French mayors call for pooled insurance buying as market nears ‘collapse’

The association of French mayors (AMF) has called on its new government to take action on proposals to tackle the insurance capacity crisis faced by French municipalities and consider extending the state-backed terror pool Gareat to cover civil disturbances and riots. Relations between local authorities and the insurance market have seriously deteriorated, with sudden policy terminations, sometimes “dizzying” increases in premiums and deductibles, and a lack of response to calls for tenders, AMF explained during a press conference this week. The association said there are major competitive problems in the market, which faces crisis, partly blamed on the riots of 2005, 2023 and 2024, which cost over €2bn. At the end of 2023, at the request of the AMF, the French Ministers of the Economy, Social Cohesion and Communities mandated Alain Chrétien, mayor of Vesoul, and Jean-Yves Dagès, former president of Groupama and honorary mayor, to look into the causes of these market dysfunctions and propose reforms to fix the problem. The two mayors published their report, in private, back in April, but little action followed as elections loomed. One key proposal was the creation of a pool to cover riots along the lines of a nat cat pool or via an extension of the French terror pool Gareat. In May, the Minister of Communities said that the French state would study the proposal but no progress was made. The AMF held a press conference this week to try to kick-start a badly needed reform process with the new government and published the findings of April’s report. The association called for the launch of a parliamentary fact-finding mission to determine whether Gareat could be used to cope with the rising risk of riots. “It’s about putting the subject back on the top of the pile!” said Chrétien during the press conference, reported the AMF. “Every week, the AMF still receives calls from mayors furious with their insurer. The date of this press conference is timely. We once again have interlocutors in the government,” said the mayor of Vesoul, who is also vice-president of the AMF. The two mayors said that they hope to meet the minister responsible for the economy, Antoine Armand, and those responsible for local authorities, Catherine Vautrin and Françoise Gatel, “very soon”. Vautrin and Gatel are two former local elected officials who are active members of the AMF. Chrétien and Dagès said that there is an “urgency” to deal with this matter. “We provide public services. If we can no longer insure the buildings of our schools, our gymnasiums, etc… we have a criminal risk,” said Chrétien. “If we do nothing, following the next social crisis or climate crisis, the community insurance system will collapse,” he added. Chrétien said that emergency measures will not resolve urgent structural problems. “It will take several months, even several years, to rehabilitate this market destabilised by a price war between insurers in the 2010s, the multiplication of climatic events and the riots of the summer of 2023,” he warned. The two mayors want to encourage municipalities to make greater use of negotiated markets by pooling their buying power. A new practical guide to public insurance procurement, made available by the Treasury legal affairs department, has recently been rewritten and could help. “This document currently encourages calls for tenders,” said Dagès. “The procedures should be simplified… and allow communities to make greater use of negotiated markets… so that companies can suggest adaptations to the community,” said the veteran insurer. By using a more pooled and structured approach, municipalities can also surround themselves with “internal or external expertise, such as brokers and project management assistance, to help them set up their procedures”, suggested Chrétien. There is also a need for local governments to “acclimatise themselves to risk” and raise their risk management and mitigation expertise, said Chrétien. “Elected officials must carry out real census work and prioritise risks… they can appoint a risk manager, for example, and turn to associations such as Amrae or train agents via the CNFPT in risk management,” he suggested. The mayor of Vesoul also called for technical standards to be harmonised to enable local officials to “speak the same language as insurers”. The biggest problem comes from riots, said Chrétien. The mayors argue that this risk needs to be more precisely defined during discussions with insurers to avoid misunderstandings, disputes and claims failures. “It must be sufficiently restrictive so as not to be activated all the time… it is clearly [for events such as] the riots of 2005, 2023 and 2024 in New Caledonia,” said Chrétien. Once more accurately and clearly defined, riot risk must be “pooled”, perhaps via the Gareat fund, suggested the mayors. The proposals are on the table. They join those of Senator Jean-François Husson, who also produced a report on insurance seeking reforms last March. “The matter must be played out at the political level” said the mayor of Vesoul Chrétien. He has requested an official meeting with the French government, the insurance federation France Assureurs, Husson and the AMF. “We want to make an effort, but the insurers have to play the game. We are ready for the balance of power because we ensure the continuity of the public service,” said Chrétien.

French mayors call for pooled insurance buying as market nears ‘collapse’

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