Aerial view of Cathédrale Saint-André de Bordeaux in Bordeaux

France is Europe’s largest country, and its location at the center of the continent makes it a desirable destination for business. A skilled workforce and a solid industrial base add to its attraction. Like any other country, France has its peculiarities. We spoke to Alexandre Reichheld – Head of International Operations at one of our partners in France – about the unique features of the French insurance market.

Christian Hilbrecht: Several European countries, including France and Germany, have been affected by floods, causing 184 deaths in Germany alone. The German insurers expect flood damage of EURO 7 billion. Nat Cat is a hot topic across the industry. France has a unique way of dealing with Nat Cat. How is Nat Cat exposure dealt with in France?

Alexandre Reichheld: Yes, indeed, Nat Cat (in French: Catastrophe Naturelle; CatNat) has extreme exposure in France because we are summarizing earthquakes, floods, and storms, although not often hurricanes or cyclones like in the US or Canada. CatNat is mandatory, and the premium – although it is instead a tax than a premium – is 12% of the net premium amount of the policy.

Christian Hilbrecht: Another notable feature is GAREAT, a pool set up to find coverage for property damage and consequential loss arising out of terrorism. Can you explain how this is handled and what the share of the premium is?

Alexandre Reichheld: Just like CatNat, GAREAT is a co-reinsurance pool. Both pools have been created after significant incidents as a reaction to natural catastrophes and terrorist attacks. 

The share of the premium for GAREAT depends on the size of the risk. For risks whose sum insured amounts to 6 million, you do not have to pay a premium. For risks whose sum insured is higher than 6 million and lower than 20 million, the share of the net premium is 12%, and for risks whose sum insured is over 20 million, the percentage is 22% of the net premium.

Christian Hilbrecht: There are significant differences between the sum insured for motor vehicle liability in Germany and, e.g., the USA. In the US, typically, there are stringent limits of liability, and they´re relatively low. What kind of limits do you provide for motor insurance in France? 

Alexandre Reichheld: There is no limit for Bodily injury and property damage caused to a third party; the limit is EUR 100 million. It is mandatory, and you cannot provide over coverage.

Christian Hilbrecht: France is a country where you have pure financial loss exposure. Is there a particular way of dealing with this?

Alexandre Reichheld: In the US, for instance, you can cover pure financial loss through errors and emission or professional liability. In France, if you are responsible for a loss or damage caused to a third party, you can be rendered liable for any financial loss; even you did not create physical damage, you can provoke a loss of benefit. This is what we call „Dommages Immatériels non-consécutifs”. 

To make it clear, I´ll give you an example. Let´s say you have different spare parts, and a client ordered spare part x, and you provided the client with spare parts by mistake. In this case, you did not cause any physical damage, but your client has not delivered his product and will suffer a financial loss. In this case, you can be held liable.

Christian Hilbrecht: France is a rather welfare state with a robust social security system. Can you tell us what the French social security system is providing in this regard and why private health insurance as an employee benefit for companies is essential and, in many cases, mandatory?

Alexandre Reichheld: Like in many countries, our social security has decreased more and more in its capacity to reimburse hospital care, etc. So we have developed additional health care insurances called “complémentaire santé.” This insurance has been mandatory since 2016. Since 2018 all employers have to provide their employees standard health insurance, completing an additional reimbursement to the case usually reimbursed by social security. Those private health insurances add new coverage like psychological treatment, etc. Since 2020, the government has introduced a new system, which ensures that 100% of the expenses are allocated between the private health insurer and the social security system. So, if you have to pay EUR 100 for your medicine and social security reimburses EUR 25, the private health insurer will have to reimburse the rest.

As part of our “Around the World with TRC” series for our US and Canadian partners, we interviewed Alexandre Reichheld. You can find the interview under the following link:

In the meantime, Alexandre has left the company and will take up a new position. We wish him all the best and thank him for his excellent cooperation over the past years.