Life Insurance in 2023: The Average Rate Is Expected to Reach 2.6%

As with other financial investments, the inflow of savings into life insurance and retirement savings declined in 2023, and life insurance—excluding retirement savings—recorded a slightly negative net inflow of -2.3 billion euros, though this was higher than the all-time low set in 2020 (-7 billion euros). 

While premium income was strong (126.9 billion euros, the second-highest level of premium income after 2021), redemptions also rose sharply (84.1 billion euros).
 

However, net inflows varied by investment vehicle: they remained negative (–33.4 billion euros) for euro-denominated vehicles but, conversely, were strong (+31.1 billion euros) for unit-of-account vehicles, although down from the record high set in 2022 (38.2 billion euros). 
 

There was also a contrast among insurance providers: while they posted similar performance in euro-denominated products, bancassurance companies recorded net inflows of 24.5 billion euros in unit-linked products, whereas net inflows for other insurance providers totaled only 6.6 billion euros. Overall, net inflows for bancassurance companies were positive (+8 billion euros), in contrast to those of other insurance companies (-10.3 billion euros).
 

Among the reasons for the rise in redemptions, inflation, rising interest rates, and higher financing costs for mortgages may have prompted households to tap into their savings to finance day-to-day consumer spending or real estate purchases. In addition, higher interest rates—particularly on term deposits—have drawn a portion of savings toward these investment vehicles. 
 

The rise in redemption rates has nevertheless remained moderate in this context, and the high level of premiums reflects households’ continued interest in this type of investment. 
 

Furthermore, several factors are expected to reduce the distortion relative to other investments and support deposit growth: according to announcements made in late 2023 and early 2024 regarding the revaluation rates for euro-denominated funds for 2023, the average rate for the French market is expected to reach 2.6% based on a preliminary estimate—0.7 percentage points higher than in 2022—while the rate on the Livret A savings account, which serves as a benchmark for savers, has been capped at 3% since January 2023; the decline in inflation, which began in 2023 and is expected to bring it down to 2% by 2025 according to Banque de France forecasts, should also support the real return on life insurance.