The Prudential Control and Resolution Authority (ACPR) banged its fist on the table on Monday about the sometimes considerable costs of life insurance contracts, a product which concentrates nearly a third of the financial savings of the French .
"All the signals seem (...) to indicate that a movement of professionals would be appropriate or even necessary," said ACPR Vice-President Jean-Paul Faugère at the institution's annual conference in Paris. .
[Live đź”´]#ACPR Conference
Focus on issues relating to the governance of insurance products:
🔹 Lessons from the ACPR's work in the life insurance sector
🔹 Focus on the obligations of wholesale brokers in product governance# Insurance pic.twitter.com/cTDbuHSGOv
— Prudential Control and Resolution Authority (@ACPR_actu) December 5, 2022
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“Particularly penalizing entry and management fees”
“This movement should be characterized by a double requirement, transparency and self-assessment,” he continued, referring to an ongoing dialogue between the ACPR and the professional federation France Assureurs.
The gendarme of bankers and insurers, backed by the Banque de France, had, in early May, called life insurance professionals to order both on their duty to advise and on the fees charged.
He then pointed to “particularly penalizing entry and management fees if they (customers) are forced to quickly redeem their life insurance contract due to lack of cash”;
and criticized the place of units of account (UC), a “risky allocation” not necessarily “adapted to the needs of customers whose financial situation is fragile at the time of subscription”.
"The accumulation of high costs can in some cases amputate any hope of return", noted Monday Jean-Paul Faugère, the potential return on investment ultimately benefiting essentially "only financial intermediaries".
A new ACPR recommendation in 2023?
"We unfortunately have to note that the account of a good agreement is not yet there today" about "better transparency and justification of life insurance costs", had indicated earlier in the day the Governor of the Banque de France François Villeroy de Galhau, advancing the possibility of a new recommendation from the ACPR on the subject "by mid-2023".
Life insurance remains the investment that captures the most savings in France: its outstanding amounted to 1.827 billion euros at the end of October, according to the latest figures available from France Assureurs.
Jean-Paul Faugère also mentioned the loan insurance market, another subject of tension this time with the banking players, the latter defending their historic market share linked to the housing loan activity.
The ACPR "regularly receives reports on practices that are not very compliant," he said, also referring to a new recommendation to come.
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