François Schmitt, Chairman of Groupama Grand-Est: “It’s about rebuilding the logic of resilience of operations made possible by insurance, in the face of climatic hazards”.
Published on: October 28, 2022
While the reform of multi-risk climate insurance (MRC) is about to enter its concrete phase, François Schmitt, president of Groupama Grand-Est, discusses the reasons that led to this development, in his eyes “historic”. Groupama has planned to organize meetings to inform farmers.
Why is this reform so important?
François Schmitt (FS): We are not always aware of its historical character. The system of agricultural calamities was put in place in 1964 and, since then, there have been adjustments: climatic multi-risk in 2005, the exit from field crops in 2009, viticulture in 2011, the establishment of a base contract in 2015… But the forthcoming reform, in terms of the transformation of agricultural risk management, is on an unprecedented scale! It is a question of completely rebuilding the logic of resilience of farms made possible by insurance, in the face of climatic hazards.
How did the need for this reform arise?
FS: Within the Council for French Agriculture (Caf), where Groupama neighbors the FNSEA, the JA, the National Confederation of Mutual Funds, Cooperation and Agricultural Credit (CNMCCA), we were among those who alerted to a development considered very worrying: since 2012 we have been facing recurring climatic hazards (frost, drought, hail, excess water, etc.) which lead to a structural deterioration of the technical balances for the historical insurers of the French farm. The Caf began a reflection, in 2019, on the relevance of insurance tools.
The observed technical degradation called into question the way in which these problems could be tackled. We feel that, since 2012, we have changed our environment. Each year, there has been a problem and the frost of 2021, catastrophic for arboriculture and viticulture, served as a catalyst: the public authorities realized that the system had to be reviewed. Over a little over fifteen years, in France, Groupama has paid more than 500 million euros in compensation, in connection with these hazards…
Concretely, what changes will the reform bring?
FS: If until now, there has been coexistence between private insurance and the disaster fund, with the reform, there will be a real link between these two tools. It’s a three-stage rocket: the first is the part of the loss that remains the responsibility of the farmer, the deductible, which ranges from 0 to 20% of losses, whatever the sector. The second stage is the intervention of insurers, for which farmers will pay a contribution which will be subsidized, up to 70%.
The public authorities wanted to act to encourage traditionally underinsured agricultural sectors (arboriculture or grasslands) by allowing a reduction in the insurance contribution. The third stage of the rocket is the National Solidarity Fund (FSN) part. There, there is a very important change: someone who is insured will be compensated for the totality of his loss, beyond 50% for field crops and viticulture, and beyond 30% for meadows. and arboriculture. 10% of the loss will be compensated by his insurer and 90% by the DSF. On the other hand, if the person is not insured, the FSN will cover only 45% of the loss. This amount will be valid in 2023, but in 2024, it will only be 40% and 35% in 2025, only on the sectors for which there is an insurance offer. For the other sectors, the amount will remain fixed at 45%.
Tomorrow, taking out an insurance contract will mean being certain of 100% compensation for the third stage of the rocket. At Groupama, we have already taken the decision to offer contracts with excess levels higher than 20%. Access to national solidarity will be permitted by signing a contract. With a subsidy rate of 70% for the contribution and a more limited scope of intervention of the insurance, there will be, for almost all farmers, a reduction in the remainder to be paid. I invite everyone to consult their insurer to make simulations…
To find out more, find this complete article in our edition of October 28, 2022.