“Pandemic insurance: the embalmer, the abbot and the gravedigger”. A column from Jérôme Goy.


The crop frost episode of last April was a severe reminder that when insurance is optional, the vast majority does not insure themselves. Vineyards are considered insurable by the insurance market and have been excluded since 2010 by the government from the agricultural calamities’ regime. Since that date, the insurance for wine-growing areas in France has therefore been optional. The outcome: ten years after, only 32% of winegrowers have underwritten an insurance contract.

How can we not draw the parallel with the government’s refusal to create a pandemic regime plan? On March 24, 2021, Florence Lustman, president of the French Insurance Federation (FFA) recalled that the government has definitively abandoned the creation of a new compulsory insurance regime covering operating losses for closed companies due to an epidemic. “It is essentially for cyclical reasons, the plan was not chosen” we are told.

However, the plan was demanded by the professionals whose the activity is impeded by administrative closures and more generally, due to the COVID-19 pandemic. It is the only system that works, but the embryo has been aborted as soon as the twelfth week. The embalmer Kessler, president of SCOR, the fourth-largest reinsurer in the world, have buried the corpse on January 15, in a tribune at Les Échos. The abbot Lustman has just delivered a eulogy. Nonetheless, the gravedigger Bruno Le Maire, the French Minister of Economy, had dug the grave on December 7, 2020, in a speech at the Ministry of Economy and Finance.

Words in the air. On July 16, 2020, when the working group created by the Minister of Finance on the development of insurance that covers exceptional risks had submitted its report, several scenarios had been proposed in order to guarantee companies a coverage against future pandemic risks. One was a mandatory guarantee added to property damage insurance contracts of all companies, ultimately reinsured by the State beyond the capacity of insurers. Such system, modeled on the one that already exists for natural disasters, included risk sharing between the private sector on the one hand and the State, on the other.

However, preferring words to action, Bruno Le Maire launched a public consultation on the management of exceptional risks for companies. From the proposals of the working group and this consultation, the government has only retained small “measures” according to certain representatives of the professions concerned. In short, the Minister did not show political courage and the government bowed down in front of the lobby of the insurance companies.

Abandoning the plan for a compulsory scheme, the government has affirmed that it wanted to offer to the willing companies, the opportunity to build-up tax-free provisions. Let’s be clear: this substitution does nothing to meet the needs of small, medium, and large businesses. It goes without saying that the constitution of reserves constitutes an inaccessible luxury for shops, restaurants, tourism professionals and the event planning industry who are on the verge of extinction.

The ultimate proof of the government’s cowardice, even this lighten and optional regime is still at the drafting stage and no concrete measures have seen the light of the day. When it comes to insurance in particular, the minister seems to have a tendency to forget – if not, to renounce – to his promises.

Deferring to the wishes of insurers or protecting French companies to preserve the future: the government has to choose.

Since July 1, 2020, we alerted the government on the urgent need for a new mandatory regime. As early as January 2021, we indicated to the government on what mechanisms to exit the crisis we thought would allow the establishment of an effective system of compulsory insurance against pandemics.

Tax loopholes. The system studied by the French Ministry of Economy and Finance could indeed take the form of a State coverage for the first year of business contributions under a new compulsory pandemic risk insurance scheme. The first year of the premium for this new scheme would thus be paid (either in whole or in part) by the State as a progressive aid to end the pandemic.

Insurance, a fortiori compulsory, is above all a pooling mechanism. The Ministry of Finance must stop preferring financial and fiscal mechanisms. The policy of France cannot be decided from the trash can … Neither from Boulevard Haussmann, headquarters of the Federation of Insurances.

Through its proposals, the government would create an additional tax loophole and a business opportunity for insurance companies. The general interest is not that. It is to protect all French companies against future pandemics. Only a mutualized compulsory insurance system will allow this.