Solvency test

What is the solvency test?

The solvency test is the annual check of whether a health insurer is financially strong enough to meet its obligations in basic health insurance even in a bad year. In health insurance, this means the KVG solvency test, named after the Federal Health Insurance Act (KVG). It measures whether an insurer’s reserves are above a statutory minimum level.

Reserves are the insurer’s equity in basic health insurance, in other words what remains after deducting all obligations. They act as a buffer: if costs rise more sharply than expected or capital markets slump, the insurer pays the loss out of its reserves instead of raising premiums in the middle of the year or not paying for benefits.

The name is reminiscent of the Swiss Solvency Test (SST) that FINMA applies to private insurers. The two tests are separate. The KVG solvency test concerns basic health insurance only and is supervised by the FOPH. Supplementary insurance under the Insurance Contract Act (ICA) is subject to the Insurance Supervision Act (ISA), with its own solvency rules and FINMA as the supervisory authority. Business from supplementary insurance is expressly not counted in the KVG solvency test.

How it works

At the start of the calendar year, every insurer calculates two figures:

1. Available reserves: the value of all assets, valued close to market, minus the value of all obligations, estimated using actuarial methods.
2. Minimum level of reserves: the amount the insurer needs to survive a very bad year. The model takes into account insurance risks (for example unexpectedly high benefit costs), market risks (price losses on investments) and credit risks (debtor defaults) and combines them using a prescribed method.

The minimum level is set so that, in the worst 1% of cases, the possible reserves at the end of the year do not fall below zero on average. Put simply: even the worst year out of a hundred should, on average, leave the insurer without a hole in its finances.

The two figures give the solvency ratio: available reserves divided by the minimum level. 100% is the statutory minimum. If the ratio is below that, the insurer must rebuild its reserves, usually through higher premiums. If it is well above, the insurer may reduce reserves according to a reduction plan, for example with tightly calculated premiums or a refund to insured persons.

Every year, the insurer writes a report on the calculation, which is signed by the executive management and submitted to the FOPH. If its risk situation changes significantly during the year, it must also estimate the figures during the year. When applying for approval of its premiums, it also encloses an estimate of the reserves at the end of the year and of the minimum level for the following year.

Legal basis

Art. 14 of the Federal Act on the Supervision of Social Health Insurance (KVAG) requires insurers to build up sufficient reserves to ensure their solvency and instructs the Federal Council to set up a model for the minimum level. This model is based on the insurance risks, market risks and credit risks across the entire field of activity.

The details are set out in the Health Insurance Supervision Ordinance (KVAV):

• Art. 9 KVAV: a new insurer needs initial reserves of at least CHF 8 million.
• Art. 10 KVAV: reserves are the difference between assets and obligations; business under the ICA is not taken into account.
• Art. 11 KVAV: minimum level with the 99% threshold and the model consisting of quantification, scenarios and aggregation.
• Art. 12 and 13 KVAV: calculation at the start of each calendar year and annual report to the supervisory authority.
• Art. 26 KVAV: voluntary reduction of reserves with a reduction plan.

If an insurer does not comply with the rules, the supervisory authority can take protective measures under Art. 38 KVAG, for example premium increases, a financing or recovery plan or the transfer of the insured portfolio to another insurer. If an insurer becomes insolvent, the Common Institution under the Federal Health Insurance Act covers the costs of the statutory benefits under Art. 18 para. 2 KVG. For supplementary insurance, Art. 9 ISA requires risk-bearing capital at least equal to the target capital.

Example: the results as of 01.01.2025

The FOPH publishes the solvency test on priminfo.admin.ch. The reference date of the test currently published is 01.01.2025.

Key figure	Value
Industry reserves	CHF 7.8 billion
Industry minimum level	CHF 5.3 billion
Industry solvency ratio	147%
Industry solvency ratio one year earlier	121%

A high ratio does not automatically mean that an insurer is better. It shows how much of a buffer exists. Very high reserves can also mean that the insurer collected more premiums than necessary in previous years.

What this means for you

The solvency ratio hardly matters for your benefits: the benefits of basic health insurance are the same at all insurers and are secured through the Common Institution under the Federal Health Insurance Act even in the event of bankruptcy. The ratio is, however, a pointer to how premiums will develop. An insurer just above 100% has to build up reserves and is more likely to raise its premiums more sharply. An insurer with very high reserves can calculate premiums tightly or give money back.

How to use the figure:

1. Compare the premium first for your municipality and your deductible in the premium calculator.
2. Then look at the key figures of the cheapest insurers. The profiles under health insurers show the solvency ratio, reserves and administrative costs with source and date.
3. Watch the trend. A ratio that falls from year to year says more than a single value.

If you have to switch insurer because of a bankruptcy, the obligation to accept applies: every other insurer in your area of residence must accept you for basic health insurance. How switching works is explained under switch insurer.

Common mistakes

• Reading the solvency ratio as a quality rating. It measures the financial buffer, not the service or the benefits.
• Thinking a very high ratio is ideal. Insured persons have paid for high reserves through their premiums.
• Mixing up the KVG test with supplementary insurance. Different rules and a different supervisory authority apply to supplementary insurance.
• Using old figures. The test always refers to 1 January of a given year. Check the reference date.

We explain how we process key figures from official sources under How we calculate.