The law Fir 2 allows Bercy to block redemptions on the contracts in case of financial crisis. But also put a ceiling on the returns of the funds in euros. Should we be worried?
life insurance has just received two real battering. In question, the law Fir 2 on the modernization of the economic life, finally adopted, and in particular article 21 bis. What does he say ? The High Council for financial stability (HCSF), chaired by the minister of Finance, may now, in the event of a serious crisis, take measures to preserve "the stability of the financial system". No one has touched them. It is the how that poses a problem.
procedures are not so new. The HCSF will, in effect, "to suspend, delay or temporarily limit" withdrawals, trade-offs and advances on contracts of life insurance of all companies. And this, for six months at the most. This measure has provoked a wind of panic among many investors, fed by a discourse wrecked. As a result, the collection (payments less withdrawals) was zero in September, and even negative in the month of October.
"A rifle shot"
The possible freeze of assets is obviously a devastating blow to life insurance, weakening its liquidity. However, it should be reason to keep it. First of all, this crash is intended in the case of an exceptional situation, such as a crash in bond caused by an abrupt rise in long rates. Then, the control of public authorities is not new. Under the aegis of the prudential supervision Authority and resolution (ACPR), it is already currently in the banks, and next to life insurance, the ACPR may long quarantine, a company specifies. What has never been done.Your support is essential. Subscribe for $ 1 support Us
In reality, the odds of a freeze are low, especially as the impacts would be, to them, dangerous. "This is a rifle-shot, evidenced by an insurer. Pull once and the life insurance will not get up !".
Push insurers to lower yields served
The worst is elsewhere. In addition to secondary measures (see box below), in reality, most of that is gone unnoticed. The HCSF has now authority to control in part the returns on allocated funds in euros. How ? By modulating "the rules of the constitution and reversal of the provision for profit sharing", we said to the law. Understand that this allowance is a reserve of performance established by the companies to adjust their rates. The Administration comes to interfere in that management with a goal of clear, push insurers to reduce drastically the yields served. It is necessary, therefore, expect rates to discount in the coming years, below 2% of average as early as 2016.
Read our complete fileInvestment : is it to be tempted by the funding formula ? Life insurance: the collection has grown in 2019, with nearly 26 billion euros in life Insurance : how to earn more
Insurance borrower, Perp, Forex also on the menu
Notice to borrowers : the law Fir 2 allows them to change loan insurance on each anniversary date, and not only the first year. A good new perspective. An investigation of the Repression of the frauds indicates that a change of insurance without charge is complicated, because of the reluctance of banks. The text is also to investments the most risky : it prohibits the electronic advertisements and e-mails concerning the investments on the Forex, CFD and binary options. Finally, the small taxpayers having a popular retirement savings Plan (Perp) not used less than 2 000 euros will be able to unlock way early.