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Why Do Private Health Insurance Premiums Rise?

Medical Progress and Healthcare Costs

One key factor is medical inflation. New treatments and advanced technologies improve healthcare but also drive up treatment costs. Rising prices for medical services, medications, or hospital stays directly impact the calculation of premiums.

Longer Life Expectancy

Longer life expectancy also plays a crucial role: as people live longer and use medical services for more years, insurers must build sufficient reserves to offset these increasing long-term costs.

Actuarial Interest Rate (Rechnungszins)

The actuarial interest rate is another influencing factor — it represents the assumed return insurers expect to earn on invested premiums.
If actual investment returns fall short of expectations, insurers must lower the actuarial interest rate during the next premium adjustment — and compensate for it with higher premiums.

Adjustment to Actual Benefit Expenses

Another major reason for premium increases is aligning with actual healthcare expenses.

When the insurer’s real expenditure on medical services exceeds the calculated costs by a specific threshold (typically 5–10%, depending on the policy), the insurer is required by law to adjust premiums. Once the deviation exceeds 10%, a premium adjustment becomes mandatory.

This ensures that the insurer’s revenue is sufficient to cover higher healthcare costs.

What You Can Do About High Premiums

Switch to Another Tariff Within Your Current Insurer

Switching tariffs internally within your private health insurance can effectively reduce your premiums without losing essential benefits. According to the German Insurance Contract Act (VVG), every privately insured person has the right to change to another tariff within the same insurance company.

If the new tariff offers equivalent or fewer benefits, you can switch without another health check. Even older policyholders or those with pre-existing conditions can often achieve significant savings this way — sometimes several hundred euros per year — without losing important coverage.

A new health check is only required if you upgrade to a tariff with more extensive benefits.

Another advantage: an internal tariff change is possible at any time and is not bound to fixed deadlines. Additionally, all accumulated aging reserves are transferred to the new tariff.

Note: Some insurers may have specific timing rules, such as the main renewal date, the next possible cancellation date, or the first day of the following month with one month’s notice.

Switching to Another Insurer

If your private health insurer has increased your premiums again, you might be considering changing providers. Under certain conditions, switching can be worthwhile — especially if you’re still young and haven’t yet built up significant aging reserves. However, this decision should be carefully weighed.

Switching insurers involves a new health check, where pre-existing conditions can lead to surcharges or even rejection. In addition, accumulated aging reserves can’t always be fully transferred. For contracts concluded before 2009, transfer is not possible at all.

That’s why it’s important not to rush this decision. A detailed consultation can help you find the best option for your individual situation — allowing you to benefit from a stable and fair premium in the long term without compromising on benefits.

Reducing Benefits or Increasing the Deductible

Another way to lower your premiums is to adjust your existing tariff. You can reduce the range of benefits — for example, by removing optional services — or choose a plan with a higher deductible.

A higher deductible means you’ll cover a larger share of annual treatment costs before your PKV starts paying, but your monthly premiums will decrease noticeably.

As long as you switch to a plan with equal or fewer benefits, no new health check is required. The same applies to increasing your deductible, as long as you don’t add new benefits. Your accumulated aging reserves also remain intact.

Think carefully about which benefits are truly essential to you and what level of deductible you can comfortably afford.

When Do PKV Premiums Increase?

Private insurers cannot raise premiums arbitrarily. Adjustments are subject to strict legal regulations and must be verified by independent trustees. Only when healthcare costs exceed a defined threshold is a recalculation initiated.

If actual costs surpass projected expenses by 5–10% (depending on the tariff), private insurers are legally required to review their premiums. Adjustments are only made when the deviation is not temporary. Similarly, if mortality rates differ by more than 5%, an adjustment becomes necessary.

The final review of any premium adjustment is carried out by an independent trustee, ensuring that the increase is justified and compliant with regulations.

Finally, the Federal Financial Supervisory Authority (BaFin) is informed. If no objection is raised, the premium adjustment (BAP) can proceed. If the justification is insufficient or flawed, the increase may even be deemed invalid.