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KVG solvency test for health insurers

The KVG solvency test determines how great the health insurers' risks are. It assesses the extent to which the insurers are able to bear these risks. The test sets the requirements for the minimum level of reserves as follows: A health insurer must still be able to meet its financial obligations at the end of the year, even if the year has been extremely bad for it. Such an extraordinary year is defined as a year that an insurer should experience on average every hundred years. In other words: the probability of a catastrophe is set at 1 percent in the KVG solvency test. With the required reserves (minimum amount), the health insurer should just be able to cope with the average loss of such an extraordinary year.

Health insurer risks

The KVG solvency test was derived from the Swiss Solvency Test (SST). This is used by the Financial Market Authority (FINMA) to assess the solvency of private insurers. Like the SST, it takes into account the following risks:

  • Market risk includes the dangers in the financial markets, for example the risk that stock prices will fall.
  • Credit risk assesses the risk that a debtor will no longer be able to pay his debts.
  • The insurance risk relates to the risks in the insurance business: the KVG solvency test takes into account the special features of social health insurance. This includes the risk compensation between the health insurance companies. Because the exact amount of the taxes and contributions is only determined afterwards. Another risk is connected with the fact that the insured can change the fund annually. It is not easy for the new insurer to estimate the cost of these additions.

Scenarios are also evaluated as part of the solvency test. The scenarios describe special situations, for example a pandemic. The solvency test examines what effects such scenarios have on the results of a fund.

Documents to be submitted and other resources

All health insurers have to fill out an Excel form annually, which determines their risks and records the available reserves in detail. The current template for the KVG solvency test will be available from the beginning of February under Downloads. The form for the KVG solvency test must be submitted together with the report by April 30th. A template for the report, instructions including a technical appendix and FAQs are also available under Downloads.

Results of the solvency test

The results of the KVG solvency tests submitted as well as some graphical evaluations are published each autumn.