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Under pressure from the ACPR, France Assureurs (the federation of insurers) presented the first elements of the methodology that life insurance companies are invited to follow in order to achieve a moderation in the level of fees paid by savers on their contract .
The ACPR calls on insurers again about life insurance costs
Last May, the ACPR (Prudential Control and Resolution Authority) questioned insurers about the fees charged on their life insurance contracts, pointing the finger at “particularly penalizing entry and management fees”, especially when customers “are forced to quickly redeem their life insurance contract due to lack of cash”.
During the ACPR’s annual conference on December 5, its vice-president, Jean-Paul Faugère, put the subject back on the table, indicating that “all the signals therefore seem to indicate that a movement by professionals would be appropriate or even necessary “. Indeed, “the accumulation of high fees can in some cases cut off any hope of return”, he added, noting “that the account of a good agreement is not there yet” and regretting that the potential return on investment only benefits “financial intermediaries”.
France Assureurs gives the first elements of methodology
Through a press release from France Assureurs, the insurance profession reacted to these declarations and indicated that it adheres to this objective. Committed to ensuring that life insurance continues to remain the preferred investment of the French, the organization calls for increased vigilance in this area. A study has been initiated to find out how, on the one hand, to promote transparency and information for customers and, on the other hand, to achieve a moderation in the level of fees paid by savers.
France Assureurs gives the first elements of the methodology that life insurance companies are invited to follow.
The federation asks its members to strengthen the examination of the units of account (UC) referenced in the contracts by comparing the fees of each CU with a reference level, for example the average of the fees of the CUs belonging to a coherent whole, such as a single category of risk indicator (SRRI).
Thus, when the costs of a CU are significantly higher than the average cost of its category, for example by more than 50%, it will then be necessary to compare its performance net of costs over the recommended holding period with that of the other CUs. In the event of unsatisfactory performance, the insurer will then have to ask itself the question of the relevance of maintaining its referencing for the new payments.
If new CUs are listed on a contract, an equivalent analysis could be carried out by applying, for example, a threshold of 33%.
Next, France Assureurs invites insurance companies to ask themselves the question of maintaining a UC on a freely managed life insurance contract when the total outstanding amount of the latter is zero.
Finally, following on from the marketplace agreement of February 2 on the transparency of costs, France Assureurs invites its members to publish annually on their website the “financial appendix” for each individual PER and life insurance contract.