At CSS Group, there are apparently more wrongdoings than thought. The behavior of the group’s management raises questions.
The Lucerne-based health insurance group CSS has once again hit the headlines. This time, it’s about “fat mail” that the health insurance company led by group CEO Philomena Colatrella has received from the Swiss Financial Market Supervisory Authority Finma.
According to a statement by the supervisory authority, the matter concerns the fact that CSS has apparently distributed parts of the sales and administration costs within the group unilaterally at the expense of the supplementary insured. The supervisory authority is therefore ordering that 129 million francs be refunded to those affected.
Combative health insurance company
For its part, CSS Group responded with a media release saying it was reviewing the regulator’s order, which accuses it of serious violations of supervisory law. “The Finma decision is not legally binding and can be appealed by CSS to the Federal Administrative Court,” it said.
The disputed allocation of costs affects the years 2013 to 2019, which is equivalent to about 1.5 percent of the annual premium, or an average of about 14 francs per year per insured person, according to the CSS statement.
Auditor must go
CSS must also terminate the mandate with its external auditing firm EY and look for a new auditing firm. This is quite extraordinary.
With the possibly incorrect booking of costs, the processes based on this were also incorrect. The Finma approved ultimately too high tariffs, it said in this connection in the communication of the supervisory authority further. One question that immediately arises in all this is whether the basic insurance was then charged with too low costs. The Federal Office of Public Health (FOPH), which is responsible for overseeing mandatory health insurance, will have to take a close look.
The general reaction of the CSS Group is surprising in some places. It would have been easy to admit that something did not go according to the ideas of the supervisory authority. But no, the CSS Group is being combative and cheering: “Serious and sustainable business management in the interest of the insured is at the heart of CSS’s actions. Switzerland’s largest basic insurer always complies with legal and regulatory requirements.”
The latter is not correct, however, because CSS Group was the only Swiss health insurer that did not comply with the legal requirements for solvency 2021. It had to carry out a merger of basic insurers in order for the solvency ratio to return to a shape that complied with the law. The irregularities had been made public on the financial portal finews.ch and had made waves.
The two health insurance companies belonging to the CSS Group, Sanagate and Arcosana, had solvency ratios of only 87 and 97 percent, respectively, and were thus below the minimum of 100 percent required by supervisory law.
Group CEO Colatrella has led the group since 2016, and all these shortcomings are her responsibility. Some people are therefore shrugging their shoulders at the current situation, which is why CSS Group is now taking on the regulator for supplementary insurance in this way.
After all, in its ruling, Finma even explicitly acknowledges the measures that CSS has been implementing for years to improve the quality of its business.