A special fund for the prevention of major natural hazards – known as the ‘Barnier fund’ after the newly appointed prime minister – is at the heart of a debate between the French government and insurance companies, who are divided over its financing.
Also known by its French acronym, FPRNM, the fund has been called the backbone of France's natural disaster prevention policy, according to the country's CCR public assurance body in its latest report on the subject.
The fund enables local authorities, small businesses and private individuals to finance work to reduce the vulnerability of buildings exposed to natural disasters.
Initially intended to finance compensation paid to owners of property expropriated as a result of severe natural events, the scope of the fund has significantly broadened since it was first set up in 1995.
The CCR says that between 2009 and 2020 the so-called "Barnier fund" financed around 700 preventive operations for an average annual amount of more than €170 million – or more than €2 billion over the last decade.
More than half of these were reportedly linked to the construction or reinforcement of hydraulic flood protection works such as dykes and water control structures.
Other European funds contribute to the prevention of natural hazards – such as the European Regional Development Fund – enabling the average amount in the emergency coffers to be almost doubled every year.
State contributions
However, since 2021, the FPRNM has been included as part of the French state's budget, so its amount is agreed and voted by Parliament.
Until 2020, the fund was financed by a tax on the natural disaster "surcharge" – an additional contribution levied in particular on multi-risk home insurance policies to the benefit of the CCR and its contribution when natural disaster is declared by the State.
This "surcharge" tax mechanism would have enabled the fund to be much better next year, since the natural catastrophe tax will increase from 12 percent to 20 percent from 1 January 2025.
Last year, the CCR called on the French government for a gradual increase in the resources dedicated to prevention "in view of the foreseeable rise in the cost of claims by 2050".
Controversial tax
On Sunday, however, the President of France Assureurs spoke out against the idea that the resources of the Barnier fund should remain static in the 2025 budget, even though the proceeds of the tax will automatically increase.
"Stop the hold-up on the Barnier fund ... it's intolerable!" Florence Lustman told France Info.
Prevention is one of the pillars of the insurance industry in France, who see it as an effective way of limiting claims.
For example, the Senate Finance Committee estimates that by 2023 there will be a gap of €73 million between the amount of the Barnier fund and the proceeds of levies on the natural catastrophe guarantee.
According to Lustman, the fund should reach “around €450 million by 2025 ... and today we can only find half”.
In an interview with the French weekly Journal du Dimanche, Barnier said he believes that the fund that bears his name could be "mobilised" to finance the national plan for adapting to climate change, scheduled for the end of October and presented as a priority.
This is not the first time that the Barnier fund has found itself at the centre of controversy.
In March 2017, the French Court of Auditors criticised the fund's management, citing "unnecessarily complex" accounting, poorly assessed expenditure and cases of undue compensation.
According to the Court, the fund ended up financing ordinary State expenditure, such as studies or subsidies to local authorities, thereby increasing its own costs.
