Claims paid ratio: Why life insurance policyholders should be aware of this crucial metric

The claims paid ratio isn't just a number, it reveals an insurer's efficiency, ethics and customer focus. It's the percentage of claims an insurance company successfully paid out compared to all claims received in a certain period.

The latest Insurance Regulatory and Development Authority of India (IRDAI) annual report (2023-24) shows an encouraging average CPR of 96.82 percent for Indian life insurers.

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Factors that contribute to a high CPR

Achieving a high CPR isn't accidental. It's the result of a well-planned, customer-focused claims system. It reflects robust management, smooth customer journeys and smart fraud detection, while keeping empathy in mind. Here's what contributes to a great CPR:

• Fast-track claim settlement: Leading insurers use technology and streamlined processes to pay claims quickly, ensuring that the funds arrive when the customer needs them.


• Simple paperwork: Dealing with complex documents can be overwhelming for families. Insurers with high CPRs use digital tools to simplify paperwork, making the process easier and more compassionate.


• Low claim rejection rates: While preventing fraud is important, a low rejection rate, along with clear reasons for any denial, shows fair and careful claim assessment. This means the insurer is committed to paying valid claims rather than finding reasons to reject them.

For consumers, especially first-time buyers, checking an insurer's CPR, which is publicly accessible on IRDAI’s official website and in the Handbook2, should be as important as looking at premiums or policy terms. These factors together help make an informed decision and truly buy peace of mind.

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The future of claims, powered by AI

The way insurance claims are processed is rapidly changing, largely thanks to artificial intelligence (AI) and data. A process heavily reliant on human judgment is now becoming more data-driven and scientific. This change is most evident in claims settlement, where AI is making things much faster and more reassuring for customers.

Insurers are now using AI for advanced underwriting, allowing many policies to be processed automatically. This not only speeds up buying a policy but also paves the way for a smoother claims experience. When a claim needs to be made, AI systems can spot fraudulent patterns early on, protecting both the company and honest policyholders, ensuring legitimate claims are paid quickly.

Digital systems, backed by AI, are significantly reducing processing times and errors. The often complicated traditional claims journey is being reinvented with automation for speed and human involvement for empathy. This combination of technology and personal touch allows for constant digital updates, from policy purchase to claim status.

Some leading insurers are even introducing services that can settle eligible claims almost instantly, providing immediate financial relief. This evolution shows a deep commitment to making every policyholder feel supported and secure, from buying their policy to the final claim payout.

Building trust by educating companies, policyholders

True financial inclusion means that everyone, especially first-time buyers and those from low-income groups and other diverse family structures, is confident that their insurance claims will be paid.

This is where CPR becomes more than just a metric. It's a powerful tool for market education. When people understand CPR, it can change their perception from doubt to assurance, from fear of delays to confidence in delivery. It's the clearest sign of an insurer's commitment.

In the Indian life insurance industry, insurers have built strong digital underwriting (UW) controls using AI and data analytics to ensure accurate risk selection at the onboarding stage itself. With tools for instant policy issuance for low-risk customers and predictive models that flag high-risk cases for deeper evaluation, new-age insurers are using rule-based engines and automated medical underwriting to ensure that disclosures are validated upfront, reducing the likelihood of claim disputes later.

This proactive approach leads to cleaner portfolios and faster claims processing, enhancing trust and transparency. By front-loading risk selection, insurers ensure that customers experience minimal friction during claims, thus delivering on the promise when it matters most.

Looking ahead

Insurers who consistently achieve high CPRs will be the ones who build the industry's credibility and expand its customer base. Every industry initiative, from regulatory sandboxes to digital KYC reforms, must be supported by an unwavering focus on claims integrity.

Claims Paid Ratio (CPR) is not just a compliance metric but it stands as a cornerstone of insurance credibility and a true currency of trust. To truly increase insurance penetration, we need to make claims reliability a mainstream conversation and keep innovating on transparency, speed, and educating nominees. Ultimately, life insurance isn't just a product; it's a profound promise to be there. And CPR is the clearest indicator of who truly stands by that promise.