Buying health insurance is usually meant to shield you from unexpected health care costs. Have you ever wondered how much of the insurance policy you hold primarily ends up being useful? Let’s explore what is credit utilisation ratio, how to calculate utilisation percentage, and why it affects you as a policyholder.
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What Is Utilisation Ratio in Health Insurance and How Does It Impact Your Policy
Utilisation ratio means how many of your policy’s benefits you use against your total sum insured during a period. Having this ratio can show you how much of your premium you spend on health services and help you realise the impact on your insurance down the road.
Now that you have understood what is utilisation ratio, let’s understand how to calculate utilisation percentage. Here’s the straightforward utilisation ratio formula on how to calculate utilisation:
Utilisation Ratio = (Total claim amount ÷ Total sum insured) × 100
For example if John made 2 claims of ₹1 lakh each against the sum insured of ₹5 lakhs then the utilisation ratio would be 40%.
Utilisation Ratio = (200000 ÷ 500000) × 100 = 40%
Understanding what the credit utilisation ratio is is half the story; how it is used by insurers is also important. Now let's look at how utilisation ratio works in health insurance.
Insurers use utilisation ratios to track usage patterns, which are then analysed to spot trends.
If your utilisation ratio is low, you are considered a low-risk customer. This can be very helpful when you renew your policy or increase your sum insured.
A low ratio can signal fewer health risks and responsible policy use.
For you as a policyholder, the ratio can impact the following.
Insurers may change terms or ask for higher premiums if you regularly hit high utilisation.
While every claim is reviewed on merit, a history of high utilisation may lead to closer scrutiny.
Insurers will rely more on data by 2025 than they have ever done. Artificial intelligence-driven claim assessment and predictive analytics point to your use history perhaps being more significant than first believed. Some modern insurers offer tailored premiums based on usage patterns. Plans increasingly include digital health tracking and wellness programs, giving insurance companies a more holistic view of your health than merely claim data.
It's about being wise with your health and coverage, not about dodging claims.
The following strategies help you control your utilisation ratio.
You should refrain from keeping poor utilisation ratios.
Truth: Realistically, that is not the aim. Use your policy if you need treatment. Just don't overuse it without real need.
Reduced premiums follow from a low utilisation ratio.
Truth: Not always. Not only use but also age, geography, health status, and more determine premiums.
Most people hardly give the utilisation ratio any thought until they are quite far into a policy. Early awareness of it, however, will enable you to better plan, make prudent claims, and even raise your prospects with future insurance advantages. Health insurance is meant to help you when needed. The aim is to use it sensibly rather than to avoid using it.
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Reviewed by Dr. Harshita Dahiya 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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