the inspectorate bangs its fist on the table

The gendarmerie of bankers and insurance companies, supported by the Banque de France, had called life insurance professionals in early May to order both their duty to advise and about the fees charged.

The Prudential Control and Resolution Authority (ACPR) hit the table on Monday about the sometimes expensive cost of life insurance contracts, a product that concentrates almost a third of the financial savings of the French.

“All signals seem (…) to indicate that a movement of professionals would be appropriate or even necessary”, suggested the vice-president of the ACPR Jean-Paul Faugère on the occasion of the institution’s annual conference in Paris.

“This movement should be characterized by a double requirement, transparency and self-evaluation”, he continued, referring to an ongoing dialogue between the ACPR and the professional association France Assureurs.

The gendarmerie of bankers and insurance companies, supported by the Banque de France, had called life insurance professionals in early May to order both their duty to advise and about the fees charged.

Penalty fees

He then pointed to “in particular penalizing entry and administration fees if they (customers) are forced to cash out their life insurance contract quickly due to lack of liquidity”; and criticized the place of units of account (UC), a “risk distribution” that is not necessarily “adapted to the needs of customers whose financial situation is fragile at the time of subscription”.

“The accumulation of high costs can in some cases cut off any hope of returns”, noted Mr Faugère on Monday, with the potential return on investment ultimately benefiting “only financial intermediaries”.

“We unfortunately have to note that the report of a good agreement is not yet there today” on “better transparency and justification of life insurance costs”, had indicated earlier in the day that the Governor of the Banque de France François Villeroy de Galhau, promoting the possibility of a new recommendation from ACPR on the topic “mid 2023”.

Life insurance remains the investment that offers the most savings in France: its outstanding amounted to 1.827 billion euros at the end of October, according to the latest figures available from France Assureurs.

Sir. Faugère also mentioned the creditor insurance market, another subject of tension this time with banking players, with the latter defending their historical market share linked to the mortgage activity.

The ACPR “regularly receives reports of practices that are not very compliant,” he said, also referencing a new recommendation coming.

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