Every year the amount of the car insurance premium increases. At issue, more expensive claims, spare parts and increasingly expensive repairs, explain the insurers. But concretely, how is the money you give them used? MoneyVox helps you see more clearly.
Year after year, the average amount of the car insurance premium increases: 437 euros excluding taxes in 2020, which is 17 euros more than in 2012 according to France Assureurs (FA), which represents the main players in the sector. An increase justified, according to them, by the ever-increasing cost of claims despite the drop in the number of claims, and by the increase in the price of spare parts and repairs. Today, motor insurance premiums represent an annual turnover of 20 billion euros. A colossal market in which it is not always easy to know exactly what insurers do with the premiums paid by motorists.
When a person insures his vehicle and pays 100 euro contribution to your insurer, a significant part of this cost is used to pay claims but also taxes and other compulsory contributions. One end is also used to recruit new clients. Explanations.
Pure premium and full of risk
First, you must remember pure prize. It covers the risk taken by the insurer to cover you. We add the safety load that allows the insurer to deal with claims bigger than expected. The claims bill is steadily increasing, with the exception of 2020, which was characterized by the confinement. The latter cost €14.6 billion in 2010 and €18.4 billion in 2019. At the same time, earned premiums went from 18.3 to 22.8 billion euro for 38 million insured vehicles according to data published by the insurance industry police, the Prudential Control and Resolution Authority (ACPR).
the the prices of spare parts go up steadily: according to Scurit et Rparation Automobile (SRA), an organization close to insurers, it grew by 5.8% in 2020 (+7% for Peugeot, +2% for Renault and +7% for Citron for example).
These two expense items, the pure premium and the risk charge, represent about 60% of the use of the sums collected by the insurance companies. According to estimates by France Assureurs for MoneyVox, this corresponds on average 59.30 euros, which will then be used to compensate the insured for material or bodily damage that he or a third party may suffer.
Management Fees and Acquisition Fees
Then we find Management fees which bring together the administrative part processing of the claim, from the opening of the file to the payment of the compensation, through the analysis of the parties, the expert or technical meetings and the connection with a network of repairers. They also cover the salaries of teleconsultants, for example premises or agencies… In fact, the historical players such as the mutualists Maif, Macif, Maaf, GMFwhich weighs one in every two contracts in the industry, they often have hefty management fees.
There are also i so-called acquisition costs, or the commercial or marketing offers put in place to attract customers but also the remuneration of brokers or insurance agents. Our insurers, for example, rely on marketing, online advertising, data and social networks. It is also in this box that no insurance limits costs via a 100% digital course on a mobile application.
FA estimates the operating and acquisition costs represent an average amount of 12.40 euros out of 100 euros paid. A number that questions. According to the Assurland comparator, all of these costs account for more than 20% of the cost of an auto insurance premium. This is confirmed by data from the Prudential Control and Resolution Authority (ACPR). Furthermore, according to her, management and acquisition costs increased from 3.3 billion to 4.6 billion annuallybetween 2010 and 2020, an increase of 39% in 10 years, for all insurers.
However, it is difficult to separate them because the distribution of management costs and acquisition costs varies according to the business model of the insurer, analyzes Olivier Moustacakis, co-founder of Assurland.
Taxes
The level of the tax varies depending on the collateral withheld: 35% on civil liability and around 20% for an all risk contract, for example. The application of the fees is quite complex because some apply only to certain guarantees and others to the total premium, Olivier Moustacakis points out. In general, the insurer indicates a total amount excluding taxes which varies from one contract to another and does not indicate the details of each guarantee.
This is called TSCA (Special Insurance Contract Tax). She represents herself 18.30 euro prize. It includes additional contributions: Guarantee fund for compulsory damage insurance, Guarantee fund for victims of acts of terrorism and other crimes (5.90 euros per contract and per year) and other crimes, Prevention fund for large natural resources (so-called Fund Bernier).
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To these 18.30 euros in taxes, another 10 euros in taxes must be added incurred by the insurer for his business: the social solidarity contribution of companies, the VAT included in the claims… According to the evaluation of France Assureurs, out of the 100 euros of contribution paid by an insured, 28.30 euros in total they are used to finance taxes and various taxes.
Does my car insurer make a profit?
But in the end, what do auto insurance companies earn? The secret is well kept it seems, and the data provided by the regulators offer only a theoretical answer. With car insurance, we are in a very competitive market, points out Alexis Merkling, head of the individual markets department at France Assureurs. Thereby, combined ratio and technical result are used to analyze the market.
The first expresses the relationship between the cost of claims and the management expenses borne by the insurer on the one hand, and the contributions received from the policyholders on the other. But in recent years, the combined report it was an average of 101.3 over 6 years according to data provided by insurers to the ACPR, the sector watchdog. Only the year 2020, and the long confinement, was an exception with a combined ratio below 100. If the total is above 100, it means that insurance is not profitable and that its costs are higher than its revenues, explains Pierre Thrond, professor at the Institute of Financial Sciences and Insurance (ISFA) in Lyon.
To this must be added the technical result which also includes part of the financial investment products of the insurers, deciphers Arnaud Chneiweiss, the insurance broker. However, this is positive with +7.4% in 2020 and an average of +3.2% annually since 2012.
But despite the profits made from investments in financial markets (between 900 million and 1.4 billion per year in the period 2012-2020), insurers are generating negative margins (especially among the big players in the market where the loss rate is exacerbated) or close to zero. This decrease derives mainly from the cost of claims and the cost of repairs, which are constantly increasing. Auto insurance is a loss leader, concludes Olivier Moustacakis of the comparator Assurland.com. It is used to recruit new clients. And, in the midst of the crowd, sell him the contracts – home, life insurance, legal protection or life insurance – judged most profitable by the companies.
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