Process to Become a Third-Party Administrator in India

Process to Become a Third-Party Administrator in India. A Third-Party Administrator (TPA) plays an important role in the health insurance ecosystem in India. These entities act as intermediaries between policyholders, insurance companies, and healthcare service providers. The role of a TPA is to simplify and facilitate the claim settlement process for policyholders while also ensuring smooth coordination with hospitals and insurance providers. The entire framework of TPAs in India is governed and regulated by the Insurance Regulatory and Development Authority of India (IRDAI). This article elaborates in detail on the process to become a Third-Party Administrator, including eligibility requirements, application procedure, documentation, and renewal process.
What is a Third-Party Administrator (TPA)?
A Third-Party Administrator is an organization licensed by the IRDAI to process and manage health insurance claims on behalf of insurers. TPAs do not have the authority to approve or reject claims but are responsible for assessing medical documents, coordinating with hospitals, and ensuring that claims are settled as per the insurance policy terms. TPAs essentially function as service providers to insurance companies by offering administrative support for health insurance-related tasks.
These tasks include processing cashless claims, issuing authorization letters to hospitals, collecting necessary documents, disbursing claim amounts, and providing customer support through toll-free helplines. They also handle other value-added services such as health check-up arrangements, availability of hospital beds, medical consultation, and even wellness programs for policyholders.
Regulatory Authority for TPA Licensing
The Insurance Regulatory and Development Authority of India (IRDAI) is the sole governing body responsible for granting TPA licenses and monitoring their functioning. The regulations governing TPAs come under the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999. More specifically, the licensing and functioning of TPAs are governed by the IRDAI (Third Party Administrators – Health Services) Regulations, 2016.
These regulations lay down the eligibility conditions, procedural guidelines, compliance requirements, and operational limits for TPAs in India. The IRDAI is also empowered to inspect, audit, suspend, or cancel the license of a TPA in case of any non-compliance.
Eligibility Requirements to Become a TPA
To be eligible to apply for a Third-Party Administrator license in India, the applicant must meet several specific criteria set by IRDAI:

The applicant must be a company registered under the Companies Act, 2013. This means that the applicant must have a separate legal entity with a proper incorporation certificate from the Registrar of Companies (ROC).

The company must have its main and exclusive objective as the provision of health services. A TPA cannot undertake any other line of business. This restriction ensures that the entity is focused solely on its responsibilities as a TPA.

The name of the applicant company must include the phrase "Insurance TPA". This is a mandatory requirement to make it clear that the company is involved in third-party administration services.

Moreover, the company must have a minimum paid-up equity share capital of INR 4 crores. This ensures the financial stability and operational strength of the TPA.

Also, during the validity of its registration, the TPA must maintain a net worth of not less than INR 1 crore. Net worth here is calculated as the difference between total assets and total liabilities.

In case of foreign investment, the TPA must comply with the applicable rules and limits prescribed by the Government of India and IRDAI regarding FDI in insurance-related services.

Capital and Working Capital Requirements
To qualify as a TPA, the entity must have sufficient capital and financial infrastructure.

Every applicant must maintain a minimum paid-up share capital of INR 4 crores, and this requirement must be fulfilled for a minimum period of one year from the date of registration. This ensures that the TPA has adequate financial backing to manage large volumes of insurance claims.

Further, the TPA must maintain working capital of not less than INR 1 crore at all times. Working capital refers to the difference between total current assets and current liabilities. It reflects the liquidity and operational capacity of the business.

While foreign investment is allowed, the TPA must follow all relevant FDI policy guidelines issued by the Indian Government and the IRDAI. The investment must be structured to maintain compliance with sectoral caps and licensing conditions.

Application Procedure for Third-Party Administrator (TPA) License

The first step in the process to become a Third-Party Administrator is to register on the official IRDAI BAP portal. The application must be submitted online through the portal along with a non-refundable processing fee of INR 1,00,000, which should be paid through the portal’s payment gateway.

The applicant must also upload the necessary documents and details as specified in the application format. The IRDAI may request further clarifications or documents to be submitted within a specified period.

Once the IRDAI reviews the application and finds the applicant suitable, it issues an in-principle approval. After receiving this approval, the applicant is required to pay a registration fee of INR 2,00,000 (plus applicable taxes) before the actual Certificate of Registration is granted.

Once the certificate is issued, the TPA must begin its business within one year from the date of issuance of the registration certificate. The TPA must also display its registration number, certificate validity, and details of the insurance companies it represents on all its documents and websites.

Documents Required for TPA License
Applicants must submit a complete set of documents to support their application. The major documents include:

Form TPA-1, the official registration application form.

MOA and AOA of the company or LLP Agreement (if applicable).

Certificate of Incorporation issued by the Registrar of Companies.

PAN Card of the applicant company.

Profiles of directors, partners, and principal officers, along with their educational qualifications and professional certifications.

Detailed information about the Chief Executive Officer (CEO), Chief Administrative Officer (CAO), and Chief Medical Officer (CMO).

Medical Officer’s documents, such as medical registration certificates.

A summary of the company’s proposed website and details about its hosting.

Information about the website content creators and IT infrastructure.

Chartered Accountant's certificate regarding shareholding structure and net worth.

Audited financial statements for the past three years (or latest available for a new firm).

Grant of Certificate of Registration
Once the applicant has fulfilled all documentation and eligibility requirements, the IRDAI issues the Certificate of Registration.
The authority may also impose additional conditions that must be met after the certificate is issued. The applicant must pay a registration fee of INR 30,000 plus applicable taxes to obtain the final certificate. The certificate remains valid for three years from the date of issuance. The TPA is required to initiate business activities within one year. The TPA must use its registered name, registration number, and other credentials in all public communications, websites, and offices.
Validity and Renewal of TPA License
The validity of the TPA license is three years. To continue operations beyond this period, a TPA must apply for renewal well in advance. The renewal application must be submitted at least 180 days before the expiration of the registration. However, it must not be submitted later than 30 days prior to expiry. A non-refundable renewal fee of INR 15,000 plus applicable service tax must be paid. If the application is submitted late but before expiry, a penalty of INR 100 per day will be charged. In exceptional cases, where the delay is due to reasons beyond the applicant's control, IRDAI may accept the renewal application after expiry upon payment of INR 750 as a penalty. If all the renewal conditions are met, the TPA will be granted a fresh certificate with a validity of three years.
Conclusion
A TPA plays a vital role in easing the burden of policyholders by acting as a bridge between hospitals and insurers. The licensing process, though rigorous, ensures that only capable and committed entities are allowed to function as TPAs. From incorporation and capital requirements to regulatory compliance and documentation, every step must be followed meticulously. With the right preparation, legal setup, and financial capacity, companies can successfully obtain a TPA license and contribute significantly to India’s health insurance ecosystem.
If you need any support in obtaining a Third-Party Administrator (TPA) License, then you can connect with Compliance Calendar LLP Experts through mail at info@ccoffice.in or Call/Whatsapp  at +91 9988424211.
FAQs
Q1. What is the role of a Third-Party Administrator (TPA) in health insurance?
Ans. A TPA acts as a service intermediary between the insurance company, policyholder, and hospital. While they do not approve or reject claims, TPAs handle important services such as verifying claims, coordinating with hospitals for cashless treatment, processing paperwork, disbursing funds, and providing customer support. They also offer value-added services like ambulance arrangements, health check-ups, and wellness programs.
Q2. Who regulates the licensing and operations of TPAs in India?
Ans. The Insurance Regulatory and Development Authority of India (IRDAI) is the regulatory body responsible for granting licenses to TPAs and monitoring their activities. The functioning of TPAs is governed by the Insurance Act, 1938, the IRDAI Act, 1999, and the IRDAI (Third Party Administrators – Health Services) Regulations, 2016.
Q3. What are the eligibility requirements to apply for a TPA license in India?
Ans. To apply, the applicant must be a company incorporated under the Companies Act, 2013. Its sole objective should be to provide health services, and its name must include the words “Insurance TPA.” The company must have a minimum paid-up equity share capital of Rs.4 crores and maintain a net worth of at least Rs.1 crore throughout its registration period.
Q4. How much capital is required to start a TPA in India?
Ans. A minimum paid-up share capital of Rs.4 crores is mandatory to apply for a TPA license. Additionally, the company must maintain a working capital of at least Rs.1 crore at all times. This ensures the TPA is financially equipped to handle its operational obligations.
Q5. What is the process to apply for a TPA license with IRDAI?
Ans. The application must be submitted online via the IRDAI BAP portal along with a non-refundable processing fee of Rs.1,00,000. Once the application and documents are reviewed and approved, the applicant must pay an additional registration fee of Rs.2,00,000 (plus taxes) to receive the Certificate of Registration.
Q6. What documents are needed for obtaining a TPA license?
Ans. Key documents include Form TPA-1, the company’s MOA and AOA, certificate of incorporation, PAN card, director and officer profiles, audited financials, details of the IT infrastructure, and CA-certified statements on shareholding and net worth. The applicant must also provide credentials of its CEO, CAO, CMO, and medical officers.
Q7. How long is the TPA license valid, and how is it renewed?
Ans. The TPA license is valid for three years. To renew it, the application must be filed between 180 to 30 days before the expiry, along with a renewal fee of Rs.15,000. Late applications incur penalties, and in special cases, the authority may accept applications post-expiry for Rs.750.
Q8. Can a TPA engage in other business activities apart from health services?
Ans. No, a TPA is strictly prohibited from carrying out any business other than health services. Its sole objective, as defined in its incorporation documents, must be to function as a Third-Party Administrator for healthcare and health insurance-related services only.

A Third-Party Administrator (TPA) plays an important role in the health insurance ecosystem in India. These entities act as intermediaries between policyholders, insurance companies, and healthcare service providers. The role of a TPA is to simplify and facilitate the claim settlement process for policyholders while also ensuring smooth coordination with hospitals and insurance providers. The entire framework of TPAs in India is governed and regulated by the Insurance Regulatory and Development Authority of India (IRDAI). This article elaborates in detail on the process to become a Third-Party Administrator, including eligibility requirements, application procedure, documentation, and renewal process.

What is a Third-Party Administrator (TPA)?

A Third-Party Administrator is an organization licensed by the IRDAI to process and manage health insurance claims on behalf of insurers. TPAs do not have the authority to approve or reject claims but are responsible for assessing medical documents, coordinating with hospitals, and ensuring that claims are settled as per the insurance policy terms. TPAs essentially function as service providers to insurance companies by offering administrative support for health insurance-related tasks.

These tasks include processing cashless claims, issuing authorization letters to hospitals, collecting necessary documents, disbursing claim amounts, and providing customer support through toll-free helplines. They also handle other value-added services such as health check-up arrangements, availability of hospital beds, medical consultation, and even wellness programs for policyholders.

Regulatory Authority for TPA Licensing

The Insurance Regulatory and Development Authority of India (IRDAI) is the sole governing body responsible for granting TPA licenses and monitoring their functioning. The regulations governing TPAs come under the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999. More specifically, the licensing and functioning of TPAs are governed by the IRDAI (Third Party Administrators – Health Services) Regulations, 2016.

These regulations lay down the eligibility conditions, procedural guidelines, compliance requirements, and operational limits for TPAs in India. The IRDAI is also empowered to inspect, audit, suspend, or cancel the license of a TPA in case of any non-compliance.

Eligibility Requirements to Become a TPA

To be eligible to apply for a Third-Party Administrator license in India, the applicant must meet several specific criteria set by IRDAI:

The applicant must be a company registered under the Companies Act, 2013. This means that the applicant must have a separate legal entity with a proper incorporation certificate from the Registrar of Companies (ROC).
The company must have its main and exclusive objective as the provision of health services. A TPA cannot undertake any other line of business. This restriction ensures that the entity is focused solely on its responsibilities as a TPA.
The name of the applicant company must include the phrase "Insurance TPA". This is a mandatory requirement to make it clear that the company is involved in third-party administration services.
Moreover, the company must have a minimum paid-up equity share capital of INR 4 crores. This ensures the financial stability and operational strength of the TPA.
Also, during the validity of its registration, the TPA must maintain a net worth of not less than INR 1 crore. Net worth here is calculated as the difference between total assets and total liabilities.
In case of foreign investment, the TPA must comply with the applicable rules and limits prescribed by the Government of India and IRDAI regarding FDI in insurance-related services.

Capital and Working Capital Requirements

To qualify as a TPA, the entity must have sufficient capital and financial infrastructure.

Every applicant must maintain a minimum paid-up share capital of INR 4 crores, and this requirement must be fulfilled for a minimum period of one year from the date of registration. This ensures that the TPA has adequate financial backing to manage large volumes of insurance claims.
Further, the TPA must maintain working capital of not less than INR 1 crore at all times. Working capital refers to the difference between total current assets and current liabilities. It reflects the liquidity and operational capacity of the business.
While foreign investment is allowed, the TPA must follow all relevant FDI policy guidelines issued by the Indian Government and the IRDAI. The investment must be structured to maintain compliance with sectoral caps and licensing conditions.

Application Procedure for Third-Party Administrator (TPA) License

The first step in the process to become a Third-Party Administrator is to register on the official IRDAI BAP portal. The application must be submitted online through the portal along with a non-refundable processing fee of INR 1,00,000, which should be paid through the portal’s payment gateway.
The applicant must also upload the necessary documents and details as specified in the application format. The IRDAI may request further clarifications or documents to be submitted within a specified period.
Once the IRDAI reviews the application and finds the applicant suitable, it issues an in-principle approval. After receiving this approval, the applicant is required to pay a registration fee of INR 2,00,000 (plus applicable taxes) before the actual Certificate of Registration is granted.
Once the certificate is issued, the TPA must begin its business within one year from the date of issuance of the registration certificate. The TPA must also display its registration number, certificate validity, and details of the insurance companies it represents on all its documents and websites.

Documents Required for TPA License

Applicants must submit a complete set of documents to support their application. The major documents include:

Form TPA-1, the official registration application form.
MOA and AOA of the company or LLP Agreement (if applicable).
Certificate of Incorporation issued by the Registrar of Companies.
PAN Card of the applicant company.
Profiles of directors, partners, and principal officers, along with their educational qualifications and professional certifications.
Detailed information about the Chief Executive Officer (CEO), Chief Administrative Officer (CAO), and Chief Medical Officer (CMO).
Medical Officer’s documents, such as medical registration certificates.
A summary of the company’s proposed website and details about its hosting.
Information about the website content creators and IT infrastructure.
Chartered Accountant's certificate regarding shareholding structure and net worth.
Audited financial statements for the past three years (or latest available for a new firm).

Grant of Certificate of Registration

Once the applicant has fulfilled all documentation and eligibility requirements, the IRDAI issues the Certificate of Registration.

The authority may also impose additional conditions that must be met after the certificate is issued. The applicant must pay a registration fee of INR 30,000 plus applicable taxes to obtain the final certificate. The certificate remains valid for three years from the date of issuance. The TPA is required to initiate business activities within one year. The TPA must use its registered name, registration number, and other credentials in all public communications, websites, and offices.

Validity and Renewal of TPA License

The validity of the TPA license is three years. To continue operations beyond this period, a TPA must apply for renewal well in advance. The renewal application must be submitted at least 180 days before the expiration of the registration. However, it must not be submitted later than 30 days prior to expiry. A non-refundable renewal fee of INR 15,000 plus applicable service tax must be paid. If the application is submitted late but before expiry, a penalty of INR 100 per day will be charged. In exceptional cases, where the delay is due to reasons beyond the applicant's control, IRDAI may accept the renewal application after expiry upon payment of INR 750 as a penalty. If all the renewal conditions are met, the TPA will be granted a fresh certificate with a validity of three years.

Conclusion

A TPA plays a vital role in easing the burden of policyholders by acting as a bridge between hospitals and insurers. The licensing process, though rigorous, ensures that only capable and committed entities are allowed to function as TPAs. From incorporation and capital requirements to regulatory compliance and documentation, every step must be followed meticulously. With the right preparation, legal setup, and financial capacity, companies can successfully obtain a TPA license and contribute significantly to India’s health insurance ecosystem.

If you need any support in obtaining a Third-Party Administrator (TPA) License, then you can connect with Compliance Calendar LLP Experts through mail at info@ccoffice.in or Call/Whatsapp at +91 9988424211.

FAQs

Q1. What is the role of a Third-Party Administrator (TPA) in health insurance?

Ans. A TPA acts as a service intermediary between the insurance company, policyholder, and hospital. While they do not approve or reject claims, TPAs handle important services such as verifying claims, coordinating with hospitals for cashless treatment, processing paperwork, disbursing funds, and providing customer support. They also offer value-added services like ambulance arrangements, health check-ups, and wellness programs.

Q2. Who regulates the licensing and operations of TPAs in India?

Ans. The Insurance Regulatory and Development Authority of India (IRDAI) is the regulatory body responsible for granting licenses to TPAs and monitoring their activities. The functioning of TPAs is governed by the Insurance Act, 1938, the IRDAI Act, 1999, and the IRDAI (Third Party Administrators – Health Services) Regulations, 2016.

Q3. What are the eligibility requirements to apply for a TPA license in India?

Ans. To apply, the applicant must be a company incorporated under the Companies Act, 2013. Its sole objective should be to provide health services, and its name must include the words “Insurance TPA.” The company must have a minimum paid-up equity share capital of Rs.4 crores and maintain a net worth of at least Rs.1 crore throughout its registration period.

Q4. How much capital is required to start a TPA in India?

Ans. A minimum paid-up share capital of Rs.4 crores is mandatory to apply for a TPA license. Additionally, the company must maintain a working capital of at least Rs.1 crore at all times. This ensures the TPA is financially equipped to handle its operational obligations.

Q5. What is the process to apply for a TPA license with IRDAI?

Ans. The application must be submitted online via the IRDAI BAP portal along with a non-refundable processing fee of Rs.1,00,000. Once the application and documents are reviewed and approved, the applicant must pay an additional registration fee of Rs.2,00,000 (plus taxes) to receive the Certificate of Registration.

Q6. What documents are needed for obtaining a TPA license?

Ans. Key documents include Form TPA-1, the company’s MOA and AOA, certificate of incorporation, PAN card, director and officer profiles, audited financials, details of the IT infrastructure, and CA-certified statements on shareholding and net worth. The applicant must also provide credentials of its CEO, CAO, CMO, and medical officers.

Q7. How long is the TPA license valid, and how is it renewed?

Ans. The TPA license is valid for three years. To renew it, the application must be filed between 180 to 30 days before the expiry, along with a renewal fee of Rs.15,000. Late applications incur penalties, and in special cases, the authority may accept applications post-expiry for Rs.750.

Q8. Can a TPA engage in other business activities apart from health services?

Ans. No, a TPA is strictly prohibited from carrying out any business other than health services. Its sole objective, as defined in its incorporation documents, must be to function as a Third-Party Administrator for healthcare and health insurance-related services only.