What Do Swiss Health Insurance Companies Spend on Administration?

In the coming year too, the premiums charged for mandatory health insurance will drastically increase again. But what role do insurance companies play in these price hikes? According to the latest figures published by the Federal Office of Public Health (FOPH), the costs of administrating mandatory health insurance totaled 1.7 billion francs in 2022. The administrative costs accounted for include salaries, sales commissions, and advertising costs.   

Salaries make up the bulk of administrative costs, totaling 1.1 billion francs. Around 73 million francs was spent on advertising, while sales commissions consumed 48 million francs. All of these costs combined made up around 5.1 percent of the total premiums paid by residents.

But while the administrative costs are high, they are relatively low compared to healthcare costs. “Primary responsibility for the high health insurance premiums falls on the climbing Swiss healthcare costs,” stresses moneyland.ch analyst Felix Oeschger.

This is what Swiss health insurance companies spend on administration

The costs of administrating mandatory health insurance vary starkly between insurance companies. According to figures published in 2023, administrative spending ranged between 105 and 458 francs per insured person, depending on the insurance company (see Table 1).

The Krankenkasse Luzerner Hinterland spent the least on administration, at 105 francs per insured person. It is followed by the Sumiswalder Krankenkasse (114 francs) and Sodalis (119 francs).

Table 1: Administrative costs in 2022 by insurance company

Note: Only insurance providers that will still operate in 2024 are included in the above comparison.

This is how much of the premium you pay is used for administration

There is another metric that makes it possible to determine how efficiently Swiss health insurance providers manage obligatory health insurance. That metric is the ratio between administrative costs (plus depreciation) and insurance premiums (minus risk compensation). In 2022, the average ratio was 5.1 percent. That figure includes marketing expenses and employee salaries, among other costs.

The Krankenkasse Luzerner Hinterland had the best performance (see table 2), with just 2.6 percent of the money collected in insurance premiums (minus risk compensation) being spent on administrating mandatory health insurance. It is followed by Sodalis (3.6 percent), Visana (3.6 percent), and Galenos (3.8 percent).

Performance ratings can be found in the interactive health insurance comparison on moneyland.ch.

Table 2: Ratio of administrative expenses in relation to insurance premiums

Note: Only insurance providers that will still operate in 2024 are included in the above comparison.

Sales commissions for sales of mandatory health insurance

According to the FOPH, around 48 million francs were paid out to insurance brokers as sales commissions for mandatory health insurance in 2022. That is around 2.8 percent of total administrative spending and around 0.15 percent of total insurance premiums collected. It is worth noting that spending on sales commissions for mandatory health insurance was low compared to spending on sales commissions for supplemental health insurance.

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