CCR, STATE OWNED REINSURER

As a public reinsurer serving the public interest, CCR provides insurance companies operating in France with state-guaranteed coverage against natural catastrophes and other exceptional risks. As risk manager for the French State, CCR collects extensive data on extreme risks and insured assets, modelling these risks and sharing its knowledge with the government and the market for better risk prevention. Finally, CCR is also responsible for the accounting and financial management of public funds on behalf of the State. 2022 was marked by a very high drought loss experience, the reform of Nat Cat compensation and the creation of the new public guarantee scheme for tour operators.

Lowest level of the Garonne River in Toulouse on 21 October 2022.

NATURAL CATASTROPHES

2022, A YEAR SHAPED BY UNUSUAL DROUGHT

“THE SUMMER OF 2022 WAS THE HOTTEST ONE ON RECORD IN FRANCE SINCE 1900.”

ANTOINE QUANTIN,

Chief Underwriting Officer, Public Reinsurance and Guaranty Funds

AFTER A YEAR IN 2021 relatively spared by natural catastrophes, 2022 followed on from the years 2016- 2020, which were marred by a very high number of natural catastrophes, particularly drought.

As regards floods, as of 31 December 2022, there were approximately 1,000 communes that had been recognised as having suffered a natural catastrophe, which is well below the average over recent years. As a result, the loss experience for floods remains contained and is estimated for CCR at €178.6m.

A year with worst drought on record

The same cannot be said for drought. Indeed, a new episode of exceptional intensity struck in 2022. According to analyses by Météo-France (*), the summer of 2022 is the second hottest summer observed in France since at least 1900, with a difference of + 2.3°C compared to the 1991- 2020 average. A very severe meteorological drought affected most of France, covering a wider area in August than it did in 1976 and 2003. The drought and the summer heat aggravated the drought that had already set in since the beginning of the year. Thus, on a national scale, the soil wetness index reached remarkable values at the beginning of May and remained at record values from mid-July to mid-August without interruption. Although there is still a lot of uncertainty regarding the final cost of this event, CCR estimates that as of 2022 year-end, it will have to bear more than €1.4bn. As a result of this very high loss experience, a number of non-proportional covers are expected to be affected in 2022.

In addition to this high loss experience due to events of 2022, there is the deterioration of past years due mainly to the inflation shock observed in 2022, which is expected to continue in 2023. Overall, the loss experience for FY2022 amounts to €2,222 million.

(*) Météo-France, 30/08/2022, Climate change: the Summer of 2022 and its weather extremes could become normal after 2050.

Change in the State Intervention Threshold between 2000 and 2022

Completion in 2022 of the reform of the Nat Cat scheme initiated by Deputy Stéphane Baudu.

REFORM OF THE NATURAL CATASTROPHE SCHEME

IMPROVING THE TRANSPARENCY OF THE SCHEME AND STRENGTHENING COMPENSATION FOR VICTIMS

FOLLOWING THE ENACTMENT on 28 December 2021 of the law reforming the Nat Cat scheme, 2022 was devoted to the preparatory work to draft the implementing decree. It was published in the French Official Journal on 31 December 2022 and a decree published the same day also set certain parameters.

These implementing texts thus finalise the reform of the regime, initiated by Deputy Stéphane Baudu. They specify: the composition of the national advisory commission set up by the reform, the timeframes, and arrangements for the coverage of emergency relocation costs and the new rules on deductibles.

This reform improves the transparency of the scheme and strengthens the compensation of claimants.

Subsequent to the law of December 2021 relating to compensation for natural catastrophes, the law relating to differentiation, decentralisation, deconcentration and various measures to simplify local public action, known as the ‘3DS’ Law of 21 February 2022, authorised the government “to take, by way of decree, any measure falling within the scope of the law in order to improve the coverage of exceptionally serious consequences on buildings and on the material living conditions of insured persons made by disorders caused by the natural phenomenon of differential ground movements resulting from drought or soil rehydration”.

Among other things, this enabling law proposes to adapt “the conditions for the consideration and compensation under the natural catastrophe scheme provided for in Articles L. 125-1 to L. 125-6 of the French Insurance Code to the distinctive features of this natural phenomenon [in order to] allow for compensation of direct material damage that cannot be insured and that has been caused by this natural phenomenon, when the direct consequences for the insured persons result in exceptionally serious disruption to their material living conditions”.

Interministerial work was carried out during 2022 and CCR was asked to carry out impact studies of the scenarios considered, in terms of the compensation for claimants and the financial balance of the scheme. The decrees are expected by 21 February 2023. However, additional work will have to be carried out in 2023 to draft the application decrees for this specific reform for the phenomenon of drought and soil rehydration.

EXPERTISE AND MODELLING

AN ESSENTIAL LINK IN THE MANAGEMENT OF NATURAL HAZARDS

CCR’S RESEARCH AND MODELLING ACTIVITIES aim to meet operational needs in reinsurance, exposure measurement, prevention and support to public authorities in risk management. CCR models are continuously used to quantify events such as the 2022 drought, to study the impact of reform projects or to analyse new risks and territories.

This work is carried out in partnership with reputable scientific organisations such as Météo-France, INRAE, BRGM and universities.

Geotechnical drought

The CCR drought model was recalibrated in 2022 by incorporating the most recent claims data. With this new calibration, the destruction rates and costs calculated by the model for the market and our ceding companies are very close to the costs observed for past droughts.

CCR began estimating the cost of the 2022 drought in June. In June 2022, a first estimate was made on the basis of an agroclimatic index, the DOWKI, adapted from the agricultural drought model. From October 2022 onwards, SWI data provided by Météo-France (see Figure 1) allowed CCR to run its classic drought model.

“THROUGHOUT 2022, CCR MODELS WERE USED TO PROVIDE TECHNICAL SUPPORT TO THE FRENCH STATE.”

DAVID MONCOULON,

Head of the Modelling R&D Department – Reinsurance and Public Funds Division

Figure 1 - Uniform SWI ratio to normal for the 2022 drought. Seasonal maps.

The model also predicts the requests and recognitions of state of natural emergency; actual requests for recognitions formulated by communes are integrated into the model as and when they are received. Given the current strong inflation, CCR models also had to be adapted to take inflation forecasts into account, the impact of which is particularly important in the case of drought, a long-duration hazard.

CCR models were also used throughout 2022 to provide technical support to the French State, as part of the work aimed at reforming compensation for geotechnical droughts, following the Government’s empowerment by the 3DS Law of 21 February 2022 to take any measure aimed at improving the management of this peril.

For the first time, Météo-France, BRGM and CCR have joined forces to co-supervise a thesis on the development of new tools to estimate losses due to the phenomenon of clay shrinking and swelling. Sophie Barthélémy’s initial work led to the development of a new index, the magnitude, constructed from soil wetness records at several depths. This index is calculated from the integral of the annual SWI values below a threshold associated with a frequency of drought occurrence. Work is currently underway on the correlation between this indicator and claims data.

Floods

During 2022, several improvements were made to the flood model to refine overflow modelling. These improvements focused on three main areas. The first is the conversion of simulated river flows into water levels. The second area of improvement was the propagation of flows on the DTM (Digital Terrain Model). Finally, in collaboration with INRAE, a new method to predict the flows of large rivers whilst integrating the snow stock was implemented.

These updates significantly improve the simulation of river overflow. The overflow was validated on real events and used to simulate a catalogue of hypothetical events, derived from current and future climate precipitation scenarios provided by Météo-France. Figure 2 shows the simulated overflow for a 100-year return period event on the Seine River in Paris.

The results of the simulations in this catalogue were used in a partnership with RTE (Réseau de Transport d’Électricité) on the impact of climate change. The aim is to study the exposure of substations and pylons managed by RTE to the risk of > flooding and to forecast its evolution as a result of climate change. This analysis is carried out regarding the overflow of rivers, runoff phenomena and coastal flooding.

To do so, each entity was cross-referenced to the simulated hazard considering three climate scenarios: current climate, IPCC RCP4.5 scenario RCP8.5 scenario, for which the data was provided by Météo-France. This study is due to end in March 2023.

Figure 2 - Maximum simulated water levels for a 100-year return period in the Paris region.

Figure 3 - Simulated losses for the 2018 Aude event aggregated on a 250m grid.

PICS and MUFFINS Projects

CCR is involved in several research projects, two of which are related to flooding.

The first is the PICS project, funded by the French National Research Agency, which aimed to design and test forecasting systems designed to assess the impacts of floods up to 6 hours in advance. It was carried out in collaboration with many partners: Université Gustave Eiffel, Cerema, INRAE, Geosciences Rennes, Météo-France, CNRS, SHAPI and IGE and it ended in 2022. In this project, CCR experimented with the use of weather forecasts to predict future damage during flash floods. Figure 3 illustrates the type of result that can be expected with the generation of an expected severity index on 1:25,000 scaled map. A second research project called MUFFINS started in 2022 following the PICS project. The partners are CEREMA, CCR, IMFT, the Toulouse Mathematics Institute, INRAE, INRIA, Université Gustave Eiffel, Météo-France and the French Ministry of Ecological Transition. This project aims to explore new methods to model the hazard of flash floods. It uses physical methods and mathematical methods such as meta-models to simulate river flow, overflow and runoff at very fine scales. CCR is involved in this project as an end user.

Earthquakes

Since 2015 and more actively since 2017, CCR has been working, in collaboration with BRGM and then the RING team of the GeoRessources laboratory of the University of Lorraine, on the development of its own seismic loss estimation model. This model was created in 2022 and was used that same year to estimate the exposure of the French territory (exc. overseas departments and territories) to earthquakes.

The model is based on (i) a stochastic earthquake generator, (ii) an analysis of the vulnerability of the French building stock and (iii) CCR’s market portfolio. This approach makes it possible to estimate the spatial variability of insurance losses on different scales: commune, department (see Figure 4) or nation-wide. The generation of earthquakes over time also allows the establishment of loss-return period relationships.

The RING - CCR partnership resulted in a first thesis presented in 2021 and two scientific papers published in 2021 and 2022. This partnership is still ongoing through the thesis of Marius Rapenne.

The aim of this thesis is to better describe site impacts. These impacts are mainly observed in sedimentary basins that have specific geometries which tend to trap seismic waves. These trapped waves in the basins imply amplified seismic hazard. The use of numerical simulations of seismic wave propagation makes it possible to better describe and understand these site impacts, which are currently modelled in the CCR model using proxies. Marius Rapenne’s work will ultimately help to reduce the uncertainties in the hazard estimate and contribute to the improvement of the CCR model.

Figure 4 - Mapping of average annual costs by department from the CCR earthquake model.

Figure 5 - Change in the intensity of ten-year extreme droughts between current climate and future climate (2050).

Figure 6 - Farmers’ financial losses for straw cereals and grasslands according to their return period in Metropolitan France.

Agriculture

Since 2015, CCR has been developing a model to estimate crop losses due to weather-related events in Metropolitan France. The scope covered includes all the crop categories in France: grassland, viticulture, arboriculture, field crops with information by type of crop. This model operates on a double scale: departmental and individual from AGRESTE and RICA data.

These models can be used to quantify, in terms of agricultural and financial losses, historical extreme events in the past, such as the 2003 summer drought, the 2011 spring drought, the 2016 excess water event and more recently the 2018 drought. They thus provide an up-to-date view of the exposure of farms to risks (such as climate risks) by type of crop as shown in Figure 5.

In order to consolidate the understanding of farmers’ exposure to climate risks, it is necessary to consider the impact of climate change.

With this in mind, a thesis in Economics in collaboration with Institut Agro Rennes and Météo-France was started in December 2018 and presented on 12 July 2022 by Dorothée Kapsambelis.

The objective of this thesis is to model the economic consequences of extreme climatic events of drought and excess water on crop production in France.

The results of this work make it possible to quantify the cost of extreme climate-related events in Metropolitan France (see Figure 6) and to quantify the necessary allocation of the State budget and the capital required from insurers to deal with future climate risks in the context of climate change, using the new system put in place as of 1st January 2023 as a risk management tool.

These results highlight the challenge of pooling risk on extreme events for insurers, who must then seek strategies at international level or by combining different covers. For the State, the results raise the question of the provisioning of the fund and highlight the need to quickly build up reserves, in years where events are said to be normal, to deal with future extreme risks.

Towards an enhanced multi-hazard platform for damage calculation

A project to improve the existing vulnerability module started in September 2022ww. The objective of this project is to improve the calibration of damage models based on detailed modelling, but also to quantify the impact of protective measures or building standards on avoided damage. A first stage of bibliographic research allowed the identification of key data and indicators to be collected as well as potential methods to be implemented for the development of the vulnerability model.

In 2022, CCR decided to rewrite its insurance damage calculation solution. The aim is to create a robust and portable damage calculation platform. For the time being, the platform is being developed in-house and deals with the perils covered by the Nat Cat scheme. The provision of this platform to CCR partners is being considered.

“CCR ASSISTS VARIOUS FRENCH GOVERNMENT DEPARTMENTS IN THE DEVELOPMENT AND ASSESSEMENT OF THEIR PREVENTION POLICIES.”

NICOLAS BAUDUCEAU,

Head of the Public Funds and Prevention Division – Reinsurance and Public Funds Division

PREVENTION OF NATURAL RISKS

CCR ACTS AS A CATALYST

AWARE THAT NAT CAT RISK MANAGEMENT cannot be reduced to the mere compensation of losses, CCR has been extending its missions and developing actions in favour of prevention for several years. In this area, CCR plays an essential role as a catalyst, identifying operational solutions for the treatment and prevention of drought, for example, encouraging its ceding companies to implement preventive practices for their customers, and supporting government services in the development and evaluation of its prevention policies.

Drought: solutions to reduce costs and prevent hazards

The very high level of geotechnical drought damage in recent years has led CCR to explore techniques to better address and prevent this hazard. From March to August 2022, CCR called on Terrasol, a subsidiary of the Setec Group, specialised in geotechnical studies prior to the design of major structures, to carry out a study on the effectiveness of underpinning with micropiles and waterproofing solutions using geomembranes or perimeter terraces.

This study, which was also carried out in conjunction with a consultancy firm specialised in the prevention of disorders linked to the shrinkage and swelling of clay, made it possible to carry out a stateof-the-art review of French and international practices as well as a vast numerical analysis of the behaviour of single-family homes subject to the effects of shrinkage and swelling of clay. The results show that solutions to limit the change in water content under the foundations, also known as horizontal measures (perimeter waterproofing, offset drains, anti-root screens, etc.) are as effective as, or even more effective than, micropiles in managing the risk of clay shrinkage and swelling, while being also less expensive. This work, which suggests potential for improving not only the post-loss treatment of drought but also its prevention, was disseminated to the insurance community and the relevant government departments. They should be followed by practical experiments within the framework of a partnership with France Assureurs and are intended to allow a medium to long-term reduction in the burden of drought claims

Involving ceding companies in the field of prevention

Since 2020, CCR has been recognising the efforts of its ceding companies in the area of prevention through a commission mechanism. In 2022, commissions paid under this scheme amounted to €17.50m for the overall market. The reports submitted by the ceding companies show the ongoing dynamics of prevention practices. The industry is getting organised, structuring itself internally, training and recruiting specialised personnel for prevention-related matters. It is also increasingly surrounding itself with service providers to diversify the services it provides to its clients (warning system, vulnerability diagnoses and self-diagnosis, flood protection). Private individuals are increasingly the focus of preventive information. The insurance business is diversifying and shifting.

Some insurers are gradually becoming relays for the State’s public prevention mechanisms on their own initiative or at the request of the public authorities. They are for example developing relationships with communities to reduce the vulnerability of individuals and small businesses to flooding through flood prevention action programmes.

In addition to the commission system, CCR supports its ceding companies in this process by providing them with documentary resources and training, and putting them in touch with local authorities or government services or other bearers of public funding schemes for the reduction of property vulnerability.

CCR is strengthening its links with French government departments in charge of natural risk prevention

CCR’s missions in supporting public policies for natural catastrophe prevention were recognised in 2021 by the Baudu Law and materialised the same year by a five-year agreement signed with the General Directorate for Risk Prevention of the French Ministry of Ecological Transition and Territorial Cohesion. In 2022, this convention gave rise to a number of research projects, the most emblematic of which were the production of an economic analysis of the relevance of introducing hurricane regulations in the French Overseas Territories and the drafting of a report on the prevention of natural risks in France over the period 1995 to 2020. In addition to this nation-wide research, 2022 was above all marked by a very strong intensification of the working relationships and collaborations maintained by CCR with the decentralised services of the State (DREAL, DEAL and DDT). CCR was thus active in all regions of France to support French government departments in developing public prevention policies.

PUBLIC FUNDS

CCR CONTRIBUTES TO THE CREATION OF NEW SUPPORT SCHEMES

IN 2022, CCR ensured the operational accounting and financial management of four public funds on behalf of the State:

- The National Fund for Risk Management in Agriculture (FNGRA).

The law of 02 March 2022 on the reform of agricultural risk management lays the foundations for a profound transformation in the management of the FNGRA. Numerous consultation meetings held by the government resulted in the publication of implementing regulations which still need to be completed in 2023 to determine how the fund will eventually be managed.

- The Construction Insurance Risk Compensation Fund (FCAC).

This fund, created in 1982, is designed to cover losses affecting buildings for which construction work began before 1st January 1983 through agreements with construction insurers.

- The Guarantee Fund for risk related to the spreading of urban or industrial sewage sludge on agricultural land (FGRE).

Created in 2006, this fund compensates farmers and owners of agricultural and forest land if the land becomes totally or partially unfit for cultivation as a result of the spread of urban or industrial sewage sludge.

- The Guarantee Fund for losses arising from preventive, diagnostic and healthcare services provided by healthcare professionals (FAPDS). For this fund, CCR is also in charge of the administrative management of the files.

In 2022, in a context of sharply rising energy costs, CCR also participated, alongside the French Treasury, in the structuring of a new public fund, intended to support companies that consume a lot of energy. The Guarantee Fund for Electricity and Gas Contracts (FGCEG) was thus created by the Finance Act of December 2022. Its accounting and financial management, like that of the Guarantee Fund for travel and tourism operators created at the end of 2021 to secure and stabilise the market of financial guarantees for the tourism industry following the Covid crisis, will be ensured by CCR as the European Commission has given its green light on the operational implementation of these two aid schemes.

Following a scorching hot summer without rain, the sunflower fields in Lormes withered in August 2022 (Nièvre, Bourgogne FrancheComté region).

“THE INCREASE IN NUMBER OF CYBER ATTACKS IN 2022 PUT CYBER RISK IN THE CATEGORY OF MAJOR EMERGING RISKS.”

THIERRY COHIGNAC,

Deputy Chief Underwriting Officer, Public Reinsurance and Guaranty Funds

CYBER

EMERGING RISK

THE DIGITALISATION OF THE ECONOMY, accelerated by the Covid-19 crisis, has significantly increased cyber risk. Cyber-attacks cause significant financial losses and jeopardise the very existence of targeted companies. This increase in the threat and its potentially systemic nature mean that cyber risk can be classified as a major emerging risk in the same way as natural catastrophes in the context of climate change. Cyber risk is often associated with malicious acts, but it also covers unintentional incidents resulting from human error or accidents. The consequences of this risk concern the integrity, availability and confidentiality of data and IT systems.

Material risks for the financial and healthcare sectors

The financial and healthcare sectors are especially at risk because they hold substantial amounts of personal data (identities, bank details, social security numbers, bank card information, medical data), which are sold on the “dark web” for fraudulent purposes (identity theft) or used as a means of pressure to obtain ransoms (a technique that has been facilitated in recent years by the emergence of cryptocurrencies). Retail (retail chains, social media, telephone operators, online video games, etc.) also generates a lot of personal data and is therefore also a prime target.

Finally, online retail and industry risk heavy economic losses if payment systems are disrupted or production stops (business interruption).

Despite the growing threat, cyber risk insurance is struggling to develop in Europe, unlike in the United States, the undisputed world leader in this field. France is no exception. There are many reasons for this lack of insurance in France. Among these reasons, the underestimation of the risk by some companies (especially the smaller ones), the heterogeneity of insurance offers (sometimes unsuitable for intermediate-sized companies) and difficulties in modelling and estimating the risk (problem of the absence of data for a risk that is constantly changing) can be mentioned. Finally, the potentially systemic nature of cyber risk reduces the appetite of insurers.

Sharing information and best practices

In this context of growing cyber threat and lack of insurance, CCR is conducting a scientific watch on the subject by participating in insurance-industry work and by creating a cyber community within its own ranks to share information and best practices in insurance and reinsurance on this emerging risk. In 2022 a course (followed by a work placement) was launched by CCR on the difficult subject of cyber risk modelling in partnership with the Institute of Statistics (ISUP).

CCR also participated in the working group initiated by the French Treasury on the development of cyber risk insurance. The French Treasury involved all relevant stakeholders (insurers, reinsurers, France Assureurs, AMRAE, APREF, risk experts, lawyers) in discussions on a wide range of subjects (legal framework, risk metrics, risk sharing and raising corporate awareness). The recommendations of the working group were the subject of a report published by the French Treasury in September 2022.

MANAGING RISK IN AGRICULTURE

THE CROP INSURANCE REFORM

THE LAW OF 2 MARCH 2022 is the starting point for a major reform of crop and grassland coverage against extreme weather events.

Based on the threefold observation that crop insurance was not sufficiently widespread, that there was harmful competition between the agricultural cat scheme and subsidised comprehensive climate insurance (MRC), and that there was a growing number of claims due to climate change, the reform laid the groundwork for a profound change in the logic of crop loss coverage.

Key elements of the reform include:

- the introduction of a three-tier system of coverage, whereby the farmer self-insures for small losses, the MRC insurance complements the first tier for medium-sized losses and the national solidarity fund (a section of the national agricultural risk management fund) kicks in for the most serious losses (see Figure 1).

- an increase of the MRC subsidy (70%) and a decrease of the deductible for subsidised contracts (20%)

- the establishment of a single point of contact for farmers

- the creation of a new forum for dialogue within the CNGRA: the CODAR (Commission in charge of the orientation and development of insurance covering damage to crops) the option to create a co-reinsurance pool. This vast reform thus aims to create an insurance shock to encourage the spread of the MRC while preserving the national solidarity tool for the most important risks. It comes into force on 1st January 2023.

Figure 1 - Presentation of the new three-tier risk management system defined by the Law of 2 March 2022 in France. The system is organised according to levels of crop loss.

The reform is also an important step for CCR’s missions. Its traditional role as accounting and financial manager of the FNGRA has been supplemented by a broader mission, since the CCR can now “contribute to the development, implementation, control and evaluation of public policy on the management of climate risks in agriculture and the development of insurance against these risks” (Ordinance of 29 July 2022).

“Varenne de l’eau agricole” consultation

CCR participated in the ‘Varenne de l’eau agricole’ consultation for the preparation of the risk management reform which ended on 2 February 2022. In addition to its role as administrator of the FNGRA and its experience as a public reinsurer of other exceptional risks, CCR provided figures on the characterisation of historical extreme events. Thus, CCR responded to operational requests from the French Ministry of Agriculture and Food Sovereignty on the amount of claims and average loss ratios for French farms over the historical period 1989 to 2018 under different risk management scenarios. In addition, work on modelling the impact of climate change on agricultural financial losses was also presented to the office of the French Minister of Agriculture and to the French Treasury.

Figure 2 - Mapping of crop insurance take-up rates for the 2020 campaign.

Comprehensive climate insurance monitoring

CCR has been monitoring the development of comprehensive climate insurance for the French Ministry of Agriculture and Food Sovereignty since 2017. This work consists in analysing the database of insured farms in Metropolitan France. CCR develops indicators such as takeup rates by crop category (see Figure 2), the changes in insured capital, subsidisable contributions, or specific studies on premium rates by type of crop and insured farms with young farmers’ aid.

CCR reports on this work in the form of a summary note for each insurance year, published on the website of the French Ministry of Agriculture and Food Sovereignty.

Grassland Index Validation Committee

CCR is the technical secretary of the Grassland Index Validation Committee (CVI). This year, the committee met on 29 November. For the 2023 campaign, which marked the implementation of the agricultural risk management reform, 6 insurers applied for accreditation. All are based on the index developed by Airbus Defence & Space, which uses satellite images and meteorological data to calculate grass growth on a ten-day scale. This tool allows for the implementation of index insurance, the triggering and level of compensation of which depends on exceeding an index threshold.

TERRORISM

A VAST COVERAGE

IN FRANCE, the coverage of terrorism risks in P&C insurance is very broad. Coverage for terror attacks and acts of terrorism (as defined in Articles 421-1 and 421-2 of the French Criminal Code) has been mandatory under property insurance policies since 1986.

In view of the stakes and the limited capacities of private reinsurers, CCR is authorised by Article L.431-10 of the French Insurance Code to provide unlimited reinsurance with a State guarantee for damage covered by the compulsory guarantee.

This reinsurance system has been organised around two different covers: small and medium risks (risks below €20 million) and major risks (risks above €20 million). Coverage of major risks is provided through the co-reinsurance pool, GAREAT (Gestion de l’Assurance et de la Réassurance des Risques Attentats et actes de Terrorisme), for which membership is compulsory for any insurer which is a member of France Assureurs.

The current reinsurance coverage scheme for major risks has been concluded for a period of four years (2022 to 2025 inclusive). CCR reinsures GAREAT Major Risks with a State guarantee for events above a threshold set at €2.8 billion. The corresponding premium received by CCR is calculated on the GAREAT premium base. Minimum and maximum premiums were set, as well as an evolving premium rate.

In addition, CCR offers reinsurance coverage for small and medium risks for a minimum annual priority of EUR 20 million to each insurer or mutual insurer that requests it. They are offered the possibility of grouping together if they wish to do so..

€2,8 BN

This is the threshold set from 2022, above which the guarantee of the State would kick in under Major Risks

Civaux nuclear power plant (Vienne)

NUCLEAR

RCEN COVERAGE

THE ENTRY INTO FORCE IN 2022 of the revised 2004 Paris Convention created a gap in the insurance market for Nuclear Operators’ Third-Party Liability.

Indeed, this revised convention provides, among other changes, for the coverage of personal injury following a proven nuclear accident or authorised discharges within a period of up to 30 years (previously 10 years). This considerable extension of the limitation period has caused many problems for the insurance market, particularly regarding the Solvency 2 Regulation. This has led to gaps in coverage for all countries that are signatories to the revised Paris Convention. France, a country for which nuclear power is a major strategic stake, has not escaped this lack of coverage.

To comply with the conditions of the new Paris Convention, the French State called on CCR to fill this market gap. By an order of 15 June 2022, CCR is now authorised to cover nuclear risk up to €700 million per nuclear facility within the meaning of Article L 597-2 of the French Environmental Code and by nuclear accident, provided that the part covered by CCR does not represent more than 60% of the total risks covered. This cover is guaranteed by the French State as are all the covers issued by CCR.

As a central player in nuclear risk, the French co-reinsurance pool Assuratome asked CCR for reinsurance coverage to fill the market gap. This new reinsurance activity was the subject of a framework agreement between CCR and Assuratome.

This agreement provides for a long-term partnership between CCR and Assuratome. It specifically provides for CCR’s various reinsurance arrangements and thus enables Assuratome to comply with the new regulations over several years.

The 2022 reinsurance treaty signed between Assuratome and CCR fell within the legal framework of this agreement and covered the Assuratome Pool from 1st July 2022 (the deadline by which nuclear operators had to bring their insurance terms in line with the revised Paris Convention) for a period of six months.

This treaty was renewed in 2023, again in accordance with the terms of the framework agreement signed with Assuratome, this time for a period of one year.

This reinsurance activity enabled the French State to have a tool for the management of nuclear risk where the private (re)insurance market could not provide a solution for a strategic industrial activity.