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A.M. Best Special Report: France’s Non-Life Sector Resilient Despite Economic Difficulties

LONDON--(BUSINESS WIRE)-- The French insurance market has experienced significant volatility during the past few years, although the non-life sector continues to grow, according to a new report by A.M. Best Co.

The report comments that while the life market contracted in 2011, gross premium written (GPW) for non-life insurers continued to increase. The non-life sector benefited from a harder market, with rates for motor lines in particular lifted to improve profitability. Data from the insurance association, Fédération Française des Sociétés d’Assurances (FFSA), shows GPW for the non-life segment increased 4.6% to an estimated EUR 47.9 billion in 2011. This was a record level for the non-life market, with rate increases mainly accounting for the increased premiums. The momentum for rate increases appears to have continued in 2012 to date.

The report, “France’s Non-Life Sector Resilient Despite Economic Difficulties”, notes virtually every line of business—with the exception of commercial property, which remained static—contributed to non-life growth. However, it adds the continued uncertainty in the Eurozone is adding pressure on insurers to focus on maintaining underwriting profitability.

Ghislain Le Cam, senior financial analyst, said: “Despite rates being forecast to modestly increase, insurers could face strain on their overall profitability. Maintaining underwriting discipline is paramount, given the challenging macroeconomic environment that has resulted in continued low investment returns.”

The report states a combination of rate increases in 2011 and a more benign claims environment has resulted in an improvement in technical profitability. The French non-life insurance sector’s combined ratio improved in 2010 and 2011. It fell to 104% in 2010 and to 100.5% in 2011.

Charlotte Vigier, senior financial analyst, said: “Technical profitability in the French market has improved considerably since 2009, when the overall market’s combined ratio reached 104.7%. A.M. Best expects rate increases to continue in 2012 and 2013, albeit at much lower levels than those achieved in 2010 and 2011.”

However, Yvette Essen, report author and director of industry research, Europe and emerging markets, added that natural catastrophes remain among the most significant threats to this trend. “Notable events have included severe flooding in Var in the summer of 2010. In December 2011, windstorm Joachim struck the north of France and was followed by windstorm Andrea, which caused damage in various areas of the country in January 2012.”

For a full complimentary copy of the report, please visit

A.M. Best Europe is holding its annual Insurance Market Briefing - Europe on 18 October in London. To register or to learn more about the briefing, please visit

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Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Ghislain Le Cam, +(44) 20 7397 0268
Senior Financial Analyst
Charlotte Vigier, +(44) 20 7397 0270
Senior Financial Analyst
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
Yvette Essen, +(44) 20 7397 0322
Director, Industry Research
Europe & Emerging Markets

Source: A.M. Best Company, Inc.