Rising Insurance Prices: How Long Can the Insurance Model Remain Sustainable?

In 2026, as every year, insurance premiums are rising. But this time, the increase is no longer simply a cyclical pricing adjustment. It is a structural signal. 

Home, motor, health, local authorities and businesses: every segment is facing growing pressure. Yet there is an apparent paradox: overall inflation is slowing. In France, it is expected to stand at around 1.3% in 2026. 

So why are insurance premiums continuing to rise well beyond inflation? 

Premium increases are far outpacing inflation 

Several major trends are now converging behind rising premiums: 

• More frequent climate events, 

• Soaring claims costs, 

• Higher repair and material costs, 

• Growing cyber and geopolitical risks, 

• Pressure on global reinsurance markets, 

• And above all, the gradual erosion of insurability itself. 

The real question is therefore no longer why insurance premiums are increasing, but rather: How can we maintain a sustainable insurance model in a world where risks are becoming more frequent, more interconnected and sometimes increasingly difficult to model? 

The increases expected in 2026 affect virtually every line of business, including home, motor, health, legal protection and commercial risks. 

Home insurance remains particularly exposed, especially due to climate-related risks. 

Following an increase of close to 10% in 2025, premiums continue to be pushed upwards by the growing impact of natural disasters and by the increase in the Cat Nat surcharge from 12% to 20%, introduced to replenish the reserves of the French natural catastrophe scheme. 

The situation is becoming increasingly clear: the cost of risk is rising faster than historical premium structures were designed to absorb. Between 1982 and 2024, the cumulative cost of Cat Nat claims in France reached EUR 61.2 billion. The French system is now entering a new phase: one of sustained, structural climate-related losses. 

The projections are even more significant. According to CCR research based on Meteo-France data, climate change could lead to: 

• A 40% increase in natural catastrophe costs by 2050 

• Up to 60% when considering the rising value of insured assets and the growing exposure of territories 

However, an insurable risk does not always mean an acceptable policy. 

One of the most important points raised during the roundtable discussion on insurability is probably this: a policy may remain technically insurable while becoming economically or socially unacceptable. 

As Simon Le Dily, President of the French Institute of Actuaries, pointed out, an excessively high price, significant deductibles or insufficient coverage can make a policy unacceptable to the policyholder, even when the underlying risk remains modelable. 

Policyholders' expectations also extend well beyond the cost of the premium alone. Insurance professionals themselves are aware of this shift. It is changing the way policyholders assess the value of their policy, the coverage provided and the balance between the price they pay and the protection they receive. 

According to Transformers de la relation client, a recent survey of 368 insurance professionals, 57.2% consider transparency and understanding of pricing and underwriting decisions to be the most important factor in the quality of the customer relationship. 

This is followed by the alignment between the level of price and the promise of compensation (43.2%), and price competitiveness (42%). 

This suggests that as decisions increasingly rely on complex models, explainability becomes essential to maintaining policyholder trust. In other words, the acceptability of an insurance policy depends as much on the ability to explain a decision as on the amount itself. 

This is probably one of the key challenges for the years ahead. Insurers cannot indefinitely compensate for rising climate-related losses, increasing repair costs, volatile reinsurance markets, and emerging risks through continuous premium increases alone. 

ACPR stress tests show that insurance models remain solvent through to 2050, but under one implicit condition: substantial increases in premiums. 

Yet an insurance system cannot function sustainably if policyholders leave the market; certain areas become too expensive to cover, or insurance itself comes to be perceived as inaccessible. 

Over time, this could create a dangerous cycle: 

Higher premiums -> lower participation -> reduced risk pooling -> further cost increases. 

In other words, the result could be a gradual fragmentation of the insurance model, declining policyholder trust in the system, and insufficient coverage at national level. 

The reality today is that risks are becoming increasingly complex and, in some cases, difficult to model because of the lack of historical data. Climate change remains the primary source of pressure, alongside the intensification of emerging risks such as cyberattacks and geopolitical tensions. 

More than their frequency alone, the threat lies in the potential simultaneity of these events. This complexity is forcing insurers to evolve their analytical capabilities. 

To address these new challenges, insurers are increasingly turning to artificial intelligence, which enables them to: 

• Process larger volumes of data 

• Produce more models 

• Test more scenarios 

• Improve fraud detection 

• Better target prevention 

But even with unprecedented computing capabilities, not everything can be modeled. And while AI can strengthen analytical capabilities, it does not replace human judgement or decisions around risk appetite. This tension between technological acceleration and genuine control over models is already clearly visible in current market practices. 

According to our 2026 insurance trends report, conducted among more than 400 industry professionals, 95% of French insurers have adopted AI, yet only 32% trust their data. 

Without reliable data, increasingly sophisticated models do not necessarily provide better control over risk. This is perhaps one of the sector's most significant paradigm shifts. 

Beyond traditional modelling, insurers are therefore facing a new challenge: 

How do we prepare for risks that we do not yet know how to model? 

For insurance professionals, one response consistently comes to the forefront: strengthening prevention. 

As Édouard Vieillefond, CEO of Caisse Centrale de Reassurance (CCR), pointed out, the market provides the price signal. The State, meanwhile, intervenes where the market falls short, while CCR acts as a systemic shock absorber. 

Without this balance, not only would the private sector reach the economic limits of insurability, but the public sector would also be unable to absorb the social cost alone. 

It is precisely this system that allows the French model to remain sustainable today, while other markets are beginning to experience insurer withdrawals, coverage exclusions and significant pricing segmentation. 

However, this model is not set in stone. The 2026 CCR report makes this clear: the system must evolve without losing the principles on which it was built. 

If risks increase faster than our ability to pool them, the only variable that can be addressed sustainably is the risk itself. 

This is why prevention is progressively becoming the main lever for maintaining sustainability of the system. There is strong consensus among the stakeholders interviewed on this point: prevention is no longer a secondary consideration. It now acts simultaneously on several dimensions, including: 

• Reducing claims frequency and severity 

• Improving insurability 

• Limiting future costs 

• Strengthening territorial resilience 

• Supporting local economic stability 

In practice, this transformation requires action across several complementary areas. 

Better risk mapping 

France still does not have a consistent nationwide map of climate exposures. This year in particular, wildfires have reached record levels of destruction, with almost 100,000 hectares burned and material and insurance losses estimated at more than EUR 500 million. 

As Édouard Vieillefond stressed during his appearance at Excelerate Paris, mapping these risks is becoming more important every year to help insurers better anticipate their impact across different markets and regions in France. 

The PNACC-3 specifically provides for national mapping of floods, wildfires and clay shrinkage and swelling. 

Over time, these maps could become key tools for territorial planning, prevention policies, and insurance strategies. 

More personalised prevention 

While France performs relatively well overall when it comes to collective prevention, it is less advanced in individual prevention. 

Yet resilience will increasingly depend on: 

• Behaviours 

• Adaptation measures 

• Protective equipment 

• Digital practices 

• And the cybersecurity of SMEs 

Smarter use of data and AI 

In this context, AI alone will not save the insurance model. But it can significantly improve: 

• Risk understanding 

• Weak-signal detection 

• Proactive prevention 

• Crisis anticipation 

• Speed of claims management 

According to our latest insurance trends report, some use cases are already delivering tangible results and are becoming direct levers of sustainability. 

43% of executives surveyed report improvements in productivity and job satisfaction through AI, while 33% are already using it to simulate risk scenarios more accurately. 

Personalisation is also progressing: 38% say they are generating recommendations tailored to customer profiles and behaviours. There is, however, one essential condition: maintaining the trust of both policyholders and professionals, particularly through the protection of their data. 

As Francois-Xavier Enderle, Director of Information Systems Transformation at Matmut Group, puts it: 

"Customer data sovereignty is the backbone of the insurance model." 

Without trust in data protection, the system itself becomes more fragile. Beyond its technical dimensions, insurance is therefore becoming an economic, political, and even societal issue. 

Ultimately, this evolution reflects a deeper shift. Tomorrow, insurers' competitiveness will no longer depend solely on their ability to model risk. It will also depend on their ability to make understandable decisions, prevent losses, and preserve policyholder trust in an environment where costs will continue to rise. 

To maintain the long-term sustainability of the insurance model, its key stakeholders will need to answer one fundamental question: 

How can we sustainably reduce risk to continue protecting as many people as possible? 

More than ever, the sustainability of the insurance model will depend on insurers' ability to reconcile economic performance, prevention, and policyholder trust. 

The real boundary is not simply the risk itself. It is our collective ability to continue pooling that risk at an acceptable cost.