The Autorité de la concurrence has issued (27 January) a report at the request of the Senate Finance Committee, highlighting significant challenges in the property insurance market for local and regional public authorities in France. The sector, deemed critical for safeguarding public assets, is characterized by high concentration, with Groupama and SMACL Assurances SA holding over 40% of the market, and low levels of competition.
Key Findings
- Market Concentration: The dominance of two major insurers limits options for public authorities, creating an unbalanced dynamic.
- Procurement Challenges: Complex public procurement rules discourage insurer participation, with 24% of tender calls receiving no responses since January 2023.
- Rising Costs: Public authorities face increased premiums, higher deductibles, and unfavorable contract terms, with some insurers terminating agreements prematurely.
- Knowledge Gaps: Many public authorities lack comprehensive data on their assets and associated risks, hindering effective insurance planning and cost reduction.
Recommendations
The Autorité has proposed seven measures to enhance competition and improve the procurement process:
- Asset and Risk Assessment: Authorities should inventory assets and risks, implementing prevention measures to reduce insurance costs.
- Technical Assistance: Encourage collaboration with consultants and resource-sharing among authorities to streamline contract preparation.
- Experience Sharing: Authorities should exchange best practices for organizing competitive insurance tenders.
- Clarify Procurement Rules: Provide clear guidelines on the French Public Procurement Code to simplify insurance contract procedures.
- Extend Tender Deadlines: Give insurers more time to prepare bids, encouraging broader participation.
- Stagger Tender Processes: Spread tender launches throughout the year to prevent overlapping deadlines and increase insurer interest.
- Flexible Contract Structuring: Promote awarding contracts by lot to attract mid-sized operators and foster diversity in tenders.
Implications
The Autorité’s recommendations aim to address structural inefficiencies and create a more competitive insurance market. By implementing these measures, public authorities could benefit from better insurance terms, while fostering a more dynamic and diverse marketplace.
