Why the French Are Turning Away From Life Insurance

Bad news for insurers. In August, life insurance premiums totaled 8.3 billion euros, and net inflows fell by 1.7 billion euros (-4% compared with August 2022).

Specifically, they fell by −0.4 billion euros for unit-linked products but remained stable for euro-denominated products. The share of unit-linked premiums stood at 31% for the month.

Since the beginning of the year, total market inflows have fallen to one-seventh of their previous level. Nevertheless, contributions have surpassed the symbolic threshold of 100 billion euros for the first time over an 8-month period, reaching 102.4 billion euros, and net inflows are positive at 1.7 billion euros.

"Despite a highly uncertain macroeconomic environment, which does not encourage the French to save for the long term, life insurance remains a solid investment. In fact, the symbolic threshold of 100 billion euros in premiums for the first eight months of the year was crossed for the first time this year, demonstrating savers’ appetite for this product,” notes Franck Le Vallois, CEO of France Assureurs

The Retirement Savings Plan (PER) is benefiting from the downturn and once again proving its appeal: contributions totaled 682 million euros in August, up 27% year-over-year, with 46,100 new policyholders (+38%). At the same time, 8,200 policyholders transferred 310 million euros from existing retirement insurance policies to a PER.

Since the beginning of 2023, contributions have totaled 5.4 billion euros for 545,700 new policyholders, up 23% and 19%, respectively, compared with the same period in 2022. Over the first eight months of the year, net inflows into PERs totaled 3.8 billion euros.

As of the end of August 2023, 5.2 million policyholders held a PER, with total assets under management of 68.5 billion euros, 39% of which were in unit-linked policies.

Although returns on euro-denominated funds rose at the beginning of the year for the first time in 30 years, they are struggling to keep pace with other savings products that are benefiting more quickly from rising interest rates.

The Livret A thus offers a net return of 3 percent, compared with an average of 2 percent (before taxes and social security contributions) for euro-denominated funds in 2022. This is enough to encourage savers to reallocate their funds, especially those who need to dip into their savings to boost their down payment before buying a home or to cope with rising living expenses.