The life insurance debate is moving into political territory
Life insurers oppose the affordability and savings bill, proposed by senators Jean-François Husson and Alberic de Montgolfier and passed in the Senate on January 31. Text enables the transfer of life insurance contracts from one insurance company to another. Since the pact law, the possibility of transfer within the same company is now allowed, at least in theory.
According to France Assureurs, “a measure that will only make losers”
“This measure is very dangerous and will only result in a lose-lose for both the insured and the insurers.” Franck Le Vallois, managing director of France Assureurs, warns during the presentation of life insurance collection figures in December.
The representative of the insurers reminds that it is not about the possibility of transferring the contract with its assets, in other words, it is not about the portability of the contract, but about the insurer’s withdrawal of the contract to buy a new one. .with a competitor while maintaining a tax advantage.
He said this new competition could reduce the average term of a life insurance contract – currently 12 years – and force insurers to reduce their investment horizon and portfolio risk profile, hurting the financing of the economy or the energy transition. “This could represent tens of billions of euros” Franck Le Vallois adds. For depositors, this would be the risk of subscribing to new funds in euros with theoretically lower returns and even less capital guarantees.
A compelling argument at a time when insurers are increasingly being called upon to fund a productive economy and even the energy transition. Besides, it would be Bercy “solid” ultimately opposes this transferability, which has little chance of being retained in the National Assembly.
The idea of ”Deposit fee observatory” is gaining ground
On the other hand, the idea contained in the proposal to create an Observatory on fees on savings products, including life insurance, has every chance of seeing the day, just as it already exists for bank savings.
The Financial Services Advisory Committee (CCSF) would be in charge of this observatory, a decision that would make sense given that the Committee was already dealing with bank charges and had conducted an initial detailed investigation into superannuation charges. plans (PER) caused a stir when they were published in the summer of 2021.
The task is not useless. Life insurers at all levels (entry, exit, management, principle of management, unit-linked funds, etc.) are under the supervision of the authorities, given their large capacity to charge all types of fees. All in the name of less and less obvious tax advantage and hardly justified inheritance freedom…
The decline in markets, but above all the decline in purchasing power, made these costs less and less unbearable for savers. Especially since Livret A, which has a tax-free and liquid backing, its rate has risen to 3%.
Average interest rate for funds in Euro is 1.81%
“We should not get a wrong game. Livret A is a product that competes with bank deposits, but not with life insurance.”echoes Frank Le Valloi.
And to support his reasoning, it is necessary to highlight the relative stability of the weight of life insurance in the household savings stream, that is, 19% in 2021 and 20% in 2022. Revamping Livret A from last summer.
In 2022, net insurance receipts remain positive at 14.3 billion euros, which is significantly lower than last year and also before the health crisis (21.9 billion) in 2019. In detail, net inflows were positive at €34.6 billion for unit-linked (UA) and negative €20.3 billion for euro-denominated funds (which still represent 75% of assets of €1.842 billion at the end of December).
“2022 was an extraordinary year. For the first time in the last 30 years, the return of euro funds fell below inflation, and regulated deposit rates approached those of euro funds. Highlights the Cercle de l’Epargne. Currently, the average interest rate served on euro funds for 2022 is 1.81%, compared to 1.27% in 2021, according to data compiled by Fact & Figures.
While some insurers have clearly generated positive momentum in the fund’s rate with yields close to or above 2%, others, particularly market heavyweights such as CNP, have shown more moderate growth. Again, these announcements of tariffs introduced in January had no effect on the 2022 collection.
For the Cercle de l’Épargne, the increase in the profitability of the funds in euros will be gradual, life insurance will always be a slow maneuvering liner and the collection will be in 2023, corresponding to 2022.