The Prudential Resolution and Control Authority (ACPR) hit the table this Monday on the costs, sometimes high, of life insurance contracts, a product that concentrates almost a third of the financial savings of the French.
“Tous les signaux semblent (…) indicate that a movement of the professions will be an opportun voire nécessaire”, as indicated by the vice-president of the ACPR Jean-Paul Faugère on the occasion of the annual conference of the institution, in Paris.
“This movement must be characterized by a double requirement, transparency and self-assessment,” he continued, referring to an ongoing dialogue between the ACPR and the professional federation France Assureurs.
The gendarme of bankers and insurers, backed by the Banque de France, had called life insurance professionals in early May to order both their duty to advise and the fees charged.
penalty rates
Next, it pointed to “particularly penalize entry and management expenses if they (clients) are forced to quickly redeem their life insurance contract due to lack of liquidity”; and criticized the place of units of account (UC), a “risky allocation” not necessarily “tailored to the needs of clients whose financial situation is fragile at the time of underwriting.”
“The accumulation of high costs can, in some cases, cut off any hope of return,” Mr Faugère noted on Monday, with the potential return on investment ultimately benefiting essentially “only financial intermediaries.”
“Unfortunately, we must point out that the bill for a good deal still does not exist today” on “better transparency and justification of life insurance costs,” Banque de France Governor François Villeroy de France had said earlier in the day. Galhau, anticipating the possibility of a new ACPR recommendation on the subject “in mid-2023”.
Life insurance continues to be the investment that captures the most savings in France: its outstanding balance amounted to 1,827 million euros at the end of October, according to the latest figures available from France Assureurs.
Mr. Faugère also mentioned the credit insurance market, another issue of tension this time with banking players, the latter defending their historical market share linked to housing credit activity.
The ACPR “regularly receives reports of practices that are not very compliant,” he said, also referring to a new recommendation to come.
Source: BFM TV
