The Economic, Social and Environmental Council (Cese) published on April 13, 2022 its opinion on the evolution of the French insurance model in the face of climate, cyber and pandemic risks. The observation of an aggravation of climatic disasters is flagrant.
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More frequent and serious claims
In 2018, out of the three groups of claims studied (natural disasters — in particular drought and floods —, “storm, hail, snow” guarantees and agricultural insurance), the cost of claims amounted to 3.4 billion euros. An amount one billion euros higher than the average for the past ten years.
The agricultural insurance system is under tension. The ratio between the sum of contributions and the amount of claims was 87%. This left little room for manoeuvre, especially since according to FranceAssureurs, “the annual cost of natural disasters will increase by 90% by 2039. Insurers anticipate that the cumulative cost of storms would increase by 36% over the period from 2014 to 2039, by 114% for floods and 162% for droughts. »
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20% of farmers for 30% of surface areas including 3% of arboreal areas subscribe to themulti-risk climate insurance. These low rates can be explained, according to the Cese, by “a lack of insurance culture and financial means for the latter. »
“Farmers prefer to invest in prevention and protection devices (examples: anti-hail nets, water storage against droughts) rather than insuring themselves”, specifies the opinion.
Banking on crop insurance reform
The crop insurance reform bill voted by the Senate on February 8, 2022 should make it possible to offer better risk coverage. The ambition is to encourage half of the operators to take out insurance by 2030. This new system is inspired by the regime for natural disasters and is based on three levels:
- Level 1: management of low risks by farmers;
- Level 2: coverage of average risks by insurance thanks to the premiums paid by farmers;
- Level 3: State assumption of catastrophic risks.
The deployment of the system provides for a provisional budget of 600 million euros on average per year.
In addition, the Cese considers that “parametric insurance (1) opens a possible way to accelerate the payment of indemnities. It has the particularity of making the triggering of the guarantee dependent on a parameter or an objective index agreed in advance. The Cese recommends “making parametric insurance eligible for public subsidies within the framework of climate multi-risk insurance”.
This recommendation, like the adaptation of crop insurance to the needs of farmers “will be worked on within the committee responsible for the orientation and development of insurance guaranteeing damage to crops (Codar) in connection with the sectors concerned” , writes Cese.
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