Returns of life insurance contracts : the dark practices of the insurers

life insurance, financial investment preferred by the French, suffers from a communication partial and biased view on the returns of its funds in euros. When the intervention of the legislature ?

Every year, from January to march, the insurers shall communicate to the public the funds rate in euros from their contracts. Data often come without hindsight by the media. Yet, among the professionals, everyone knows that this table is a remarkable trompe-l'oeil. "The ads performance by insurers are absolutely not a complete picture and real of the market, writes Gilles Dupin, president and ceo of the mutual Monceau Assurances. It is the marketing communication, it is necessary to say it out loud ! The goal of the companies is not to inform investors but to value the contracts."

A Better Live Your Money (paper Version of The Express-Seminar, ed.), our follow-up history of the market confirms this observation. Let's modify our statement : the beginning of each year, companies report the rate of "some" of the contracts. For completeness, you will revert to !

The performance of the old contracts ?

Generally, insurers are less chatty about the performance of their contracts closed with the subscription, yet many. Our applications supported with the companies on the returns of the older products are often given for non-receiving.

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You insist ? You reply that "this contract is very old, and weighs little in the stock", that "it is no longer marketed, and therefore not representative of our offer", that "each purchaser of a contract is informed by his annual statement," etc ..

responses well-oiled, but often inaccurate. As the old envelopes that weigh heavy in the assets of the companies. Example : at CNP Assurances, the first life insurer in the market, Initiatives Transmission, product closed since the early 2000's, is still worth 24 billion euros.

Rest the argument shock imparted by one of our interlocutors : "When you compare computer products, you are interested in the latest models offered for sale, not to products sold fifteen years earlier. Do the same with the life insurance !"

Problem is, savings is not a consumer product. It belongs to the insured, who have the right to know how the company distributes the fruits.

Carry the iron in the wound : the omerta on the old contracts is related to the fact that they are much less profitable than current products, without that this is justified on the contract.

biased Information on the performance of contracts in progress

The average rates that say nothing specific about your contract. But the insurers also know to bias the information on the performance of contracts in the course of marketing.

So-t-he average rates announced by some institutions, such as BNP Paribas or Société Générale. Often, these are the figures that you find in the press or on the websites of the companies, so that an average rate won't tell you anything about the minima and maxima attributed to policyholders, nor on the criteria used to provide these different levels of remuneration.

It must also rely on the propensity of companies to mix the cabbages and carrots in the presentation of the performance. Example in vogue : in the contracts with several euro funds, the media often turns out to be more profitable and therefore more... attractive.

This is, of course, that which is to be put forward. Except that it fails to specify that its access is subject to a risk-taking significantly in parallel (on 20% to 50% of its capital !). Of which lure a audience little bit of a connoisseur.

The list is long of these practices little consumerist : enhanced yields that make it hard to read the true report of the contract, forgetting to note that the rate shown is gross of social contributions, etc., The market would be the need of discipline.

These communication standards adopted since 1998...

Yet, since 1998, the French Federation of insurance (FFA) has adopted standards of communication on the performance of funds in euros, which are supposed to impose on all its members, that is to say, almost all of the insurers (a collection of these commitments, updated in July 2016, is available on Ffa-assurance.fr).

the Aim of the operation : "to Improve the clarity and transparency of the information that our profession is diffuse on the evolution of the performance of the contracts." With a golden rule : "insurers are committed to ensure that the information on a given contract may not falsely lead to believe, implicitly or explicitly, that it is related to other contracts or all contracts proposed by the company." It is far enough away.

In addition, in the case of a query of journalists, the federation asked the institutions to publish, in the face of the returns served, the amount outstanding of the relevant contracts.

Some do it spontaneously, like the Afer or the Macif. But most do not deliver this central element.

The insurers put to the test by writing

to test the insurers we surveyed twenty of them. Even if it takes note of the efforts of transparency among some of our interlocutors, the conclusion will leave the investor uncertain : a majority of insurers do not even respect the commitments of communication, taken by their profession (see the table below or click here to view in full screen).

Thistte opacity nurtures a practice unknown to the general public, the unequal treatment of the insured. Most often, the rates offered on the euro funds are beyond any logic.

An example among others : how do you explain that the contract Kashmir 2 of The Postal Bank sees its funds in eur credited from 1.85 to 2.01 % in 2016 when the contract Vivaccio displays only 1.15 per cent, while they are driven by the same insurer (CNP Assurances) and that their management costs are the same in contract (0,85 %) ? Unfair but legal, the insurance Code, leaving complete freedom to the institutions to distribute the financial benefits that will be realized with the savings of their clients.

"The manipulation of rates served"

These practices arouse the wrath of the Federation of independent associations for the defence of savers for retirement (Faider). "We oppose the lack of transparency in the life insurance market and the manipulation of the rates used in accordance with the contracts, denounces Jean Berthon, chairman. Our federation is campaigning for an amendment of the rules for calculation of participation in profits so that there is greater inequality between the rates offered."

For the time being, it is just lost. The attribution of the returns on the funds in euros is primarily a business decision between the insurer and its distributor.

in other words, the rate of life insurance does not find, they are enacting ! Hence the looting of the old contracts, stripped for the benefit of newer products.

Even if some of the actors - some associations of investors, and each other - do not participate in this great hack, the evil is deep.

ultimate Question : who will lead the operation of transparency, which was so in need of the preferred investment of the French ? It's hard to believe that the answer will come from the prudential supervision Authority and resolution (ACPR), the regulator of the financial sector, more concerned of the health of system as the protection of investors.

Even if the ACPR amounts regularly against the "bad practices that may impair the understanding of the offers and life insurance products offered", it does not go up to tancer companies fault. Does it remind him of what was written ten years ago in its annual report : it is difficult for investors to "exercise any control of the amounts that they advertise their insurers".

And if the legislature took the folder ?

The salvation would therefore be more on the side of the legislator. On the minefield of dormant (these contracts dormant for insurers because they have not been paid to beneficiaries), that many believed irrevocable, the situation has improved considerably thanks to his intervention.

Who will dare now to tackle the transparency on the returns of the fund in euros ? Two tracks are possible. The first, rather technical, would be to impose on the professionals in the cantonment of contracts, their isolation in the accounts of the companies.

What would "draw" the returns attributed to them, like the traceability in the food sector. This ring-fencing of funds in euro, adopted by few institutions (including the Afer, Asac-Fapès, Gaipare, Monceau Assurances), is a guarantee of equity. But the profession is united against this evolution.

Read our complete file

life Insurance rates / returns contracts

Two types of life insurance are worth more than a life Insurance : how to earn more life Insurance : what to do in the face of declining rates?

A default, there is a second, simpler solution : carry a legal obligation for the insurers to publish on their website the entirety of the rates offered on all of their contracts with their outstanding loans. For savers, then, to draw the necessary conclusions. Perhaps it is time that insurers accountable.