Figure 1

Schematic drawing outlining the concept for modelling lifetime risk adjustment transfers. a shows monthly risk adjustment payments in 2011, ordered by amount of payment (which corresponds to increasing age). Because the volume of payments into and out of the fund are symmetric in Switzerland, the area under the curves below and above the zero-line are identical. For the model of lifetime payments the volume of transfers into the fund (and hence out of the fund because of the symmetry) are approximated by a triangle confined by the most negative transfer to the point where the curve of transfers crosses the zero-line on the x-axis. b generalizes the model of lifetime payments for 3 time periods (two as a net-payer into and one as a beneficiary of risk adjustment).