How Bern intends to moderate health insurance reserves

In 2020, health insurers had 11.3 billion francs in their reserves, 203 percent of the minimum, set to be reduced to the benefit of premium payers

Health insurance reserves are to be reduced to the benefit of Swiss policyholders.
At its meeting on April 14, 2021, the Federal Council adopted the revised Ordinance on the Supervision of Health Insurance (OVAMal), which specifies the conditions for the voluntary reduction of reserves and the reimbursement of excess premiums collected by insurers.
In addition, the minimum permitted threshold for reducing reserves in compulsory health insurance will be lowered. The revised ordinance will come into force on June 1, 2021 and will apply for the first time to the approval of premiums for 2022.

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At present, the reserves of health insurers are well above the legally required minimum. In 2020 they amounted to CHF 11.3 billion, i.e. 203% of the required minimum.
The Federal Council is of the opinion that these excessively high reserves should be reduced to the benefit of the insured.
Insurers are also encouraged to calculate premiums as close as possible to the expected costs and to reduce reserves if these allow.

Simplified conditions through two different mechanisms

The Law on the Supervision of Health Insurance (LVAMal) and OVAMal provide for two mechanisms to correct ex post excessive differences between premiums collected and actual costs: the voluntary reduction of reserves and the reimbursement of excess premiums collected.
Voluntary reduction of reserves benefits all policyholders of the insurer concerned.

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Reimbursement of excess premiums is only granted to insured persons in cantons where premiums have far exceeded costs.
The revision of the OVAMal envisages simplifying the conditions under which an insurer may voluntarily reduce reserves and lowering the limit above which this is possible.
Currently, insurers must have reserves that are 150% higher than the minimum amount prescribed in the Ordinance. With the revision, this limit will instead correspond to the minimum amount of 100 per cent.

The relationship between costs and revenues will be made more explicit

With the revision of the Ordinance, the Federal Council also clarifies the conditions for the reimbursement of excess premiums, defining the ratio between costs and revenues from premiums which an insurer must present in order to have its application approved.
Another objective of the OVAMal amendment is to prevent insurers from using the two corrective instruments for commercial purposes, in order to acquire new policyholders.
The revision of the ordinance also enhances legal certainty by defining in the ordinance, rather than in an FOPH circular, the conditions necessary for a voluntary reduction of reserves.