KVAG (Health Insurance Supervision Act)

What is the KVAG?

The KVAG is the federal act under which the Confederation supervises health insurers in basic health insurance. Parliament passed it on 26 September 2014, and it has been in force since 1 January 2016. Before that, the supervisory rules were scattered across the Federal Health Insurance Act (KVG) and the Health Insurance Ordinance (KVV).

The act has a clear purpose: it is meant to protect the interests of insured persons, above all through transparency in social health insurance and through the solvency of health insurers (Art. 1 para. 2 KVAG). Solvency means that the insurer can meet its obligations at all times, even in a year with unexpectedly high costs.

The KVAG applies to everyone who provides basic health insurance: the health insurers (legal entities that do not pursue a profit motive), private insurance companies with an authorisation, reinsurers and the Common Institution under the Federal Health Insurance Act. It does not apply to supplementary insurance. That is governed by the Insurance Contract Act (ICA) and supervised by FINMA.

Alongside the act, there is the implementing ordinance, the Health Insurance Supervision Ordinance (KVAV). It sets out how reserves are calculated, when premiums must be submitted and how repayments work.

How it works: supervision under the KVAG

Authorisation: Only insurers authorised by the FOPH may offer basic health insurance (Art. 4 KVAG). The requirements include a legal form as a company limited by shares, a cooperative, an association or a foundation, a registered office in Switzerland, sufficient reserves, an audit firm and the obligation to accept every person in its area of activity who is required to take out insurance (Art. 5 KVAG). The FOPH publishes the list of authorised insurers.

Reserves: Every insurer must build up sufficient reserves to remain solvent (Art. 14 KVAG). The minimum amount is calculated by the solvency test. It is set so that, even in the worst 1% of possible developments over a year, the reserves do not fall below zero on average (Art. 11 KVAV). If the reserves exceed the minimum, the insurer may reduce them voluntarily, for example through tightly calculated premiums or an adjustment on the premium invoice (Art. 26 KVAV).

Approval of premiums: Premiums for basic health insurance require approval by the FOPH and may neither be published nor applied before then (Art. 16 para. 1 KVAG). The insurer submits them at the latest five months before they take effect (Art. 27 KVAV). The FOPH refuses approval if the premiums do not cover the costs, are inappropriately high compared with the costs or lead to excessive reserves (Art. 16 para. 4 KVAG). The cantons can comment beforehand.

Repayment: If premium income in a canton was significantly higher than the costs, the insurer can make an adjustment in the following year (Art. 17 KVAG). The money goes to everyone who was insured with it on 31 December of the year concerned (Art. 18 KVAG).

Administration and intermediaries: Administrative costs must be limited to what is necessary; the insurer shows advertising and intermediary commissions separately (Art. 19 KVAG). Since 01.09.2024, Art. 19a and 19b KVAG have governed the activities of intermediaries: insurers can agree, among other things, on a ban on telephone advertising to people who have never been insured with them or have not been for some time, a cap on commissions and signed advice records, and the Federal Council can declare these rules binding on all insurers.

Legal basis

The KVAG has the number SR 832.12 and is based on Art. 117 para. 1 of the Federal Constitution. The most important articles for insured persons:

Breaches are punishable: anyone who operates social health insurance without authorisation risks a custodial sentence of up to three years or a monetary penalty (Art. 53 KVAG). For certain breaches of duty, Art. 54 KVAG provides for fines of up to CHF 500,000.

Example: from the premium application to cancellation

The process for one year’s premiums shows how the KVAG and the KVG work together. Here for the 2027 premiums, with the statutory deadlines:

A ratio below 100% does not mean that an insurer is insolvent. It must, however, rebuild its reserves, and the FOPH takes this into account when approving premiums.

What this means for you

The KVAG works in the background, but you benefit from it directly:

• You can choose any insurer. Every authorised insurer must accept you for basic health insurance. The overview of health insurers shows which insurers exist and what their key figures look like.
• New premiums are checked. No insurer may charge a premium that the FOPH has not approved. Compare the approved premiums in the premium calculator as soon as they are published.
• You have a right to switch. Once you are notified of the new premium, you can cancel by 30 November. The steps are under switch insurer and deadlines.
• Intermediaries have rules. Since 01.09.2024, the Federal Council can declare insurers’ rules on telephone advertising, commissions and advice records binding on all insurers (Art. 19b KVAG). Do not sign anything you have not understood.

Common mistakes

• Confusing the KVAG and the KVG. The KVG governs your rights and benefits, the KVAG the supervision of insurers.
• Believing the FOPH sets the premiums. Each insurer calculates its own premiums. The FOPH only reviews and approves them.
• Assigning supplementary insurance to the KVAG. Supplementary hospital and outpatient insurance is governed by the ICA and the ISA and supervised by FINMA.
• Thinking high reserves are bad. Reserves secure an insurer’s ability to pay. The FOPH can, however, object to excessive reserves when approving premiums.

We explain how we process the insurers’ key figures under how we calculate.