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Reserves

With the entry into force of the Federal Act on the Supervision of Health Insurance Companies (KVAG) on 1 January 2016, the risk-based reserve model has come into full effect. The risk-based reserve model had already been adopted in the Health Insurance Ordinance (KVV) of 1 January 2012 and was required to be implemented by 2017. The previous arrangement, which tied reserves to premiums, did not adequately reflect the financial risks of an insurer, since it took only the size of the insurer into account as the sole risk. Switching the establishment of reserves to a model that calculates the minimum reserves on an individual basis, involving a thorough analysis of the risks entered into by the health insurer (insurance, market and credit risks), was therefore the right decision.