Acting with prudence
The year 2023 was marked by the persistence of strong economic and geopolitical uncertainties. In particular, we saw the return of major geopolitical conflicts: war in Ukraine, Israeli-Palestinian conflict, tensions in Taiwan and Korea etc. Accelerating inflation, rising interest rates and increasing climate-related claims also characterised the year. And despite the good performance of the stock markets, regulatory institutions and major players in the banking sector are now sounding the alarm about the risk of a global recession and a major financial crisis.
A new regulatory and prudential deal for insurance
In this changing context, the insurance sector is combining prudence with increased transparency. Since 1 January 2023, the revised accounting standard IFRS 17 for the insurance sector harmonises the valuation of insurance contracts between countries and makes their accounting presentation more transparent. In practice, insurers are required to move from “historical” accounting, recognising year by year the value generated by current contracts, to “prospective” accounting, anticipating the future profit over the term of the contract as soon as the contract is signed and then updating it to reflect the reality year by year. The aim is to report the performance of a contract more accurately over time. And by the end of 2024, companies will have to publish sustainability reporting in line with the requirements of the European CSRD (Corporate Sustainability Reporting Directive). This will require them, in particular, to take all carbon emissions into account: direct emissions (Scope 1) related to their equipment and installations, emissions related to the production of the energy used (Scope 2), and emissions produced by third parties involved in the creation of value, including distribution, claims management, asset management etc. (Scope 3).
Inflation did not dissuade the French from building up savings
The global economic and geopolitical context is having a direct impact on French society. Anxiety about the risk of the conflicts of the Middle East being imported into home territory, high expectations for the regulation of migration policies and concerns related to purchasing power and retirement are prompting the French to favour prudence and, despite inflation, precautionary savings. The household saving rate climbed to nearly 19% of disposable income in the second quarter of 2023, compared with around 15% in recent years. Individual and group pension savings plans are proving popular, as well as “Livret A” and “Livret de Développement Durable” savings accounts, boosted by the rise in rates.
Over the year1, life insurance contributions increased by +6%, leading to a positive net inflow of +€3.4 billion, despite a negative inflow for euro products (-€25.4 billion), which was penalised by the competition from “Livret A” accounts.
Markers
58%2 of French people think they know little or very little about the various savings products.
As a result, 68% of savers turn to risk-free products despite their low returns3 (vs 10% to more responsible products and 5% to risky products).
1 November 2023 figures, source: France Assureurs
2 Source: AMF Savings and Investment Barometer 2023
3 Ifop x Altaprofits: 2023 Barometer of savings in France and regions
