Due to the current stock market crisis, the supervisory authority wanted to remind investors, for their life insurance savings, of some main principles when subscribing for unit-linked support.
In these times of strong market turbulence, the ACPR (the French Prudential Supervisory Authority) wanted to recall some of the main principles of life insurance.
Its message is clear and it is reflected in the title of its press release: “Life insurance is a long-term product, the characteristics of which must be clearly explained to customers by professionals”.
In the current context of low, even negative, rates, many insurers encourage their customers to abandon, for their life insurance savings, the contracts in euros, with guaranteed capital, and to direct them towards support in unit of account, much more risky. These incentives can take different forms. The regulatory body cites, for example, the increase in the fees charged during payments for certain contracts in euros to the point that they may represent, given current rates, several years of yield.
Due to these developments, the ACPR draws the attention of customers to several elements:
- Life insurance contracts are long-term products; savers must subscribe according to the objectives pursued and the planned holding period.
- A life insurance policy cannot be chosen on the basis of past performance alone or on remuneration for a year. Customers must also compare all of the conditions of the contracts (in particular the various fees) and be explained the possible impacts of a modification of the contract carried out at their request or at the initiative of the insurer.
In its press release, the ACPR also carries out a few booster shots for professionals:
- The latter must give their customers clear information, in particular on the risks inherent in unit-linked contracts, the current period by providing clear proof. They are also obliged to support them in defining their needs in order to make them a tailor-made commercial proposal.
- The information documents must also clearly indicate, when subscribing to new contracts, and because of the specific tax regime of these products, that an investment horizon of at least 8 years is advised.
This reminder from the ACPR is timely since many savers, tired of the low yields on their historical contracts, have had to subscribe in recent months to unit-linked supports attracted by past yields. Some of them must experience their first great crisis today. It is therefore essential to remind them that this type of investment is judged over time. It is also good to remind professionals of their duty to inform.