PSU insurers dodge questions on underuse of own TPA

1. At a Glance

• Health Insurance TPA of India Ltd. (HITPA) is a third-party administrator (TPA) promoted by the four public-sector general insurers: New India Assurance, Oriental Insurance, United India Insurance and National Insurance [1].
• A 2022 CAG report found that HITPA had enough capacity and performance comparable to leading TPAs. Even so, its promoter insurers gave it only a fraction of their business, and the CAG recommended that they give it more [1].
• More than four years later, RTI replies from the four insurers do not show whether allocations to HITPA have risen significantly, or what was done on the audit recommendation [1].
• UPSC relevance: the case touches PSU governance, how CAG audit findings get followed up, health-insurance claims administration, and the RTI Act exemptions under Section 8(1)(d) and the override in Section 8(2) [1][3].

2. Why in the News

• An investigative report in The Hindu (International edition, 11 November 2026, page 12) says the PSU insurers "dodged" RTI questions on why they underuse their own TPA [1].
• New India Assurance and Oriental Insurance refused to give information on every question, citing Section 8(1)(d) of the RTI Act (commercial confidence and trade secrets) [1].
• United India Insurance and National Insurance gave some operational information [1].
• The report points out that Section 8(2) allows disclosure where public interest outweighs the protected interests [1].

3. Background & Evolution

• What a TPA does: it is an intermediary that handles health-insurance claims for insurers. HITPA was set up as a captive TPA owned by the four PSU general insurers [1].
• Rationale: an in-house TPA would let the promoter insurers handle claims themselves instead of outsourcing that work to private TPAs (implied by the CAG's call for higher allocation) [1].
• 2022: the CAG audit flagged that HITPA was underused despite having adequate capacity and comparable performance, and recommended higher allocation of business [1].
• 2026: RTI applications to all four insurers fail to show any meaningful follow-up on the CAG recommendation [1].
• RTI Act, 2005 (Act No. 22 of 2005) is the transparency law used to look into the issue [2].

4. Core Static Facts

5. Multi-Dimensional Analysis

Economic

• Underusing a captive TPA that performs comparably means PSU insurers may be paying private TPAs for work their own subsidiary could do [1].
• If the four promoters do not use HITPA, its capacity sits idle and the return on their investment in it falls [1].

Ethical / Governance

• PSU insurers are using the commercial-confidence exemption to withhold information about how they use their own subsidiary, which raises a question of public accountability [1].
• The insurers responded unevenly: two refused outright and two gave partial information. This shows there is no common disclosure standard across the PSU insurers [1].

Legal / Constitutional

• Section 8(1)(d) is a qualified exemption. It contains its own larger-public-interest override, and Section 8(2) adds a general public-interest test [3][5].
• Commentators have noted that "commercial confidence" needs a clear definition that balances it against transparency [6].

Administrative

• There is no visible follow-up on the CAG recommendation more than four years on. This points to a weak mechanism for making sure audit recommendations are acted on [1].
• Moving work to an in-house TPA requires coordination among four separately run insurers [1].

Social

• Better claims administration matters for health-insurance policyholders. Transparency about how TPAs are allocated and how they perform serves policyholders' interests (an inference from the public-interest framing in [1]).

6. Recent Developments (last 12-18 months)

• November 2026: The Hindu reports the RTI replies. New India Assurance and Oriental Insurance cite Section 8(1)(d); United India and National Insurance give partial operational data [1].
• November 2026: the RTI replies do not establish whether allocations to HITPA have increased significantly, or what action was taken on the 2022 CAG recommendation [1].

7. Prelims Hooks

• HITPA stands for Health Insurance TPA of India Ltd. [1]
• HITPA is promoted by four public-sector general insurers [1].
• The four promoters are New India Assurance, Oriental Insurance, United India Insurance and National Insurance [1].
• The CAG flagged HITPA's underuse in a 2022 report [1].
• The CAG found HITPA's performance parameters comparable to leading TPAs [1].
• The RTI Act is Act No. 22 of 2005 [2].
• Section 8(1)(d) of the RTI Act exempts commercial confidence, trade secrets and intellectual property whose disclosure would harm a third party's competitive position [3].
• Section 8(1)(d) allows disclosure if the larger public interest warrants it, so it is a conditional exemption [3][5].
• Section 8(2) applies notwithstanding the Official Secrets Act, 1923 [3].
• Under Section 8(2), access may be allowed if the public interest outweighs the harm to protected interests [3].
• Section 8(1)(d) accounted for about 18% of exemption invocations in 2005–2010, according to PRS analysis [4].

8. Why the 'Commercial Confidence' Excuse Is Weak Here

• Section 8(1)(d) protects a business from its competitors, not from its owners
• The exemption covers information whose release would harm the competitive position of a third party (an outside person or company the information is about) [3].
• In ICAI v. Shaunak H. Satya (the exam question-paper case), the Supreme Court said the exemption applies only where disclosure would actually harm someone's competitive position [8].

• The RTI questions were about how much work the insurers give their own subsidiary. It is hard to see which competitor gains from knowing that.

• HITPA is wholly owned by government insurers

• When it was formed, New India, Oriental, United India and National Insurance each held 23.75%, and GIC Re held the remaining 5% [7].

• So in the allocation question, the 'third party' is the insurers' own company, owned by the public. The public interest test in Section 8(2) weighs heavily on the side of disclosure [3].

• The other two insurers' replies weaken the refusal

• United India and National Insurance shared some operational data [1].

• If the same type of data could be shared by two PSU insurers, the other two have to explain what harm it would cause them in particular. A blanket refusal does not explain that.

• The refusal is not the final word

• The applicant can go to a first appeal inside the insurer, and then to the Central Information Commission (CIC). Courts have treated 8(1)(d) as a qualified exemption, one that must be tested case by case [5].

9. The Insurers' Best Argument, and Where It Falls Short

• The strongest case for the insurers
• PSU insurers sell health cover in a market where private and standalone health insurers compete with them.
• Detailed TPA data, such as fees per claim or hospital-wise performance, could help rivals and private TPAs bargain against them. This is the kind of harm 8(1)(d) was written for [3].

• Choosing a TPA is a business decision for each insurer's board. A CAG recommendation is advice, not a binding order.

• What is right about it

• Contract rates and named-hospital data may really be commercially sensitive. Withholding those specific parts can be justified.

• Where it falls short

• The RTI Act allows partial disclosure. The authority can hold back the sensitive part and release the rest. A refusal on every question skips that step [1][3].
• A simple figure, such as 'what share of our health claims went to HITPA each year', reveals no price or trade secret.
• Boards may decide freely, but they are still expected to answer to the owner (the government) and to Parliament on why they ignored an audit finding. That is a separate duty from commercial freedom.

10. What Underuse Costs a Public-Owned Insurer

• Outside TPAs are paid from premium income
• When HITPA was formed, insurers expected it to cut the fees they paid external TPAs. Those fees were then about 6% of premiums [7].

• Every claim sent to a private TPA instead of HITPA means that fee leaves the PSU group, even though HITPA's performance was found comparable [1].

• HITPA was meant to stop leakage

• Leakage here means money lost through inflated or false claims.
• One stated reason for setting up HITPA was to control large-scale leakage in health-claim settlement [7].

• If HITPA gets only a small share of claims, the insurers lose the closer control over claims that was the reason for creating it.

• TPAs decide a lot of claims, so the choice matters to patients

• In FY24, 72% of health claims across insurers were settled through TPAs. Only 28% were handled in-house [9].
• In the same year, insurers disallowed (refused to pay) claims worth ₹15,100 crore [9].
• Whoever handles the claim shapes these outcomes. So policyholders have a real stake in knowing how claims work is divided.

11. Why CAG Advice on PSUs Can Sit Unanswered for Years

• The follow-up chain for PSU audits is slow and runs separately
• After a CAG report, the audited body must send an Action Taken Note (ATN). An ATN is a written reply saying what was done about each audit point.

• Audit points on PSUs go to the Committee on Public Undertakings (COPU), the parliamentary committee for government companies, and not to the Public Accounts Committee [10].

• The numbers show the backlog

• In August 2025, ATNs were still pending on 61 PSU audit paragraphs under just three ministries, 48 of them on BSNL [10].

• CAG notes that ATNs on PSU (commercial) paragraphs are still received and checked on paper. Some pending paragraphs date back to 1999 [10].

• The online tracker leaves PSU paragraphs out

• The Audit Para Monitoring System (APMS), the online portal that tracks ATNs, does not cover paragraphs examined by COPU [10].
• So a recommendation like the 2022 HITPA one can stay unanswered, and no dashboard will show it as overdue. This is why RTI had to be used to find the status [1].

12. Who Should Do What Next

• COPU should take up the 2022 HITPA paragraph

• It should ask the four insurers for a dated ATN with year-wise figures on claims sent to HITPA. This is the forum Parliament created for PSU audit follow-up [10].

• CAG should bring PSU paragraphs into online tracking

• CAG has itself pointed out the paper-based handling and the missing APMS coverage for COPU paragraphs [10].

• Putting these paragraphs online would make delays like this one visible without an RTI.

• The Department of Financial Services (Ministry of Finance), as owner, should fix one disclosure rule for all four insurers

• Each insurer could publish the share of health claims handled by HITPA in its annual report.

• This would end the uneven situation where two insurers shared data and two refused [1].

• The applicant should appeal to the CIC

• The CIC can test whether the refused information really harms anyone's competitive position, as the Supreme Court requires [8], and order release of what does not.

13. Anchors for Answers

• Data: 72% of health claims in FY24 were settled through TPAs and 28% in-house; ₹15,100 crore of claims were disallowed that year [9]
• Data: TPA fees were about 6% of premiums when HITPA was set up, and cutting this cost was part of its purpose [7]
• Data: ATNs were pending on 61 PSU audit paragraphs (48 of them BSNL) as of August 2025; some PSU paragraphs pending since 1999 [10]
• Report/Committee: CAG report of 2022 on HITPA [1]; Committee on Public Undertakings, which examines PSU audit paragraphs [10]
• Law/Case: RTI Act Sections 8(1)(d) and 8(2) [3]; ICAI v. Shaunak H. Satya (SC, 2011): 8(1)(d) applies only where disclosure harms competitive position [8]

14. Mains Relevance

• GS-II: Transparency and accountability; Right to Information; role of constitutional bodies (the CAG).
• GS-III: Indian economy, covering public-sector enterprises and the insurance sector.
• GS-IV: Probity in governance; accountability in public institutions.
• Possible question stems: 1. CAG recommendations often go unimplemented by public sector undertakings. Examine the mechanisms for audit follow-up in India and suggest reforms. (GS-II) 2. Should the 'commercial confidence' exemption under the RTI Act apply to public sector enterprises in matters of internal resource allocation? Discuss with reference to Section 8(2). (GS-II) 3. Captive service entities of PSUs, such as HITPA, are often underutilised. Analyse the governance and efficiency implications. (GS-III)

15. Related Topics to Study Next

• CAG (Arts. 148–151): the constitutional basis of the audit that flagged HITPA.
• Public Accounts Committee: the parliamentary body that examines CAG reports and follows up on them.
• RTI Act, 2005 (Sections 8, 11 and 24): exemptions, third-party information procedure, and organisations excluded from the Act.
• IRDAI and TPA regulation: the regulatory framework for insurers and TPAs.
• PSU general insurers' merger and recapitalisation debate: context for coordination among the four promoters.
• Health-insurance claims processing / National Health Claims Exchange: where TPAs fit in the claims ecosystem.
• Central Information Commission: the appellate body for RTI refusals.

16. NCERT Concepts to Revise

• Comptroller and Auditor General (Polity): The 2022 CAG audit found HITPA capable but underused and recommended giving it more business.
• Right to Information Act 2005 (Polity): The insurers' replies to RTI queries are how the underuse of HITPA came to light.
• Public interest override (Polity): Section 8(2) lets authorities disclose exempt information when public interest outweighs harm; the report invokes it.
• Public Accounts Committee (Polity): It examines CAG reports and follows up on them, the mechanism missing for HITPA's recommendation.
• Official Secrets Act 1923 (Polity): Section 8(2) applies notwithstanding this Act, so it is a likely exam detail.
• Central Information Commission (Polity): It hears appeals against RTI refusals, such as those by New India Assurance and Oriental Insurance.
• Public sector undertaking (Economy): The four promoter insurers are government-owned undertakings whose governance and efficiency are in question.
• Accountability (Polity): Withholding information on how PSU insurers use their own TPA raises a public accountability question.
• Transparency (Polity): The case tests how open public-sector insurers must be about internal business decisions.
• Insurance Regulatory and Development Authority of India (Polity): It regulates insurers and TPAs, the framework within which HITPA operates.
• Promoter (Economy): HITPA is promoted by four PSU insurers, who also decide how much business it gets.
• Outsourcing (Economy): Insurers outsource claims work to private TPAs instead of using their in-house TPA.
• Intellectual property rights (Economy): Section 8(1)(d) shields trade secrets and intellectual property, which the insurers cited to refuse information.

17. Common Errors / Trap Areas

• Section 8(1)(d) is not an absolute exemption. It carries its own public-interest override [3][5].
• Section 8(2) overrides the Official Secrets Act, 1923, not only Section 8(1) [3].
• HITPA has four promoters, and all are general insurers (not LIC, which is a life insurer) [1].
• The CAG report is from 2022, not 2026. 2026 is when the RTI follow-up was reported [1].
• The CAG did not find HITPA deficient. It found HITPA capable but underused [1].