For its study, independent online comparison service moneyland.ch analyzed the administrative expenses of Swiss health insurance providers using data provided by the Federal Office of Public Health (FOPH). The administrative expenses published by the FOPH include all costs related to providing and maintaining a health insurance company, including salaries, commissions and marketing.
According to the most recent FOPH figures, insurance companies spent 1.44 billion francs on administration related to compulsory health insurance in 2017. “That is an increase of around 76 million francs compared to the previous year,” says moneyland.ch analyst Felix Oeschger. By comparison, total compulsory health insurance premiums paid by residents in 2017 totaled 30.3 billion francs – around 1.5 billion francs more than premiums paid in 2016.
Insurance companies spend an average of 166 francs per policyholder on administration
Health insurance providers spend a weighted average of 166 francs per policyholder on administrative expenses in 2017. That is 3 francs more per policyholder than they spent in 2016.
Health insurance provider Ingenbohl had the highest administrative expenses in 2017, at 492 francs per policyholder. Sumiswalder Krankenkasse had the lowest expenses at 86 francs per policyholder, followed by Sanagate (91 francs), Krankenkasse Luzerner Hinterland (92 francs), Sanavals (101 francs) and Sodalis (103 francs). The administrative expenses of health insurance companies are shown in the moneyland.ch compulsory health insurance comparison.
You can request a full comparison of the administrative expenses of Swiss health insurance providers free of charge at the foot of this article.
Some insurance providers are more efficient than others
In addition to administrative expenses in relation to policyholders, administrative expenses in relation to premiums are another important indicator. The average ratio of administrative expenses to premiums for 2017 across all insurance providers is 5.06%. That means health insurance companies spent around 5% of the money paid by policyholders in compulsory health insurance premiums on administration.
The most efficient insurance providers in this regard over the 2017 insurance year were the Krankenkassen Luzerner Hinterland (2.9%), the Sumiswalder Krankenkasse (3.2%), CSS (3.3%), Visana (3.4%), Atupri (3.4%), Easy Sana (3.5%), Sodalis (3.5%), Philos (3.6%), Avenir (3.6%), Groupe Mutuel (3.6%) and Galenos (3.7%). “The ratio of administrative spending in relation to health insurance premiums is clearly shown in the health insurance comparison,” states moneyland.ch CEO Benjamin Manz.
High sales commissions in the health insurance industry
According to the FOPH, Swiss health insurance providers paid out around 50 million francs in commissions to both employees and third parties for sales of compulsory health insurance. That is significantly more than the 33 million francs paid out in sales commissions in 2016. Sales commissions for the supplementary health insurance policies accounted for by the FOPH totaled around 56 million francs in 2017. Collectively, sales commissions for FOPH-regulated supplementary health insurance made up around 24% of administrative expenses related to supplementary health insurance.
It is important to note, however, that the bulk of supplementary health insurance providers are not regulated by the FOPH, but by financial supervisory authority FINMA. Supplementary health insurance providers supervised by FINMA had combined administrative expenses of 1.566 billion francs in 2017. Together with the administrative expenses recorded by the FOPH, total administrative expenses related to supplemental health insurance comes to 1.8 billion francs. FINMA no longer reports sales commissions separately. According to moneyland.ch estimates, sales commissions in 2017 were similar to those reported in 2016, making up around 30% of administrative expenses.
moneyland.ch estimates that Swiss health insurance providers paid out sales commissions totaling half-a-billion francs in 2017 for both compulsory and supplemental health insurance. The fact that administrative costs for compulsory and supplementary health insurance cannot always be clearly separated is problematic. Sales commissions also provide insurance agents and brokers with a motivation to promote high-commission policies even when these are not the right solution for customers.
Compulsory health insurance: Marketing expenses
According to the FOPH, Swiss health insurance providers spent 55 million francs on advertising compulsory health insurance in 2017. That amounts to around 3.8% of total administrative expenses. An additional 9.5 million francs was spent on advertising supplementary health insurance services which are regulated by the FOPH. However, many supplementary health insurance policies are not regulated by the FOPH but by FINMA.
At first glance, the costs associated with advertising do not seem significant. But it is important to note that it is difficult to clearly differentiate between the marketing of compulsory and supplementary health insurance. Large portions of advertising expenses are likely designated to supplementary health insurances which are not regulated by the FOPH.
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