28. Juni 2024 – In its decision of 11 June 2024, the Federal Administrative Court upheld the ruling of the Swiss Financial Market Supervisory Authority (FINMA) regarding the approval of premium increases for supplementary insurance products proposed by X. AG. The court confirmed FINMA's decision to limit the premium increases for X. AG’s products A. and B. for the year 2022.

The case focused on the planned premium increases submitted by X. AG on 29 July 2021. X. AG requested increases of 6.3% for product A. and 8.2% for product B. FINMA only approved increases of 2.7% and 2.5% respectively, based on the permissible exogenous inflation rate. The increase in excess of exogenous inflation was considered by FINMA to be abusive. Exogenous inflation is defined as the increase in claims expenditure per insured person less the financial impact of changes in the portfolio that have occurred. In determining the relevant exogenous inflation, FINMA took into account the general cost trend observed in the market rather than the individual insurance portfolio.

X. AG contested FINMA's decision, arguing that the new practice of using exogenous inflation as a benchmark for premium increases, as well as the calculation of this benchmark, were both non-compliant with regulations and unconstitutional. This practice constituted an impermissible appropriateness review, which restricted economic freedom and competition.

The court dismissed X. AG's appeal, affirming the compliance of FINMA's decision with applicable regulations. The court's decision was based, among other things, on the consideration that, in the field of supplementary health insurance, the assessment of tariffs constituted a restriction on the economic freedom of insurers, but that this restriction was permissible and in accordance with the constitution. In contrast to compulsory health insurance, there was no obligation to insure in the area of supplementary health insurance, which is why an assessment of the state of health of the person to be insured preceded the conclusion of the insurance contract. As a result, although the insured had the general option of transferring to other insurers in the event of a change in the terms of the contract, the transfer was de facto restricted by health clauses, particularly for the elderly or those in poor health ("trapped portfolios"). In such cases, the real bargaining power of the insurer allows it to dictate the content of the contract and thus the premiums. Limiting this imbalance was in the public interest, and there was no milder measure that would guarantee the same protection for so-called "trapped portfolios", which is - inter alia – the court held that limiting premium increases to the exogenous inflation rate, as outlined in FINMA Circular 2010/3, was a permissible specification of the statutory abuse concept.

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