Regulatory Guidelines in Classifying Third Party Administrator Costs in Financial Returns Lodged by Accident and Health Insurance Companies with MAS

2 Dr Tan Yia Swam asked the Prime Minister (a) whether there are any regulatory guidelines in classifying third party administrator costs in the financial returns lodged by accident and health insurance companies with MAS; and (b) if so, whether such costs are included in the returns as management expenses or gross claims settled.

Mr Tharman Shanmugaratnam (for the Prime Minister): Some insurers offering health insurance appoint third party administrators (TPAs) to undertake a variety of claims administration services on their behalf.

In their statutory submissions to MAS, insurers are required to classify TPA-related expenses directly related to claims paid, such as claims administration expenses incurred for each processed claim, as part of gross claims settled. They must classify other TPA-related expenses, such as on-going panel management fees, as part of management expenses. External auditors check whether these requirements are met, and MAS will take action on any non-compliance.