Technical provisions

Insurance companies are obliged to form provisions to cover their contractual obligations. FINMA issues rules in this context and reviews compliance annually.

Detailed information about the type and scope of provisions for the various insurance sectors can be found in the Insurance Supervision Act, the Insurance Supervision Ordinance and the relevant FINMA circulars:

Life insurance companies

The formation and release of provisions in life insurance are regulated in FINMA Circular 2008/43 "Technical provisions – life insurance".

2008/43 FINMA-Rundschreiben "Rückstellungen Lebensversicherung" (20.11.2008)

Versicherungstechnische Rückstellungen in der Lebensversicherung

Updated: 11.12.2015 Size: 0,15  MB
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Non-life insurance companies

The formation and release of provisions in non-life insurance are regulated in FINMA Circular 2008/42 "Technical provisions – non-life insurance".

Non-life insurance companies must form four types of provisions:

  • provisions for claims reported but not yet settled;

  • provisions for claims incurred but not reported;

  • security and equalisation reserves, because provisions, by their nature, can never be quantified precisely and are subject to random fluctuations;

  • unearned premium reserves (i.e. premiums that have already been paid but which relate to the next time period).

2008/42 FINMA-Rundschreiben "Rückstellungen Schadenversicherung" (20.11.2008)

Versicherungstechnische Rückstellungen in der Schadenversicherung

Updated: 31.03.2017 Size: 0,12  MB
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Supplementary health insurance companies

The formation and release of provisions in supplementary health insurance are regulated in FINMA Circular 2010/3 "Health insurance under ISA". As well as specifying the rules on the formation and release of provisions and permissible financing models, this circular also sets out the method used by FINMA when approving premiums in supplementary health insurance. 

As a matter of principle, anyone intending to provide supplementary health insurance must form the following types of provisions:

  • provisions for claims not yet settled;

  • provisions for claims not yet reported;

  • provisions for eventual future claims expenditure (relating to claims already settled on the reference date);

  • ageing reserves (in order to be in a position to finance the consequences of ageing among insured persons);

  • equalisation reserves (to finance adverse claims settlement outcomes or offset volatility);

  • other technical provisions (e.g. for anticipated losses due to anti-selection);

  • provisions for general risks arising from insurance operations.

2010/03 FINMA-Rundschreiben "Krankenversicherung nach VVG" (18.03.2010)

Zusatzversicherung zur sozialen Krankenversicherung und Spezialfragen der privaten Krankenversicherung

Updated: 11.12.2015 Size: 0,16  MB
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Reinsurance companies

The formation and release of provisions are regulated in FINMA Circular 2011/3 "Provisions in reinsurance". Relaxations apply in the case of reinsurance captives which do not have a complex risk structure.

2011/03 FINMA-Rundschreiben "Rückstellungen Rückversicherung" (30.06.2011)

Versicherungstechnische Rückstellungen in der Rückversicherung

Updated: 03.12.2015 Size: 0,1  MB
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FINMA's supervisory activities

FINMA verifies that all regulations on technical provisions are being observed. The primary information source for this activity is a report submitted annually to FINMA by the actuary responsible for the non-life insurer.

FINMA also launches investigations of its own when it believes that this course of action is indicated for economic or other reasons. Where necessary, FINMA can also authorise on-site supervisory reviews.