French Insurance guarantee schemes

Transcription

1 Public hearing on insurance guarantee schemes French Insurance guarantee schemes Claire Cheremetinski DGTPE Head of Unit - Insurance companies and intermediaries 1

2 CONTENTS Origin of IGS in France Main features of French IGS Pros and Cons 2

3 ORIGIN OF IGS IN FRANCE In life insurance, FGAP was created in Objective : protect policyholders against the failure of life insurers. Established in the context of failure of a life insurer (Europavie), where French insurance industry compensated for comitments that were not covered by Europavie remaining assets. Private governance : board of directors and governing body exclusively composed of representatives of insurers In non-life, IGS exists since originally established to protect victims of motor accident in the event of non-insurance or of failure of an insurer. Scope of coverage was extended to all compulsory insurances in 2003 (construction liabilty, medical liability,..). Mostly private governance + 1 representative of government 3

4 Insurance Guarantee Scheme Main features 1) PRINCIPLES Context of Intervention Participants Last resort intervention For life, all life undertakings established in France are required to participate. For non-life, all undertakings established in France that cover risks that are subject to compulsory insurance. Beneficiaries Geographical scope - Life : all policyholders - Non-life : no coverage when policies have been concluded in a policyholder s professional capacity Home state principle : operations of French insurers covered in France or in other Member States under the freedom of establishment / to provide services. No participation of EU branches 4

5 Insurance Guarantee Scheme Main features 2) FINANCING Mix of Ex ante + possibility to call additional resources within a fixed ceiling For Life IGS -0,05% of mathematical provisions, half of which are effectively transfered to the fund, the rest remains in the insurers account but are available at first demand -Possibility to borrow equivalent amount from participating insurers. -Currently, funds available = 500 M. For Non-life IGS - Initial endowment of 304 M in contribution set up by Ministerial decree at 1% of the cost of the FGAO for preceding year - Possibility of an extraordinary contribution from insurers if FGAO reserves fall below 250 M. 5

6 Insurance Guarantee Scheme Main features 3) OPERATION - ACAM launches portfolio transfer. - Interested insurers make an offer. - ACAM chooses the most competitive company or refuse If the portfolio is transfered to another entity offers if they are deemed to be insufficient - In case the acquiring company does not ensure full coverage of policyholders claims, IGS tops up the company assets. - The failed company is wound up. In case there is no transfer IGS compensates directly policyholders Limits of intervention -In life = In non-life, victims are fully protected, policyholders are covered up to 90% of their claims. In some cases, franchise up to

7 Insurance Guarantee Schemes - Pros and Cons Home state principle Limits in coverage Ex ante financing Pros - Responsabilisation of supervisory authorities - Responsabilisation of policyholders and intermediaries - Funds are immediately available - Cost for insurers is gradual Cons - Uneven level of protection across the market for policyholders Some policyholders are not covered Moral hazard? 7