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After the riots, the lack of insurance
New Caledonia continues to heal the wounds of an economy grounded between May and December 2024. With insurers threatening to pull out of the increasingly risky French overseas territories, hope could come from a reform of New Caledonian insurance law, which has so far closed off the market more than it has taken account of local particularities.
1 billion euros in reimbursements out of 2.2 billion euros in damage. The estimated overall cost of the riots in New Caledonia between May 13 and December 2, 2024, is proving to be very high for insurers! During the summer, Allianz reported 260 million euros in damage to be reimbursed on the archipelago, while Generali announced on October 7, 2024 that it would have to assume a remaining liability of 50 million euros. This avalanche of millions almost makes us forget that, apart from the fourteen deaths, the main victims of the atrocities committed on Grande Terre – the archipelago’s main island – are companies.
This has an impact on insured losses, the insurance rate of local businesses is much higher than that of the population as a whole. According to a note from France assureurs dated December 2, 2024, out of 3,470 claims reported at the end of November, 1,600 concerned industrial or commercial establishments, 900 of which were totally destroyed. The surveyors dispatched to assess the damage did not escape the violence, some having had their vehicles stoned or their computer equipment stolen during their surveys. They were able to see for themselves that the rioters were intent on destroying the island’s economic fabric.
The figures bear this out: damage to business property accounts for half of all claims reported. They account for 96% of the total cost of the devastation. And that’s not counting business losses, which will have to be taken into account, and which account for 68% of the estimated one billion euros of damage. According to one industry professional, it may take one or two years to compare pre- and post-event sales, in order to put a definitive figure on the loss. However, in Nouméa today, the 137.5 M€ already paid out by insurers, corresponding to 75% of declared losses, is far from sufficient to revive the local economy. This was not for lack of trying, as Bruno Le Maire, then Minister of the Economy, called on insurers to “show benevolence” towards New Caledonia as early as May 20. But in the meantime, a fire has broken out in Martinique, a storm has ravaged Mayotte, and two government reshuffles in mainland France and New Caledonia later, it has to be said that the French Overseas Territories have been in the news, and not in a good way. It is part of the threat of a revival of this market heard from insurers, but also part of the rise of a phenomenon identified by reinsurers: riots.
Worrying dynamics
Over the last ten years, “we can only consider a series of events that reveal a worrying dynamic”, sums up Alexis Valleron, General Delegate of the Association des professionnels de la réassurance en France (Apref). This fear has prompted the CEO of Generali France to say that “reinsurers are putting France at the same level of risk as South Africa or Nigeria” when it comes to riots, with events in New Caledonia and Martinique playing a large part in the rise in risk. A theme echoed by the Fédération des entreprises des outre-mer (Fedom) on January 11, 2025: “Some international reinsurers, whose position largely determines that of the insurance industry, today consider the risk of riots to be as recurrent and violent in France as it may be in developing countries.”
Is the fear of riots likely to compel force insurers to turn away from the French overseas territories? No, reassures Alexis Valleron, “it’s wrong to think that we want to withdraw from this sone. If you look at a map of the world, you can quickly see that all countries are exposed, including developed countries like the United States”.
A globalized riot risk
In response, reinsurers have decided to revalue their intervention points by almost 50%. For riot risk in France, this was €500 million until 2023.
“This was historically very low,” notes Apref’s General Delegate, to justify the decision to raise this intervention point to €750 million in 2024, and to increase reinsurers’ intervention capacity from €2.5 million to €3 million. This change, imposed as part of the annual negotiations between insurers and reinsurers, and inevitably costly for insurers, is having a hard time getting through, even if “it’s completely absorbable” according to one reinsurance professional. For Alexis Valleron, it could not be otherwise in a world where political violence is gaining ground: “We assume that insurance covers a hazard; as long as there is no return to law and order, the hazard is not eliminated. The insurance model is therefore endangered by the evolution of this hazard, which is becoming recurrent.
All the more reason for the weariness expressed by insurers still present on the Rock -Helvetia, Axa, Allianz, Generali, Groupama and Australia’s QBE- regarding their presence on the territory. “Some companies are now quite burnt out,” confirms Frédéric Ducos, Regional Director of Poe-ma Insurances. Even before they turned their backs, they announced that they were withdrawing from riot and related cover and, more generally, were organizing their withdrawal: Generali, citing its weak presence in this niche, has withdrawn from the professional property damage market (DAB Pro) in New Caledonia, but claims to have “maintained contracts for individuals”. Helvetia, which had decided in July to halt the development of its business on the Pebble, finally resumed its underwriting and policy renewals on October 9 “in view of the lull observed in September”. Already, residents of certain districts of Greater Nouméa (Kaméré, Rivière salée, Vallée du Tir, etc.) are unable to find a property and casualty insurer, given the devastation that has occurred there. As for local business owners, it is virtually impossible for them to insure their professional risks or access credit, as some banks refuse to finance reconstruction that is not insured against riots.
The state reminded of its duties
All these elements of blockages regarding a recovery of the economy that inspired the written question asked by the elected member Nicolas Metzdorf, dated 26 November 2024. The elected from La Foa calls for the creation of a state-funded guarantee fund to stabilize the local insurance market: ‘By acting as reinsurer for insurance companies for guarantees related to riots, the State could immediately secure the insurance system while allowing insurance companies to gradually reconstitute sound actuarial bases and restore normal coverage rates over a transitional period. ‘
This idea was defended by the Caledonian government during the economic forum carried out by Bercy and the Ministry of Overseas: wherever it is shot from, the ball arrives in the camp of the State. Relying on the article L.211-10 of the French Code de la sécurité intérieure (CSI) which provides that «the State is civilly liable for damage and injury resulting from crimes and offences committed, by open force or violence, by armed or unarmed assemblies or gatherings, either against persons or against property», Allianz threatened to take legal action against the French state as early as summer 2024. Four months later, it was joined by Generali France. Appeals which, according to Jérôme Goy, partner at Enthémis, will not be easy to carry out, as he explained on Radio Classique, last 9 October: “it must be proved that the state has not done its job (…). If it takes ten days to bring people from a metropolitan area, you can’t necessarily blame the state for not bringing them three (…)“.
In addition, the fact that insurers have already taken out their cheques to compensate their clients is against them. If they did so, “it is because we were below the limit of generalization [of risk, NDLR], so this was covered by the insurance contract,” notes the lawyer who, for his part, is preparing to defend the interests of certain metropolitan groups established on Le Caillou against their insurers.
A judicial noise that annoys more than one. «The companies are holding the riots to threaten to withdraw from the march», says a Caledonian broker under cover of anonymity: «But in this case, everyone is at fault, the State, the government [local, NDLR], the companies. They will pay only 30% of the € 2.2Md damage, or € 660M, and in addition they will call on reinsurers. In fact, they want to be capitalized companies and let the state take the risks.”
The insurance object of political emancipation
This call to the State, both a potential reinsurer and a judicial punching-ball, is all in all recurrent. However, it has something to surprise in the Caledonian file, as the recent history of the Caillou has proved the emancipation of this territory vis-à-vis the metropolis, especially in terms of insurance.
It all began in 1956 with the so-called «loi cadre Defferre» and then its decree of 22 July 1957, which gave the territorial assembly the right to create an insurance obligation in compliance with the legal framework set by the State. Less than ten years later, this possibility is used to compel motorists to insure motor land vehicles (resolution no. 394 of 15 December 1966). Then the Stirn statute, resulting from the law no. 76-1222 of 28 December 1976 relating to “the organization of New Caledonia and dependencies“, gives exclusive jurisdiction in insurance law to the territory. A power that will be taken up in the Law no. 88-1028 of 9 November 1988 “laying down statutory and preparatory provisions for the self-determination of New Caledonia in 1998“, following the Nouméa agreement… and which leads to the creation of local agricultural mutual insurance funds on the Caillou (resolution no. 192/CP of 30 September 1992). Ten years later, after the signing of the Matignon agreement, the Constitution Law of 20 July 1998 on New Caledonia and the amended Organic Law no. 99-209 of 19 March 1999 on New Caledonia were enacted. Article 22-16 of the second article enshrines the transfer of jurisdiction “insurance law” to New Caledonia.
In reality, the territory took a long time to appropriate this competence transmitted by the French State on paper but long organized in Paris: until the organic law of 1999, the State continued to extend to the New Caledonia legislation on insurance in Caledonia. Incidentally, the French state, which was at the same time working on its insurance code, took the opportunity to remove any reference to New Caledonia.
This is the moment when on the Caillou, we finally seem to become aware of the importance of the project to be carried out. «until 2016», acknowledged in a report submitted in 2022 Virginie Ruffenach, Member of the Caledonian Congress, “New Caledonia had not really taken up its jurisdiction and in the absence of a text adopted locally, insurance law was based on the provisions of the National Code (…) without the law in force being truly legible”.
It will take two years for the law of the country n°2016-8 of 3 May 2016 “relative to book III and V of the Insurance Code applicable in New Caledonia” to be enacted. From 2014 to 2016, the then government, through one of its members Bernard Deladrière, called on the Comptroller General of Finances Antoine Mantel, former secretary-general of the Insurance and Mutual Control Authority (ACAM) Supervisory and Resolution Authority (ACPR). The man, perceived as the expert indispensable to the emergence of this legislative work, works with the Economic Affairs Directorate (DAE) to concretize the emancipation of insurance. The territory thus decides to organise the supervision of undertakings engaged in life and casualty insurance activities: a risk located inCaledonia must be insured with a government-approved insurer and insurance intermediaries must be registered in a public register. The objective according to the law of the country is «to ensure the ability to honour contacts», the managers of companies having their registered office in New Caledonia, such as agents, being subject to conditions of good repute, competence and experience. Finally, insurance companies are subject to obligations concerning their technical provisions, investments and own funds, and are required to respect a solvency margin corresponding to the amount of own funds necessary for their current business.
The government must also enter into a cooperation agreement with the supervisory authority of the State in which the head office of these undertakings is situated, provided that the level of control exercised by this State offers guarantees at least equivalent to those provided for in the code. In this case, only Belgium, Luxembourg, Australia, France and Ireland now meet the criteria.
Local insurance law
Combined with Brexit, it was not necessary to do more to affect the New Caledonia activities of Lloyd’s, which leave the territory in 2018. The news affects many brokers in the territory. Helvetia takes over part of its transport and civil liability contracts, without the damage cover that was provided by the London market. «Lloyd’s has always practiced attractive prices while Allianz has always been expensive”, sums up Arnaud Darras, director of the broker Sivac.
The reform is not adopted because it is based on an administrative burden which is similar to that of the number of insurers. “We have been saddled with enormous obligations for a territory of barely 270,000 inhabitants,” sighs a broker. This reform is a true millefeuille that has discouraged many people. «Politically, there was too much to do, we were probably not careful and inventive enough», sums up Nicolas Metzdorf. In light of the events after 13 May 2024, the transfer of insurance jurisdiction to New Caledonia appears to be part of the problem. «We are in small markets with high risks», admits broker Frédéric Ducos who sees a solution: «It should be possible to open the market, risk by risk, to attract new companies. That would be a good start. But why continue to deny yourself the London market?” Nicolas Metzdorf, for his part, would already like that «New Caledonia draws lessons from what happened by talking with the neighboring countries».
It remains to be seen how the government Caledonian, elected on 7 January 2025, will seize the opportunity to carry out a reform of insurance law to accelerate reconstruction and secure the local economic fabric. A working group, organized locally among insurance players with the support of Medef NC, did not wait to act. It submitted a report in January to Emmanuel Moulin. The former director of Gabriel Attal’s office in Matignon, appointed to head the interministerial delegation dedicated to the rebuilding of New Caledonia, has already warned: “New Caledonia cannot rely on the metropolis alone.”