Life and PER insurance: insurers do not always respect their contractual commitments


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In its annual report, the ACPR indicates that insurers do not always respect their contractual commitments regarding the calculation of life insurance and retirement benefits, sometimes with serious consequences for the insured.

The ACPR (prudential control and resolution authority) is the supervisory authority for the insurance sector. It monitors the commercial practices of bankers and insurers in this area and also carries out numerous control actions. In its 2021 annual report, the ACPR indicates that it has found that companies do not always respect their contractual commitments with regard to the calculation of life insurance benefits, including with regard to supplementary pension contracts.

The consequences can be serious for the insured

This observation is particularly frequent for old contracts, whose clauses can be very diverse and complex. The ACPR points out that non-compliance with contractual clauses can have serious consequences for policyholders in terms of the valuation of their savings, specifically for long-term contracts (pension contracts for example), especially if the errors made are repeated. in time.

The problems mainly concern the mortality tables and guaranteed technical rates, the methods for calculating and allocating the profit-sharing or even compliance with regulatory and contractual cantons.

The holder of a life insurance contract or a retirement contract (PER, PERP, Madelin, etc.) can choose to dispose of his savings in the form of a life annuity, that is to say an income that he collects until his death. The amount of the life annuity to which he can claim is calculated by the insurer at the time of the conversion of the savings into an annuity and depends on numerous parameters which are specified in the general conditions of the contract.

The allocation of profit sharing

Of course, the more savings the saver has accumulated on his PER, the higher the amount of the annuity will be. Profit-sharing, that is to say the remuneration of the savings invested in the fund in euros, contributes to making these savings grow. Some old contracts guarantee a fairly high minimum rate of return compared to current rates of return on funds in euros. However, if they are not correctly taken into account, the savings will be less valued.

Mortality tables

The amount of the life annuity also depends on the life expectancy of the insured at the time when he applies for his annuity. The higher the life expectancy of the insured, the lower the amount of his life annuity will be because the insurer must make the savings last longer.

To determine the life expectancy of the insured, insurers rely on the INSEE mortality table. This gives the life expectancy according to the age of the person. For example, the life expectancy of a 60-year-old woman in 2000 was 25.6 years. It was 26.4 years in 2005 and 27.5 years in 2021. In the oldest tables, life expectancies are therefore lower than in the most recent ones. Some contracts guarantee the use of the mortality table in force at the time of payment or even at the opening of the contract. If the insurer does not respect this commitment and uses the table in force at the time of the conversion into an annuity, then the annuity will be lower.

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