French insurers to urge caution on Le Maire’s rate cap proposal

French (re)insurers are lobbying the country’s government to rethink plans to cap personal lines and SME insurance rate rises in response to surging energy and living costs.

France’s influential finance minister Bruno Le Maire recently floated the populist idea of a temporary limit on premium hikes for the worst-affected policyholders.

The Insurer understands a meeting is scheduled on 19 September to discuss the idea further. Sources close to the discussions said a number of trade bodies will be invited, including France Assureurs and Mutualité Française, alongside state-backed carrier CCR.

Le Maire is expected to then formally request insurers to take steps to ease the financial pressure on small businesses and households by committing to limit premium increases at renewal and to widen services, such as the sector-run coverage mediation service.

However, it is understood that while insurers have expressed a willingness to support policyholders, there is a natural reluctance to commit to a long-term freeze in premiums at a time when inflation is driving increases in repair costs for motor claims and the sector faces multi-billion-euro losses from major summer nat cat events.

French insurers are also expected to face higher reinsurance costs in 2023 if the mood music at the Monte Carlo Rendez-Vous proves correct.

While it is thought the requests made by the Bercy will be voluntary, industry insiders note Le Maire may dangle the threat of a windfall tax.

Speaking to the Mouvement des entreprises de France (Medef) in August, Le Maire said that while some countries had imposed so-called windfall taxes on those firms benefiting from higher energy costs, France was instead urging companies – particularly banks and insurers – to “make an effort” and take steps that reduce costs for customers.

“It is obvious that the burden of inflation must be fairly distributed,” the Minister of the Economy told Medef. “I call on all companies that have the necessary leeway to reduce the inflation bill for our compatriots.

“I will receive insurers soon and I will ask them to make an effort on the insurance premiums of our compatriots. I will receive the banks and ask them again to make an effort on bank charges,” he said.

This came after the minister told a press conference on 21 August that he was planning to ask “for an effort from insurers on daily insurance premiums, such as housing or motor” to aid the fight against inflation and protect household purchasing power.