6.5 billion euros. This is the amount paid by French insurers to compensate victims of climate disasters in 2023, which makes it the third most expensive year according to France Assureurs. In a press release, the federation notes that “over the last 4 years, climate losses have reached an average of 6 billion euros per year, significantly higher than that of the previous decade”, before adding that “climate disruption is increasing. worsens faster than expected: over this same period 2020-2023, the cost of climate claims for insurers is 18% higher than the forecast established by France Assureurs in 2021 on the horizon 2050”.
Beyond the health, social or environmental aspects of climate change, the question of its impact on the insurance sector arises. Because in a world where the risks of climatic disasters are more and more frequent, having access to an insurance contract could prove more difficult.
More expensive and more cautious insurance
First of all because, mechanically, a higher risk leads to an increase in the price of insurance for households, communities and businesses. According to the consulting firm Facts & Figures, the cost of home insurance is expected to increase by 10 to 12% from January 1. And the natural disaster premiumlevied on home insurance contracts, should see an increase of 12 to 20%. A revaluation supposed to give oxygen to the Central Reinsurance Fund (CCR), the French public reinsurer, and which the Senate would like to see automated from 2027. “This will avoid what we will all know on our bills on January 1: a very significant jump because for more than ten years, we have not increased this rate, even though claims costs were soaring,” Christine Lavarde, senator Les, told AFP. Republicans, at the origin of this bill.
Insurers could also refuse to insure more when they consider the risk too high, as is already the case in certain states in the United States. According to the Prudential Control and Resolution Authority (ACPR), the institution responsible for monitoring the activity of banks and insurance companies, the termination rates on the part of insurers would be significantly increasing by 2050. Particularly in areas most exposed to climate risks, such as coastlines.
“We must look to the future and try to predict”
To adapt, the insurance sector made proposals to the government last April. For example, a system of tax bonus-malus for insurersbased on the level of exposure to climatic hazards of the insured areas, to prevent certain areas from being neglected by the insurance market. They also suggest strengthening prevention, in particular by investing in the resilience of buildings and consolidating the mapping of areas exposed to major natural hazards.
Insurers are now preparing to change their working methods. “The role of the insurer has always historically been to rely on the past, that is to say on history, on data and that obviously remains important. But today, the changes are such that we must look to the future and try to predict,” Frédéric de Courtois, deputy general director of the French insurer Axa, explains to AFP. “One of the solutions is to invest ever more in human capital and new skills: with meteorologists, with sociologists, with experts in different fields.”
The third national plan for adaptation to climate change (Pnacc), presented by Prime Minister Michel Barnier on October 25, also addressed the issue. It indicates that a “system will be established to encourage insurers to maintain a affordable and available insurance offer throughout the territory and not to neglect the areas most at risk.
On October 17, the CCR announced the launch of a map to identify the areas most exposed to climate disasters. This will then be compared to a map of the presence of insurers in the territory, to identify the places deserted by the latter. If the first results are due to arrive in spring 2025, the data will however remain confidential so as not to disrupt the real estate market, and only the State will be able to consult them.
