Swiss Health Insurance Running Expenses Compared

The management of Swiss health insurance has its price. According to the latest data released by the Federal Office of Public Health (FOPH), the administrative expenses exceed 1.5 billion francs. Administrative costs include employee salaries, sales commissions, and advertising.

In total, health insurance companies collectively spent more than 1.5 billion francs on administration in 2020. Salaries form the bulk of this amount, with the cost of employees totaling 1.1 billion francs. Insurers spent around 60 million francs on advertising, and an additional 60 million francs on sales commissions. On average, 4.9 percent of each insurance premium goes towards covering administration.

“But although they are high, administrative costs are relatively low when compared to healthcare spending,” says moneyland.ch CEO Benjamin Manz. “The high costs of healthcare in Switzerland remain the determining factor behind health insurance premiums.”

Administrative spending by health insurance company

Differences between individual health insurance providers are large. According to 2020 figures released in 2021, the administrative spending of Swiss health insurance companies ranged between 98 francs and 666 francs per insured person (see chart).

The Sumiswalder Krankenkasse had the lowest expenses, at just 98 francs per insured person. It is followed closely by the Krankenkasse Luzerner Hinterland (103 francs) and Sodalis (117 francs).

Expenses in relation to insurance premiums

An interesting approach to determining the efficiency of Swiss health insurance providers is to compare administrative costs (plus depreciation) with insurance premiums (minus risk compensation). The average expense-to-premium ratio for 2020 is 4.9 percent. That means nearly 5 percent of the money paid in compulsory health insurance premiums by residents went to cover administrative costs, including marketing and employee salaries.

The Krankenkasse Luzerner Hinterland performed the best in this regard, with just 2.5 percent of total risk-balanced insurance premiums going towards running expenses. It is followed by Sumiswalder (2.8 percent), Visana (3.2 percent), CSS (3.2 percent), and Sodalis (3.6 percent).

Glarner Krankenversicherung has the highest expense-to-premium ratio, at 9.6 percent. Budget health insurance provider Assura also performs poorly in this regard, with 6.7% of insurance premiums going towards running expenses. The figures shown here are included on the individual product information pages in moneyland.ch’s mandatory health insurance comparison.

Spending on sales commissions for compulsory health insurance

According to data for 2020 from the FOPH, around 60 million francs was paid out by health insurance companies to insurance brokers in sales commissions. So sales commissions make up around 3.8 percent of total administrative spending, or 0.2 percent of insurance premiums. But sales commissions for mandatory insurance were low compared to those paid out for voluntary health insurance. We can expect to see sales commission spending become even lower in the future thanks to a new industrywide agreement for insurance brokers.

Administrative costs of voluntary health insurance

Running expenses for the management and provision of voluntary, supplemental health insurance are much higher than those of mandatory health insurance. According to data from the FOPH and Swiss financial supervisory authority FINMA, the total administrative costs associated with voluntary health insurance total nearly 2 billion francs.

Commissions paid out just for sales of voluntary health insurance offers which fall under the FOPHs supervision total around 92 million francs. That equates around 33.5 percent of total administrative costs, or 5 percent of the premiums charged. Taking all administrative costs into account, running expenses make up 15 percent of the cost of insurance. FINMA does not publish sales commission figures for voluntary health insurance which falls under its supervision, but these are likely much higher.

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