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Why insurance companies jump ship

They hadn’t seen it coming! In turn, the management center of Isère (700 affiliated communities, 15,000 agents) and Loire-Atlantique (310 affiliated communities, 17,000 agents) have confirmed the receipt of a firm termination from their statutory insurance company. The two companies had signed a contract with Axa France in 2020. In the same year, the group had actually developed its offer to local communities. Two years later, he went on the heels due to difficulties in balancing his results.

Although Axa France has defended its “presence in the statutory risk market for more than twenty years”, it told us through its communications department: “We actually indicated in 2020 that we wanted to increase our presence, but within the civil service of the State, with references obtained from various ministries, which do not include territorial agents. »

Message sent to the 120 communities that have signed up to the group contract for the Loire-Atlantique Management Centre. Hélène Guillet, the director general of services, admits her surprise. “We were faced with a very significant increase in the premium, which we could not accept within the framework of market equilibrium. Our negotiating room turned out to be very limited”, testifies the manager, who decided to use project management assistance “on the basis of the deadlines for signing a new contract”.

Four months without coverage

The situation on the statutory insurance market is indeed more and more tense. “In recent years, the number of stops, especially long-term, for health reasons has increased in the territorial sector, mainly due to the aging agent population, the pension reform, professional wear and tear, but also Covid,” points out Michel Hiriart.

The chairman of the National Federation of Management Centers makes the same observation as most local employers, but he is not concerned about the difficulties encountered in the revision of group insurance agreements, which, according to him, do not concern that “a large minority of management centers”.

Meanwhile, the statutory loss experience makes insurers hesitate. The historical groups in the territorial world are revising, if not jumping ship, their involvement. “We have lost too much money, it is no longer sustainable”, confides a manager of Smacl in all discretion. And the same to induce this municipality remained four months without coverage, due to failure to find an insurer.

Society trapped by economic reality

When asked, Groupama did not want to answer us, but Pierre Jardinaud, managing director of Cigac, a brokerage company, a subsidiary of Groupama, notes this bluntly: “Some local authorities lived under the illusion that insurance would make them win money; the economic reality has caught up with them. Insurance is a management tool, risk management designed to guarantee a cash balance. No wonder today that the price step to climb is very high. »

Regarding CNP insurances, Véronique Fossoul, CEO of “MFPrévoyance” and Director of “Development of Social Protection”, admits: “We are still present in this market. However, it is true that we no longer systematically respond to all tender, especially if it concerns prospects This year the insurer has only positioned itself on one new contract.

In this context of scarcity of supply and unabated absenteeism, prices are rising despite better use of prevention, also for damage to property. Increasing rates, extending co-payments, percentages of unemployment benefits that are revised downwards are the party in most societies.

The aftermath of the health crisis

The urban community of Foix-Varilhes (42 communes, 120 agents, 32,000 inhabitants, Ariège) has struggled to insure its real estate, even though its loss rate is low and its buildings are well maintained. “At the end of the property damage contract with Smacl, in June 2022 we had a unique offer from a German operator. So no choice. The costs, from 19,000 euros in 2019, reached 37,699 in 2022 with an excess of 2,500 euros”, explains Elsa Rumeau, head of legal affairs.

For statutory insurances, taken out with Groupama, the annual contract increased from 21,000 euros to almost 40,000 euros between 2021 and 2022. In the end, the amount of all insurance contracts in Ariège interco almost doubled in one year.

Still a good student, the urban community is aware of paying the consequences of the health crisis regarding the statutory and climate change events that have taken place in other regions of France. “Great, for example, Alex in the Vésubie valley”, emphasizes the manager, who admits that “her biggest fear was not having any proposal”.

A concern that is also formulated by Jean-Pierre Savignac, vice-president of the Ille-et-Vilaine management centre: “The scarcity of insurance companies risks posing a real competition problem. We should have a real discussion with the parliamentarians, especially about the legislation, because it is difficult for us to operate without a minimum of assurances. »

A new management approach

According to Véronique Fossoul, the problem does not seem to come from a national position. “We do not ignore the difficulties for the local authorities who are faced with the growing increase in closures and their duration. However, this situation is no longer a danger, it has become structural. The municipalities must have a new approach to governance in place, precisely by to assess the risks that can be transferred to the insurance company and those that they themselves agree to cover”, says the director, who suggests working on this with the municipalities as well as with management centers. This development towards partial self-insurance may become necessary in the coming years.

In Loire-Atlantique, Hélène Guillet makes a close observation. “We need to take a closer look at the gap between our budget provisions and insurance premiums. And from now on, we choose to insure ourselves against certain types of risks by allocating the budget upstream. »

An acceptance of responsibility that Pierre Jardinaud also calls for, who clarifies, “with 11,000 communities covered, we remain in this market. But what has changed is that the demand has turned, it is now the communities that must lead the insurance companies”.

The rising costs of contracts and the need to better manage risks are new limitations that must be integrated, and which will undoubtedly weigh a bit more on the functioning of the municipalities. In Foix-Varilhes, at the end of 2022, a difficulty was added: the exponential increase concerned the public electricity market “which has more than doubled”, warns Elsa Rumeau. The Chief Justice is not done breaking out in a cold sweat.

When senators sound the alarm

On 30 September 2021, Senator Jean-Yves Roux (European Democratic and Social Rally) warned the government about the situation of municipalities in south-eastern Occitanie, which are facing the refusal of insurance companies to apply for tenders regarding material damage and civil liability contracts. And when an offer was made, it reached prices that had never been seen and were not negotiable.

The senator argued that the context pushed certain communities to become their own insurance company, with the risk that unforeseen events, such as natural disasters, would present them with insurmountable financial difficulties. This question was then answered by the government (1).

He was aware of the problem, but argued for the “localized” nature of the problem. Among the possible levers, the Ministry for Cohesion and Territories and Relations with Municipalities mentioned support for local authorities in their risk protection work, bringing fires up to standard, investment grants for prevention and credits from the Water Agency, etc. Another question asked this year, on July 14th (2), on the increase in tariffs and the withdrawal of insurance companies from public markets put on the agenda, once again by a senator, Jean-Jacques Michau (socialist, environmentalist and republican group), arguing that this fact was no longer simply localized to areas in the Mediterranean area. The elected representative asked what measure the government intended to take to help local communities.

“We maintain the level of reimbursement of unemployment benefit at 100%”

Jean-Pierre Savignac, vice-president of the Ille-et-Vilaine management center (383 affiliated local authorities, 13,000 agents)

“During our last tender, at the end of 2019, we received a single proposal from an insurance company for our 383 member societies. From the second year, we found a balance to keep our guarantees with a 10% increase in the contract. And for two months then the termination as a precaution was communicated to us.We considered three options which ranged from keeping our guarantees but with a 30% increase in the contract to an option covering only 80% of the unemployment benefit with no increase in the overall rate. We have chosen to maintain the level of reimbursement of unemployment benefits at 100% and to rebalance the contract financially by increasing the premium level of the contract specific to communities with fewer than 20 agents.The increase in the rate for this market, which should have been 30%, was finally reduced to 12% because this is the last year of this group contract. But a new consultation is being prepared in 2023.”

A reflection on group insurance agreements

“A deep reflection on the statutory insurance group contracts is necessary”, affirms Michel Hiriart, the president of the National Federation of Management Centres. “A working group that particularly involvesM.F.Awas launched to work on the reform of the framework for group insurance agreements and more generally on how to support the control of absence”, he clarifies.

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