KVG/LAMal solvency test Health insurers

The solvency test is used to check whether a health insurer has sufficient reserves. It is filled out at the beginning of each year, and takes account of the risks to which the insurer will be exposed until the end of the year. An insurer is deemed to have passed the test if the available reserves exceed the minimum level of reserves.

The KVG/LAMal solvency test is used to find out the level of risks to which health insurers are exposed and the extent to which they are capable of bearing these risks. The test requires a minimum level of reserves that would enable a health insurer to meet its financial obligations at the end of the twelve-month period even if it has suffered an extraordinarily bad year. An extraordinarily bad year is defined as a year experienced by an insurer on average every one hundred years. In other words, the KVG/LAMal solvency test puts the probability of a catastrophe at 1 per cent. The required minimum level of reserves is designed to allow a health insurer to just survive the average loss suffered in an extraordinary year of this sort.

Health insurers’ risk exposure

The KVG/LAMal solvency test is based on the Swiss Solvency Test (SST) used by the Financial Market Supervisory Authority (FINMA) to assess the capital strength of private insurers. Like the SST, it takes account of the following risks:

• Market risk encompasses risks on the financial markets, for example the risk that share prices will fall.
• Credit risk measures the risk that a borrower will no longer be able to pay its debts.
• The insurance risk has to do with the risks of the insurance business. The KVG/LAMal solvency test factors in the special features of social health insurance. This includes the risk compensation between health insurers, as the exact amount of expenses and premiums is only set retrospectively. Another risk has to do with the fact that insured members can switch insurer each year. It is not easy for the new insurer to gauge the costs involved in taking on these new members.
The solvency test also involves evaluating scenarios describing special situations such as pandemics. The test looks at the impact of such scenarios on a health insurer’s performance.

Documents to be submitted and other tools

All health insurance companies must complete an Excel form once a year to quantify the risks to which they are exposed and record in detail their available reserves. The current template for the KVG/LAMal solvency test and the form for calculating the standard deviation in relation to the risk compensation are made available for download at the beginning of February each year. The KVG/LAMal solvency test form must be submitted together with the report by 30 April. Also available for download are a report template, instructions including a technical annex, and FAQs.

Results of the solvency test

The results of the KVG/LAMal solvency tests submitted are published each autumn.


Last modification 04.07.2018

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Federal Office of Public Health FOPH
Health and Accident Insurance Directorate
Premiums and Solvency Oversight Section
Schwarzenburgstrasse 157
3003 Berne
Tel. +41 58 462 21 11

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