Published on Nov 17, 2023 at 6:33 p.m.Updated Nov. 17, 2023 at 6:34 p.m.
After having talk louder on life insurance prices a year ago, the Prudential Control and Resolution Authority (ACPR) is tackling the cost of non-life insurance contracts.
“The spotlight must be placed on costs, not only in life insurance, but also in damage and even health,” declared Friday Jean-Paul Faugère, vice-president of the ACPR, during the annual conference of the institution.
Faced with the drift in the cost of car or home claims caused by the repetition of climatic events (storms, floods, etc.) but also the health expenses of the French at the expense of private insurance, “the remedy cannot be exclusively a price catch-up”, warns the regulator.
No commitment from insurers
After the promise made by the profession at Bercy, in September 2022, to limit price increases to a level below inflation for their individual customers, insurers no longer consider themselves bound to the same pricing commitment for 2024.
“Coming out of this exceptional period cannot do without thinking about management costs,” believes Jean-Paul Faugère. Management costs include distribution, personnel and even IT costs.
Beyond economic political pressure, insurers must respond to the “structural” drift in their costs, particularly climatic ones, but without mechanically ping them on to the consumer via prices or the sorting of policyholders, believes the supervisor.
This involves strengthening the financial cushions built up in anticipation of future shocks. “It will no longer be possible to calculate provisions by only looking in the rearview mirror,” says the supervisor. It will be necessary to integrate a drift on the frequency and intensity of certain disasters. »
This particularly concerns “long branches”, such as foresight which manages long-term risks (death, disability, etc.) and finds itself weakened by the increase in sick leave. Several specialists have reported financial difficulties in recent months, such as Aesio Or AG2R La Mondiale.
Damage insurers, who suffer from climatic disasters or urban riots, are also in the viewfinder. “It will be necessary to maintain coverage by pooling risks, which is the vocation of the insurer, even if prevention must also progress in parallel to ward off the growing risk of uninsurability,” points out Jean-Paul Faugère, who believes that the insurers have a “general interest mission”.
This is illustrated in the public-private regime for natural disasters, which makes it possible to maintain the insurability of extreme risks (floods, earthquakes, cyclones, etc.) by relieving insurers of half of the bill, covered by the Central Reinsurance Fund (CCR).
Following the insurers and the CCR, the ACPR in turn takes a position in favor of an increase in the share of property and casualty insurance premiums for households and businesses which is dedicated to financing the scheme, which has been in deficit since 2015.
Share the climate burden
If Bercy still has to decide, Jean-Paul Faugère speaks of an “inevitable increase in premiums for natural disasters”. But this “must be accompanied by price control which once again involves cost control, whether structural costs or even more distribution costs,” he added. In other words, consumers will not have to bear the responsibility alone climate overload .
the climate overload https://www.lesechos.fr/finance-marches/banque-urances/sinistres-climatiques-les-reureurs-restent-en-position-de-force-pour-relever-leurs-prix-1976393
New vigilance on units of account
The ACPR warns against the “diminishing” of life insurance reserves (PPB) constituted during periods of low rates, from which insurers now draw to improve performance of their products. They must not “favor” unit of account (UC) customers, warns Jean-Paul Faugère, vice-president of the ACPR. This includes remuneration bonuses linked to the holding of UC, which consume less equity than traditional euro funds.
At the start of 2024, the regulator will also monitor the application of his recommendations on life insurance costs. The companies have undertaken a vast review of their product catalog which should lead to the delisting of CUs that are too expensive in relation to their performance and their risks, or that are too small.