Swiss Compulsory Health Insurance Running Expenses Hit 1.5 Billion Francs

Salaries, sales commissions, advertisement and other expenses associated with compulsory health insurance are the topic of recurring political debates. Every year the Federal office of Public Health (FOPH) publishes the running costs of health insurance companies. Running costs include the cost of personnel, sales commissions and advertising. moneyland.ch studied the most recent FOPH data.

The result: In 2019, the running expenses associated with providing Swiss compulsory health insurance totaled nearly 1.5 billion Swiss francs. Salaries made up more than two-thirds of these expenses, totaling 1.1 billion francs.

Health insurance companies spent around 49 million francs on sales commissions for compulsory health insurance policies and 60 million francs on advertising.

Commissions paid by health insurance providers for sales of non-compulsory supplemental health insurance totaled around half a billion francs per year, according to moneyland.ch estimates.

“The cost of administration and marketing is staggering,” observes moneyland.ch CEO Benjamin Manz. “However, the driving force behind compulsory health insurance premium hikes over recent years has not been health insurance administration, but ever-increasing healthcare costs,” says Manz.

Health insurance provider running expenses compared

Administrative costs varied broadly between health insurance companies in 2019, ranging between 96 and 573 francs per policyholder. The differences between compulsory health insurance providers are huge (refer to the comparison table which you can request below).

The insurance provider with the lowest per-policyholder costs in 2019 was the Krankenkasse Luzerner Hinterland, at 96 francs per insured person. It is followed by Sodalis (107 francs), Visperterminen (111 francs) and Compact (116 francs). The running expenses of each health insurance provider are listed in the compulsory health insurance comparison on moneyland.ch.

How cost-efficient are Swiss compulsory health insurance providers?

There is another practical indicator which can be used to determine the cost efficiency of Swiss health insurance companies: comparing running expenses (plus depreciation) with premiums paid by policyholders (minus risk equalization subsidies). On average, the running-cost-to-premium ratio was 4.6% in 2019. Nearly 5% of money paid as compulsory health insurance premiums was spent on administration – including marketing and salaries.

The most cost-efficient health insurance provider was the Krankenkasse Luzerner Hinterland. Only 2.7% of the money which it collected in compulsory health insurance premiums went to cover its running expenses. It is followed by Visana (3%), Sodalis (3.3%), CSS (3.4%), Easy Sana, Galenos and Sumiswalder (all 3.7%).

The health insurance provider which had the highest administrative costs in relation to premiums is Glarner Krankenversicherung, with a ratio of 9.6%. Surprisingly, budget health insurance provider Assura has relatively high running costs, with a running-cost-to-premium ratio of 6.1%.

You can find the full rankings on the free PDF available below. You can also find the figures on the information pages of the interactive health insurance comparison on moneyland.ch.

High compulsory health insurance sales commissions

Sales commissions for compulsory health insurance are the source of recurring political discussions. According to the Federal Office of Public Health (FOPH), health insurance providers paid out 49 million francs in commissions for compulsory health insurance policy sales. Spending on sales commissions for voluntary private health insurance is much higher.

In practice, the line between sales commissions for compulsory and voluntary health insurance is not easy to define. Many insurance providers only sell supplemental health insurance in combination with their compulsory health insurance policies. The publishing of compulsory health insurance premiums for the coming year is typically used by brokers and agents as an opportunity to sell voluntary health insurance.

Administrative costs of voluntary health insurance

The administrative costs of voluntary private health insurance are even higher than those of compulsory health insurance. According to figures published by the Federal Office of Public Health and by financial supervisory authority FINMA, nearly 1.9 billion francs went into running expenses related to voluntary health insurance in 2019.

Around 71 million francs was paid out in sales commissions just by the voluntary health insurance providers which are regulated by the FOPH. That means commissions made up 29% or nearly one-third of administrative costs. But the truly relevant health insurance providers are regulated by FINMA and not by the FOPH.

The bulk of sales commissions are paid out by health insurance companies which are supervised by FINMA, which does not publish clear statistics for these figures.

As part of its study, moneyland.ch estimated the total amount of money paid out in sales commissions for voluntary health insurance sales. According to moneyland.ch estimates, in recent years Swiss health insurance providers collectively spent nearly half a billion francs on voluntary health insurance sales commissions per year.

More information:
Interactive health insurance comparison