“The step is extremely brutal”, but “inevitable”, believes a specialist

The additional premium which finances the natural disaster regime will increase from 12 to 20% on January 1, 2025. This system has been in deficit since 2015.

“The step is extremely brutal”but “inevitable”, estimated Friday December 29 on franceinfo Cyrille Chartier-Kastler, founder of the Facts & Figures firm and insurance specialist, while the additional premium which finances the natural disaster regime will be increased from January 1, 2025 from 12% to 20% in average for homes. The decree appeared Thursday, December 28 in the Official Journal.

The objective of this general increase is to revive a system in deficit since 2015, according to professionals. “We have completely changed the paradigm in terms of natural events in France” linked to climate change, explains Cyrille Chartier-Kastler. The effects of drought on homes are costly for insurers: “Approximately 2.9 billion euros in compensation costs for the year 2022”he clarified.

franceinfo: Was this increase inevitable?

Cyrille Chartier-Kastler: The rise was inevitable. We have completely changed the paradigm in terms of natural events in France. Historically, we were at a rate of around one billion to 1.5 billion euros of natural events per year. For around ten years now, we have reached levels of around two to three billion euros. You should know that each year, what is collected by the Central Reinsurance Fund for natural events is 1.9 billion. We see a gap between what is collected in terms of revenue and what is now paid in terms of natural events.

The system had been in deficit since 2015. Why did you wait so long?

This is because, in fact, climatic events have a very erratic side. This year, until the end of September, everything was fine. There was no particular natural event. We had the impression of replaying a bit of the year 2021 which had been very calm in terms of weather. And then, all of a sudden, at the beginning of October, there were the storms Ciaran and Domingo, which cost 1.3 billion euros, then the heavy rains from the beginning of November, significant flooding.

“The climate is indefinite and until December 31, we do not know the cost of the exercise.”

Cyrille Chartier-Kastler, insurance specialist

at franceinfo

Without these events in 2023, the increase may not have been as significant. In fact, the profession historically spoke of an increase from 12% to 18% and ultimately, we went from 12% to 20%, which is an extremely high step. It must be remembered that the previous step dates back to 1980. We went up from 9 to 12%.

Could this increase not have been smoothed out over several years?

Like the climate, it is something that gradually shifts over time, we could have imagined an increase to gradually go from 12% to 14%, 18%, 20% over several years. Here, the step that is being taken is extremely brutal, which will have an obvious consequence on the increase in housing premiums at the start of 2025. The challenge is to bail out a system which is suffering significant losses. But if it turns out, 2024 will be a climatically calm year.

Without this increase, who would have faced the financial risk?

The risk ultimately would have been for the State. It is the French State which guarantees the financial solidity of the natural disaster regime. Now, this regime itself is the subject of reassurances. There are provisions which are managed over the very long term.

Disasters linked to global warming are likely to increase in the coming years. Is this additional premium likely to increase further?

The big risk that costs the most is drought: around 2.9 billion euros in compensation costs for the year 2022. In 2023, we will see more events linked to wind and rain. But what weighs very heavily on the regime is the drought for quite a few years, with summers which are very dry, therefore clay soils which contract enormously, wet winters, clay soils which swell. There were many pavilions built on clay soil with foundations that were too weak. These flags work, crack and it costs the profession very dearly.