Suva: Positive operating result leads to lower premiums
For the past fiscal year, Suva can report a positive operating result of CHF 241 million. The reimbursement of surplus investment income and the reimbursement of the pandemic-related surplus lead to historically low premiums for Suva policyholders in 2022.
Suva reports a positive operating result of 241 million Swiss francs for the year 2020. The accident insurer was thus also solidly on track in the year marked by Corona, as it announced on the occasion of its balance sheet media conference. All insurance lines are financially in balance, the insurer announced. For all future benefits from all accidents and occupational diseases that have already occurred, there are provisions in line with requirements, Suva added. Due to special effects, Suva's insured will benefit from historically low premiums in 2022.
Positive investment result
Despite a challenging environment and an ongoing Corona pandemic, Suva achieved a good investment result for 2020. The investment performance reached 5.3 percent. The largest contribution to this result came from equity investments. After the turbulence in the first quarter, the equity markets showed a strong recovery in 2020. Thanks to its long-term investment strategy, Suva is able to invest significant portions of its assets in equities, real estate and alternative investments. This enabled it to achieve a positive result despite money market investments, which continued to suffer from negative interest rates. The good investment result allows for a refund of excess investment income amounting to CHF 526 million, or 15 percent of net premiums in occupational and non-occupational accident insurance for all Suva-insured companies, for 2022. The solvency ratio rose from 171 to 182 percent. Suva thus has sufficient solvency to meet legal requirements even in times of crisis. Suva's assets are fully earmarked. They cover Suva's obligations for around 82,000 pensions as well as future medical costs and daily allowances from accidents that have already occurred.
COVID-19 effect: extraordinary surplus
The number of accidents fell sharply, particularly during the lockdown from mid-March 2020. The second wave from October onwards also led to a decline once again. In total, Suva recorded 431,827 reported accidents and occupational illnesses. This is 10.0 percent less than in 2019. In terms of occupational accidents, it is apparent that the industries were affected differently by the Corona measures. While in some industries operations could be maintained despite restrictions, in others work was greatly reduced. The strongest decrease in occupational accidents was reported by the aviation industry with -54 percent. Suva registered a total of 161,468 occupational accidents. This is 10.8 percent less than in the previous year. The development of figures in non-occupational accident insurance was also characterized by a decline due to reduced leisure activities. In particular, the accident figures for team sports were down sharply. For example, Suva recorded 37 percent fewer football accidents. Leisure accidents fell by 10.9 percent overall.
Nevertheless: Higher accident costs
Accident costs, on the other hand, did not decrease to the same extent as the number of accidents, because the average costs per accident increased. Average medical costs per case rose by 3.6 percent and daily allowance costs per case by 6.3 percent.
The increase in costs per case is due to a disproportionate decline in minor accidents with short absences and thus a short duration of daily allowances. The main drivers were changes in accident patterns (e.g. fewer soccer accidents, which tend to result in shorter absences, but more bicycle accidents with older accident victims and longer absences) and restrictions in treatment options. The number of new pensions also continued to decline, with 1141 new pensions for disability cases. However, the costs per new pension increased significantly due to the reduction in the technical interest rate.
Overall, COVID-19 resulted in an extraordinary surplus of CHF 253 million. This surplus will be refunded to policyholders in 2022 in the form of lower premiums. The amount of the premium reduction is defined by the effectively observed cost decrease of the respective risk class. On average, the reimbursements will amount to 7.3 percent of net premiums in occupational accident insurance and 6.8 percent in non-occupational accident insurance.
Positive operating result leads to historically low premiums
While the average net premium rates for non-occupational accident insurance will increase slightly in 2022 due to the claims experience, the average net premium rates for occupational accident insurance can be kept stable. However, depending on the claims experience, there are very different developments in the individual risk classes, both in terms of net premium adjustments and Covid 19 reimbursements.
With the reimbursement of surpluses due to the Covid 19 pandemic and investment income totaling CHF 779 million, or 22 percent of net premiums, the average premium burden on policyholders will be historically low in 2022 for both workers' compensation and non-workers' compensation insurance.
Source: Suva
