Life insurance: record payments but declining outstandings

Life insurance: record payments but declining outstandings

Life insurance confirms once again that it is one of the favorite investments of the French, with a record level of payments during the first quarter of the year. However, outstandings are down.

Life insurance: record payouts but declining outstandings – iStock.com / simon2579

Life insurance hits record high in more than a decade

We have to go back to 2011 to see such a high level of life insurance payments because, as evidenced by the figures recently published by France Assureurs – formerly the French Insurance Federation (FFA) – total collection reached no less than 8.4 billion euros during the first quarter of 2022. The month of March even saw a sharp increase in payments with +2.2 billion euros. On arrival, in March 2022, total payments amounted to 14.3 billion euros, up by more than 1 billion euros compared to March 2021. Foresighted, the French took the decision to to save more, driven as much by the economic uncertainty of the months and years to come against the background of the war in Ukraine, as by the current inflation and the probable pension reform in preparation. On this last point, most savers indeed choose life insurance as an investment vehicle with a view to building up a pension supplement, against a background of general decline in pension levels from the general scheme. The recent announcement by the new government that it wants both to complete the thorny pension reform and to raise the retirement age to 65 should in all likelihood encourage households to continue their long-term savings effort .

Outstandings stalled and fell

Another lesson from the figures published by France Assureurs: the French are now willing to direct part of their investments to unit-linked units. This type of life insurance contract has the advantage of a possibly high return in return for risk taking, because the sums are placed on the financial markets, with what this may therefore suppose as a fluctuation. Especially since at present, the yields of funds in euros are well below their level of just a few years ago and have settled at 1.7% gross on average in 2021. For their part, unit-linked contracts posted much higher performances in 2021, between 5% and 8% depending on the contract. Furthermore, the other highlight of the figures published by France Assureurs is the reduction in outstandings. It must be said that the fall in the financial markets has inevitably seized up the machine somewhat. However, all observers agree that the choice of the French to invest in units of account will pay off in the medium and long term, something confirmed by Franck Le Vallois, Managing Director of France Assureurs: “In a still uncertain macroeconomic and international context, the French consider life insurance as the reference savings product.Beyond the protection of their savings over the long term, life insurance also allows them to combine profitability and liquidity .” Also, to compensate for any losses, many savers choose a mixed life insurance contract, breaking down their capital into funds in euros and units of account.A good way to play on both sides: security and yield.

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