Ministry of Economy and Finance in Dialogue with Insurers to Address Insurance Rates for Individuals

A new consensus under consideration

In this period marked by growing concerns about the purchasing power of French households, the Ministry of Economy and Finance is preparing a dialogue with insurers. Although the official summons to Bercy has not yet been fixed, the intention is clear: Minister Bruno Le Maire wishes mobilize insurers for an additional effort in terms of adjusting insurance rates for individuals for the year 2024. A similar process had been undertaken the previous year, with concrete results.

The department had then succeeded in obtaining thecommitment of insurers to contain the average evolution of car and home insurance premiums below inflation, thanks to an “anti-inflation pack”. This action was taken despite the challenges facing the sector, including a high claims due to climatic factors and rising repair costs.

“Honestly, the situation is very tough for insurers this year, but we will reiterate, like last year, our call for moderation in prices for everyday insurance”confirms Bercy to L’Argus.

Accumulating economic challenges

However, the current situation remains complex. While theclimatic episode of last year left financial scars, a new wave of challenges looms on the horizon. Although the climatic disasters are less intense, the August heat wave, which affected the South of France, could cause new cases of drought and damage to homes. Especially since insurers always have to deal with rising costs. The urban riots of last June left a bill estimated at 650 million euros, and the increase in the cost of car repairs continues to weigh on the expenses related to claims.

In addition, insurers will have to reflect the rising cost of their non-life reinsurance in their rates. Natural catastrophe treaties renewed last year resulted in a 37% increase in coverage. This increase did not not yet passed on to end customers, but it weighs on the underwriting results of insurers. It is therefore essential to choose the most suitable car insurance in order to guarantee your protection and maintain a balanced management of your expenses.

At the same time, inflation also gives rise to reflections. INSEE reveals a 4.8% price increase in August compared to the previous year. This acceleration is mainly due to the rising energy prices, mainly attributable to the increase in the cost of petroleum products and the introduction of regulated prices for electricity from August 1, 2023. Yet this increase masks a broader downward trend in other sectors. Prices for food, manufactured goods and services are slowing down.

A deflationary trend for 2024?

Economist Sylvain Bersinger stresses that this rise in inflation is temporary, and that the overall trend is down. The Banque de France’s forecasts point in this direction, indicating a return to more usual inflation rates by 2024.

In a context where the inflationary pressures and the economic challenges are numerous, the question of the balance between consumer protection and the viability of the insurance sector is central. The Ministry’s requests for moderate rates are not without difficulty for insurers, who have to deal with a series of financial pressures.

At the same time, inflation and its economic implications require a balanced approach to ensure long-term stability. The discussion between insurers and the Ministry of Economy and Finance promises to be crucial for determine the way forward in a constantly changing economic environment.