Posted on Oct 7, 2021, 6:26 PMUpdated Oct 7, 2021, 6:41 PM
The attack is frontal. Some discussions with insurers have been “surreal”, reported Thursday Senator Jean-François Husson (LR), during the presentation of a Senate report on the protection of savers. For his co-rapporteur, Alberic de Montgolfier (LR), these actors gave the impression of “not living in the same world” as us.
The cause of this charge: the observation that the fees charged by insurers and bancassurers in their life insurance contracts “cut too much the returns” to which French savers could claim. Their report comes at a time when Bercy is already criticizing the costs of Retirement Savings Plans (PER).
Over ten years, “17% of returns” are captured by the distributor and intermediaries on these contracts, noted the elected officials. Over 40 years, that’s almost half! “There are too many layers of costs, which erode yield and harm actual performance,” denounces Jean-François Husson.
The retrocession system
In question according to the rapporteurs, the French model of bancassurance, which has admittedly allowed “the success story of life insurance”, but encouraged intermediation, which results in many costs. Elected officials denounce in particular the practice of retrocessions.
Prohibited by some countries, such as the Netherlands, this consists for the manager of an investment fund to remunerate the distributor, for example an insurance broker or a wealth management advisor, in exchange for the distribution of shares in his fund. An opaque system that can influence the advice of the distributor.
These retrocessions can represent up to 57% of the outstanding costs levied on collective investment undertakings, detail the elected officials. “This system necessarily encourages insurers and their distributors to direct their customers to supports characterized by a high level of commissioning”, underlines the report.
However, the senators do not call for abolishing these retrocommissions, “in the short term” at least, arguing that this risks limiting the products available to savers, a consequence observed in the Netherlands.
On the other hand, the rapporteurs do call for the elimination of movement commissions, these costs taken each time the funds of savers are placed on a different product. “In some cases, the movements are not motivated by a performance gain, but only to be able to invoice the movement”, Tance Albéric de Montgolfier.
Senators also call for better supervision of outperformance fees, levied when life insurance returns exceed expectations. They recommend only authorizing this type of commission if the outperformance has compensated for the underperformance of the last five years. Finally, they call for index funds to be compulsorily referenced by insurers in order to present low-cost products (these funds reproduce the performance of a stock market index).
Real return and inflation
Originally, the two senators had set themselves the task of investigating the subject of the protection of savers in the light of the constitution of savings forced by part of the French during the pandemic.
But the subject of the real return on savings products available to the French risks becoming more and more sulphurous with the return of inflation, the senators stressed: the fall in yields could push the French to look elsewhere, at the same time. risk of being seduced by the scams that abound on the Internet.