The French regime dedicated to natural disasters could be in deficit “of at least 420 million euros per year by 2050”, in particular because of global warming, worries the public reinsurer CCR in a report released on Wednesday.
In addition to the multiplication of natural disasters, CCR points out in this report submitted to the Ministry of the Economy in December the legislative developments likely to seriously unbalance the regime instituted in 1982.
This device, almost unique in the world, aims to guarantee compensation for victims via a public reinsurer, CCR, and for a modest cost since individuals pay an average of 22 euros per year.
CCR is particularly concerned about the 3DS law on decentralization, the publication of the decrees of which is still awaited and which could aim to better take into account the damage linked to drought, even if it is not considered abnormal.
The first simulations carried out by CCR lead to the conclusion that in the absence of measures to regulate expenditure, the assumption of responsibility for all damages (…) without restriction would be well beyond the capacities of the plan and would require a massive state intervention, responsible for intervening as a last resort, underlines CCR.
Damage to homes due to drought has increased sharply in recent years and will reach around 2.5 billion euros in 2022, out of a total of 10 billion euros in losses linked to natural disasters, according to the professional federation France Assureurs.
In order to reduce the system’s funding gap and thus ensure its sustainability, three main avenues can be envisaged: strengthening prevention efforts, refocusing the criteria for recognizing the state of natural disaster on the original legislative principle and increasing the resources of the plan, indicates the public reinsurer, which specifies that these solutions can be combined.
Currently, the scheme is financed by an additional premium of 12% on home and professional insurance contracts and 6% on vehicle theft and fire contracts.
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A one-point increase in the premium rate represents an amount of approximately 150 million euros if it were applied to all types of risks, underlines CCR.
Regarding the refocusing of the recognition criteria, the reinsurer notes that the scheme is intended to compensate events that are by definition rare and that certain municipalities have been affected at least once every five years.
It could then be economically more efficient to encourage local authorities to invest in prevention and to establish a threshold of ten years. In the event of a higher frequency, the claim would be covered by traditional insurers and not by the catnat scheme.
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