According to a report released by S&P Global Ratings, a provider of credit ratings, the French insurance industry is well positioned to sustain both profitability and moderate growth over the coming years.
Despite economic headwinds and rising claims costs, the sector continues to demonstrate adaptability, supported by prudent financial management and structural resilience.
S&P Global Ratings notes that life insurers in France have responded effectively to higher interest rates by drawing on surplus reserves, allowing them to maintain competitive credited rates on traditional life insurance policies.
This strategic use of policyholder reserves has helped insurers remain attractive in a market where banks had previously gained ground through higher yields on regulated savings accounts.
However, with the regulated Livret A rate now at 2.4%, and average credited rates on traditional life policies holding around 2.5% in 2025, insurers are regaining some competitive edge.
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The report, titled French Insurance Sector Overview 2025: Profitability Resilience and Growth Despite Challenges, indicates that unit-linked life insurance products remain a key component of the market, projected to make up around 40% of total savings gross written premiums (GWP) through 2026.
While life insurance premiums surged in 2024—primarily due to strong demand for these investment-linked products—S&P Global Ratings forecasts a slowdown in growth to approximately 5% annually over the next two years.
Redemptions in life insurance policies increased in 2023, driven largely by wealthier clients and corporate entities seeking more attractive investment alternatives amid rising rates.
Nonetheless, S&P highlights that overall lapse ratios have remained manageable, thanks in part to tax advantages that continue to appeal to retail clients. The agency also emphasises that insurers’ ability to maintain relatively high credited rates in 2024 helped deter further redemptions.
The health and protection segment faces more complex challenges, according to S&P. These include increased medical consumption due to the absence of deductibles, lower government reimbursement rates, and a rise in long-term illness among younger age groups. While pricing has adjusted upward in response, these measures have not fully offset the pressure on margins.
In the property and casualty (P&C) segment, S&P expects gross written premiums to grow at a pace exceeding inflation, driven largely by ongoing repricing efforts needed to counteract rising claims costs.
While the sector has experienced significant premium growth—6% in 2023 and 6.8% in 2024—this trend is expected to moderate in 2025 and 2026 as inflation levels begin to stabilise.
The total net combined ratio in the P&C sector, a key indicator of underwriting profitability, stood at 99.1% in 2024. S&P forecasts that this ratio will remain at approximately the same level through 2026, despite specific lines facing pressure.
The motor insurance segment, while profitable in 2023, is anticipated to return to a slight loss-making position due to competitive pricing and ongoing claims inflation, particularly in relation to spare parts and bodily injury claims.
In contrast, general liability insurance continues to deliver strong returns, and personal property lines have responded to more frequent weather-related claims with necessary tariff increases.
S&P draws attention to the rising cost of natural catastrophes in France. The financial impact of extreme weather events such as hailstorms and droughts peaked in 2022 and has remained historically high through 2024.
To address these growing risks, the French government raised the premium loading for natural catastrophe coverage beginning January 2025—from 12% to 20% for home and commercial property, and from 6% to 9% for motor insurance. This adjustment is designed to strengthen the public insurance backstop administered jointly by insurers and the state-owned Caisse Centrale de Réassurance (CCR), reducing pressure on the public system.
Despite these challenges, S&P views the overall outlook for the French insurance sector as stable. Major industry players such as Allianz France (AA/Stable), AXA France (AA-/Positive), and Crédit Agricole Assurances (A+/Stable) maintain solid financial strength ratings.
The agency notes that insurers’ continued ability to manage risk, control costs, and draw on available buffers supports their profitability, even as they adjust to a more complex economic environment.
S&P concludes that the sector’s performance in 2025 will reflect both operational discipline and the benefits of France’s unique public-private structures, which help absorb systemic risks.
The combination of cautious financial management and adaptive pricing is expected to support continued growth and earnings stability, even under evolving conditions.
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