Whenever one buys a Life Insurance, only one thing to look at how much premium you have to pay, how much tax will be discounted and death benefits? However, most people ignore the Claims paid ratio (CPR). Let us know what this CPR is and why it is important to pay attention to.
Simply understand, CPR is a aspect, which determines whether your insurance company will stand with your family in times of trouble. CPR states how much money the insurance company actually paid out of the total claims. For example, if a company received a claim of ₹ 100,000 and paid ₹ 75,000, its CPR will be 75%. In short, it is not enough to only approve the claim, it is more important to pay the amount.
What is the difference between CSR and CPR? The CSR, the claim settlement ratio, states how many claims of the total claims were ‘settled’. Suppose, if 1000 claims came and the company approved 960, CSR is 96%. However, it is not mentioned how many people received the full amount. This is just a game of figures.
CSR shows the calculation and the CPR shows the actual amount. CSR may be good but CPR shows you the reality how much money people got.
The purpose of insurance is to provide financial assistance to the family in difficult times. Now if the insurance company does not pay the money at that time, what is the use of that insurance? Thus, drawing attention to CPR is important. This shows that the insurance company is really helping people, not just making promises on paper.
According to the report of Insurance Regulatory and Development Authority of India (IRDAI), the average claim paid ratio of life insurance companies in India was 96.82% in 2023-24. This means that the insurance amount was paid in about 97 claims from each of the 100 claims.
If you are planning to buy insurance, definitely pay more attention to CPR and CSR. In addition, read all the terms of the policy carefully, always keep the nominee information updated and keep in mind that whatever other information you are giving should be true. False information or incomplete medical details can be a major reason for the clam stopping later.
