If premiums are set too high or benefit costs turn out lower than expected, a premium surplus arises. We generally pay this amount into the reserves in order to keep premium increases as moderate and predictable as possible for our clients. However, we also free up our reserves in exceptional situations. This takes the form of repayments to insured persons, who thus enjoy lower premiums.
Frequently asked questions
Why do premium surpluses arise?
We set premiums to cover the benefit costs we actually expect to incur. As a health insurer, if we generate a surplus this can have one of two reasons: either the premiums we charged our insured persons were too high, or benefit costs turned out lower than originally expected or calculated.
What happens to excess premiums?
Under basic insurance, positive results for the year (surpluses) must be paid into the reserves. Art. 14 of the Health Insurance Oversight Act (KVAG) requires insurers to establish reserves to ensure their solvency. These statutory reserves are a way of preventing premiums from suddenly rocketing sky high, for example when benefit costs are unexpectedly high or a financial crisis occurs thus making a negative result for the year possible.
What are reserves?
Reserves are money that is set aside for leaner times. As a health insurer, they ensure that we can still pay all our bills even in times of crisis. That’s why positive results for the year also flow into the reserves.
By the way: the establishment of reserves by health insurance companies is governed by law (Health Insurance Oversight Act, Art. 14). If their reserves fall below the level stipulated by law, the health insurers in question must increase the premiums they charge their insured persons.
In what situations is a repayment made?
The Federal Council simplified the legal requirements for the voluntary release of reserves in mid-2021. It lowered the minimum reserve level, thus making it easier to free them up. This means that we can reimburse reserves in certain exceptional situations. Above-average capital market gains in 2019 and a lower-than-expected trend in costs in 2020 resulted in an extraordinary increase in reserves. This constitutes just such an exceptional situation. In addition to calculating tight premiums, CSS will release part of these reserves in 2022 and pay CHF 90 million back to its clients.
Why is the excess money not normally refunded?
Repayments should remain an exception and only be made when the accumulated reserves are excessively high. CSS will therefore maintain its focus on using surpluses from basic insurance to calculate tight premiums. We will continue to follow this principle in future. We want to offer our clients premiums that are as attractive as possible. That’s why we pass the surplus from basic insurance on to clients in the form of moderate premiums in the following years.
One example: While the industry saw an average rise in premiums of 0.5% as at January 2021, the CSS Group was able to lower its premiums by an average of 0.9%. In our view, reducing the reserves by calculating tight premiums is a more meaningful approach as it allows all insured persons to benefit from attractive premiums.
How does this repayment work?
Insured persons who have basic insurance with either CSS Kranken-Versicherung AG or Arcosana AG in 2022 will enjoy a repayment from reserves. The monthly repayment from reserves will be deducted directly from your monthly premium. If you pay your premiums every two months, quarterly, semi-annually or annually, the repayments will be made at these same intervals.