French insurers call for ‘real’ national risk prevention strategy

The French federation of insurers (France Assureurs) has called for a “real national risk prevention strategy” as the nation and its insurance sector faces up to rising economic, climatic and digital risks.

In its annual report on 2023, the federation says that economic risk “changed scale” last year due to a slowdown in activity.

Aside from the US, a large number of advanced economies have seen their economic activity slow significantly. In France, GDP growth was 0.9% in 2023, after 2.5% in 2022. This difficult macroeconomic and financial context weighed on the flow of French financial investments, down by €38bn over a year, the report says.

In 2023, climate risk also changed in scale, reports the federation.

Climate losses are increasing, both in frequency and severity. The report notes that the world has never recorded so many serious climate disasters – 37 in 2023 compared to 30 in 2020, the previous record.

Climate-related claims cost French insurers €6.5bn in 2023, becoming the third-costliest year for the profession. Over the last four years, climate losses have reached an average of €6bn per year, significantly higher than the previous decade.

Finally, climate change is worsening faster than expected. Over 2020-2023, the cost of climate losses for insurers was 18% higher than the forecast from France Assureurs for 2050, which was only set in 2021.

The federation also pointed out that digital risk has become a major concern for households, businesses and organisations. “The number of cyberattacks is on the rise: two-thirds of attacked companies have recorded an impact on their activity,” it said.

Faced with this riskier-than-ever society, insurers are adapting to fully assume their societal role, said the federation.

France Assureurs reported that insurers managed one new claim every two seconds last year, or nearly 38,000 new claims every day. The federation’s members noted that inflation continues to weigh on the cost of auto property claims, while, after 15 years of decline, car theft experienced a marked acceleration in 2023, up 11%.

Last year was also marked by high inflation in the cost of materials, leading the average fire cost over ten years to increase twice as fast as the drop in frequency. When it comes to water damage, both the average cost and frequency increased significantly in 2023.

Over ten years, compensation for water damage has increased by 41%. In professional and commercial insurance, claims have been worsening over the past five years and increased by 11% in 2023. This was due to an unprecedented level of serious claims, which is partly the result of the summer riots.

“In 2023, the cost of the urban riots at the beginning of the summer reached €793m, more than three times the cost of the social movements of 2005 and 2018. In health and welfare, benefits continue to increase, once again illustrating the change in scale of risks. For example, the number of days of work stoppage has exploded: it remains 24% higher than its level before the health crisis,” said the federation.

“We have never had so much need for insurance: for an insurable France, insurers are making proposals. The rise in risks raises the question of the conditions for insurability and prevention plays a key role. This is why insurers wish to co-construct with public authorities a national prevention strategy encompassing all risks,” added the federation.

Faced with digital risk, France Assureurs proposes, for example, to include a cyberbullying awareness module in the school curriculum of all young French people.

Florence Lustman, president of France Assureurs, said: “We are witnessing a change in the scale of the economic, climatic and digital risks that the French face, both in terms of intensity and frequency. The ‘risk society’ is taking hold and insurers are essential partners for businesses and individuals alike. Faced with this observation, we have launched numerous projects, including the ‘Drought Initiative’, aimed at better protecting individual homes from drought-related damage. We must now go further and co-construct with the public authorities a real national risk prevention strategy.”