Market remains reticent over certain risks, say French buyers

Despite the market stabilising during recent renewals, French risk managers that took part in this year’s Risk Frontiers Europe survey stressed that tensions can still surface when renewing some insurance programmes, and a number of risks that have been hard to sell to the market in recent years remain uncovered.

The insurance buyers said they certainly want carriers to show more willingness to provide insurance protection for new technologies that firms are implementing to deal with emerging trends, such as the energy transition.

Some segments of the French insurance market remain very tough for buyers. This is the case for French local governments.

Marie-Elise Lorin, a member of Amrae’s board and risk manager at local government insurer SMACL Assurances, said that this pressure begins in the reinsurance market, despite the recent signs of loosening reported in January.

“We have seen of late a disengagement of reinsurers from some of the risks, and attachment points have moved upwards. There have been some clause limitations too,” she said. “For example, in the previous renewals, we were able to offer political risks insurance for local governments with the same trigger across the French territory. Today that is no longer possible.”

“In general, we have been able to offer the same programmes we offered before, but the costs are higher,” Lorin points out.

Local governments in France have struggled to buy insurance as they faced a perfect storm of risks such as civil unrest and weather events. The French government estimates that urban violence caused losses of more than €200m in 2023 alone, which goes some way to explaining why underwriters are nervous about the risk. In October, the French Finance Ministry even created a group to find solutions for the lack of insurance protection for local communities.

But that is not the only risk that insurers are failing to offer solutions for, according to Amrae vice-president François Beaume.

“These include a certain number of activities, among which are the so-called giga factories. The wood manufacturing industry is another case, and so is the transportation of passengers,” he said, during an Amrae press conference in January. “It is quite a long list that has been expanded over time, with the inclusion of sectors that are difficult to cover today for a number of reasons that are linked to the almost prototypical nature of certain construction processes or equipment, for example.”

Companies that operate in sectors that have the potential to generate a large number of claims, or very severe losses, have also seen a limited appetite from insurers for their risks.

“It has nurtured some tension, an impossibility for some companies to access the markets,” Beaume said.

Another example is civil liability, according to Amrae board member Frédéric de Serpos.

“France’s civil liability market is moving towards the Anglo-Saxon model, where there is a distinction between general liability and professional liability. That will entail some difficult conversations,” he said. “Risks linked to technological innovation are difficult to transfer. For example, those related to photovoltaic panels or the use of AI in production processes. Will insurers accompany us on this road?”

Amrae president Oliver Wild noted that, despite signs of stabilisation during the latest insurance and reinsurance renewals, risk managers still have plenty of work ahead to ensure that their companies find the covers they need at reasonable prices and conditions.

“It is critical that, as risk managers, we make sure we have the correct values to be insured and to demonstrate that to insurers,” he said. “But I believe that, in general, the insurance market is very vigilant and is requiring increasing proof and comfort in order to even give a quote or to provide capacity.”

“We need to start our discussions early on renewals. As soon as the latest renewals are finished, we must begin our dialogue with insurers so that we know exactly what to expect, even if we get last-minute questions on the 29th of December,” he added.