If premiums are set too high or benefit costs turn out lower than expected, a premium surplus arises. We pay this amount into the reserves. That way, we can keep premium increases as moderate and predictable as possible for our clients.
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 a pandemic breaks out (thus making a negative result for the year possible).
Why is the excess money not refunded?
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. 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.
By choosing not to reimburse the premiums, we also prevent any additional administration costs. It’s our clients who ultimately benefit from this – in the form of moderate premium increases.
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.