The Motor Vehicle Insurance Insolvency Fund (Fonds d’insolvabilité en assurance automobile, or FIAA, in French) meets a need: to ensure that policyholders who are victims of a road accident are properly compensated if an insurer goes bankrupt. It was set up at the beginning of April 2024 under article 6 of the law of 29 March 2024 transposing Directive (EU) 2021/2118.
Its management committee is now known and includes three members: Marie-Laure Meyer (adviser to the constitutional court), Valérie Scheepers (head of the non-life and reinsurance department, member of the board of directors of the Commissariat aux Assurances, CAA) and Carlo Zwank (head of Insurance, market infrastructure and AML/CFT at the finance ministry). As expected--and much to the chagrin of the industry--there will be no industry representatives on the committee. It will be chaired by Scheepers in her capacity as a member of the CAA. The term of office for members of the management committee is set at five years and is renewable.
Reduced structure
There are no plans for the fund to recruit its own staff. “In order to minimise operating costs,” explains the ministry of finance, the management committee will be assisted by the Commissariat aux Assurances in the performance of its duties, “and in particular for the operational tasks for which it is responsible.” The secretariat will be managed by an agent of the CAA, appointed by the CAA’s management.
The FIAA will also be able to call on external experts and advisers. “In this way, access to specific technical skills, particularly in situations involving cross-border elements, can be ensured,” states the ministry. The FIAA could also call on external service providers “when it has to intervene in the insolvency of an insurance company.”
A call to the wallet
The FIAA will be sending out its first call for contributions for the year 2023 in the next few days, the finance ministry has confirmed. The call for contributions will be capped at a maximum between 0.5% of written premiums, gross of reinsurance, in the RCA (responsabilité civile automobile, or motor vehicle liability) insurance branch, net of cancellations, and 0.125% of the technical reserves of the RCA insurance branch.
These amounts are calculated in relation to the last financial year closed at the time of the call for funds. The bill is estimated at €1m for 2023. “This is a considerable additional cost,” said , CEO of the Association des Compagnies d’Assurance et de Réassurances (Aca), when the law was voted. This cost will be passed on to policyholders in the form of premiums, finance minister (CSV) confirmed in committee.
Questionable profitability
In 2023, motor insurance premiums came to €591.2m, up 4.4% year on year. However, the gross technical result was negative. This fact, combined with the impact of FIAA contributions, led the CAA to carry out a profitability study on this branch of the market. This segment has been penalised by a near doubling in the cost of claims, an increase that has been particularly driven by the price of spare parts, labour costs and medical costs.
According to the CAA, the profitability of the motor liability business “depends partly on the size of the portfolio and partly on the level of costs charged to this business, but also on the cost and efficiency of reinsurance. In 2023, the CAA has noted an improvement in the result of the branch for a certain number of operators who have made a tariff adjustment and/or adapted their reinsurance programme.”
This article was originally published in .