 2013.
LLPs are generally not permitted for TPA licensing unless specifically allowed by IRDAI in exceptional cases.

2. Name and Business Restrictions

The name of the company must necessarily include the words “Insurance TPA”.
The company must be exclusively engaged in health insurance administration activities and cannot undertake any other unrelated business.

3. Financial Requirements

Minimum paid-up equity share capital: Rs.4 Crores
Minimum working capital: Rs.1 Crore (to be maintained on an ongoing basis)
Foreign investment is permitted, subject to compliance with IRDAI regulations and FEMA guidelines.

4. Director and Management Requirements

At least one Director must be a qualified MBBS doctor, registered with the appropriate Medical Council in India.
All Directors and Key Management Personnel must satisfy the fit and proper criteria and must not be disqualified under any applicable law.

5. Infrastructure and Operational Readiness

Adequate office infrastructure with trained and qualified manpower
Robust IT systems for secure handling of sensitive health and policyholder data
Hospital network tie-ups with hospitals having the required medical facilities to support cashless treatment and claim servicing

6. Other Key Regulatory Expectations (Additional Points)

Appointment of a Chief Executive Officer (CEO) with relevant healthcare/insurance administration experience
Strong data confidentiality, cybersecurity, and information governance framework
Ability to comply with IRDAI reporting, audit, and ongoing compliance requirements

Documents Required for TPA License

The following documents are required to be submitted to IRDAI:

Form TPA-1 (Application Form)
Certificate of Incorporation issued by ROC
MOA & AOA / LLP Agreement
PAN of the applicant entity
Detailed profiles of Directors / Partners
Profiles and qualification documents of Principal Officers
Proposed website content overview
Details of CEO, CAO, and Chief Medical Officer
Medical Officers’ registration and qualification records
Website hosting and cybersecurity details
Website content responsibility declaration
Net Worth Certificate and shareholding pattern (CA-certified)
Audited financial statements (last 3 years or latest)
IT infrastructure details
Director / KMP appointment or change intimation forms

Application Process for TPA License

Step 1: Application Filing

Submission of Form TPA-1 with supporting documents
Payment of non-refundable application fee of Rs.1,00,000

Step 2: IRDAI Review & Clarifications

IRDAI may seek additional documents or clarifications
Applicant must respond within prescribed timelines

Step 3: Grant of Certificate

Upon satisfaction, IRDAI grants Certificate of Registration
Registration fee of Rs.30,000 payable

Step 4: Commencement of Operations

Business operations must commence within 12 months from registration

Shareholding & Ownership Changes

Any transfer of shares, change in shareholding pattern, or change in control of a licensed Third Party Administrator (TPA) requires prior approval of the Insurance Regulatory and Development Authority of India (IRDAI). TPAs are not permitted to effect such changes without regulatory consent.

Further, all approved changes must be formally reported to IRDAI within 30 days of occurrence. This requirement ensures continued regulatory oversight, transparency in ownership, and protection of policyholder interests.

Renewal of TPA License

A Third Party Administrator (TPA) license is granted for a validity period of three years. To continue operations without interruption, the TPA must apply for renewal not earlier than 180 days and not later than 30 days before the date of expiry of the existing license.

The prescribed renewal fee is Rs.15,000. Applications submitted beyond the stipulated timeline may attract additional fees or penalties, as determined by IRDAI. Further, if the TPA fails to meet the required financial, operational, or compliance benchmarks, IRDAI may refuse renewal unless the deficiencies are satisfactorily explained and rectified.

How Compliance Calendar LLP Will Help

A Third Party Administrator (TPA) License is among the most regulated and compliance-intensive approvals in the insurance ecosystem, requiring strong financial capacity, qualified medical leadership, sound governance, and secure IT systems. Any gap in planning, documentation, or regulatory coordination can lead to delays or rejection.

Compliance Calendar LLP provides end-to-end support throughout the TPA licensing lifecycle. Our assistance covers entity structuring and eligibility assessment, preparation and vetting of all statutory and regulatory documentation, coordination and follow-ups with IRDAI, and support in addressing regulatory queries or clarifications. Post-licensing, we also assist with ongoing compliances, renewals, reporting, and governance requirements, ensuring that the TPA remains fully compliant and operationally stable on a long-term basis.

Difference Between TPA License and Other Insurance Registrations

A TPA operates as a back-end health insurance administrator focused on claims and hospital coordination, not sales.

A Broker, IMF, or Agent focuses on selling and advising on insurance products and does not handle claims. Among all, the TPA license is the most compliance-intensive and operationally demanding, due to its role in handling sensitive medical data and claims processes.

Parameter	TPA (Third Party Administrator)	Insurance Broker	Insurance Marketing Firm (IMF)	Individual Insurance Agent
Core Function	Administration and servicing of health insurance claims	Advisory and distribution of insurance products	Distribution and servicing of retail and MSME insurance	Sale of insurance policies
Authority to Sell Insurance	Not permitted to sell or solicit insurance	Permitted to sell and advise across insurers	Permitted to sell retail and MSME insurance	Permitted to sell products of tied-up insurer
Role in Claims	Processes and coordinates claims administratively	No role in claims processing	No role in claims processing	No role in claims processing
Decision-Making Power	Cannot approve, reject, or pay claims	No claim decision powers	No claim decision powers	No claim decision powers
Scope of Insurance	Health insurance only	Life, General, and Health (as licensed)	Retail and MSME insurance only	Limited to insurer appointment
Capital and Infrastructure	High capital, medical expertise, strong IT and data security required	Moderate capital and compliance requirements	Low to moderate net worth and compliance	Minimal regulatory requirements
Medical Expertise Requirement	Mandatory MBBS-qualified Director	Not required	Not required	Not required
Regulatory Intensity	Very high due to health data and claims handling	High	Medium to high	Low