The financial sector is weakened by the rout of the American bank SVB and that of Credit Suisse, bought by UBS. Stock markets around the world have unscrewed in recent days and savers, especially those with life insurance, fear for their savings.
Do life insurance policyholders have to worry about their investment in the midst of the global banking crisis? The answer of Philippe Crevel, director of the circle of savings.
Do life insurance holders have reason to worry about the bankruptcy of the SVB bank or the last-minute bailout of Credit Suisse by the UBS bank?
First, what we have just experienced is a banking problem, not an insurance problem. Then, there are big differences between the establishments concerned. Credit Suisse had been a sick investment bank for years due to risky investments. In the United States, we are talking about the bankruptcy of a small bank which financed start-ups and whose funds were not very diversified. In France, insurance companies are much larger. And they diversify their risks as much as possible by seeking long-term or very long-term money.
However, is there a risk of contagion from the financial crisis of American tech?
There are very few links between French insurers or banks and American banks in Silicon Valley. This has nothing to do with the crisis of 2008, when rotten real estate products were sold all over the planet.
What guarantees the solidity of the insurer?
It is a very controlled sector. The insurer must be able at any time to return the money entrusted to it. There are very strict prudential rules, set by the European Solvency II directive, which require institutions to have significant capital to ensure their solvency. And therefore to deal with the possibility of a massive movement of withdrawals. In France, the Prudential Control and Resolution Authority ensures that insurers meet their deadlines and reimburse their customers.
And if, despite everything, the insurer defaults?
There is a guarantee fund in the amount of 70,000 euros per establishment provided for each holder. But it is a device provided in the event of an extreme disaster. Governments would intervene before this happens. This is also what has just happened in Switzerland, so that UBS bought out Credit Suisse. And in the United States, to save the small banks. This is to avoid the domino effect.
What happens to the money placed on a life insurance policy?
It can rest on two different types of supports. The most popular, which concerns three-quarters of holders, is the euro fund, which benefits from a capital guarantee from the insurer. The other quarter of the contracts is made up of what are called units of account. These are securities, Sicav funds, mutual funds… like shares, their value fluctuates according to the mood of the financial markets.
How much does life insurance weigh in France?
It is a major savings product in France. Four out of ten French households have a life insurance policy, mainly people over 40 years old. In volume, it is by far their largest investment, with total outstandings of 1,840 billion euros. A sum ten times greater than that placed in Livret A.
