Why do your group insurance rates change every year?

Analyses

5 minutes

29 September 2026

Every year, the review of collective insurance contributions (health and welfare) raises questions about these adjustments. A collective contract is not based on a fixed pricing: it reflects the reality of employees' medical consumption, the regulatory context, and the overall financial balance of insurance organizations. Understanding the rate adjustment mechanism allows approaching annual renewals with an objective analysis grid, based on measurable data and verifiable facts.

Equipe RH étudiant les renouvellements santé et prévoyance

What are the foundations of a group insurance contract?

The economic model of group insurance is based on the principle of risk pooling (pooling the contributions of employees to compensate those in need of care or suffering from disability, for example). However, depending on the size of the company, the pricing is partially or completely "customized" and directly linked to the consumption behavior of insured employees.

Definition of the Loss Ratio on Premiums (S/P ratio in French)

The S/P ratio is the central indicator used by insurers (also called risk bearers), mutuals, and provident institutions to evaluate the financial health of a contract. This is the ratio between the total amount of benefits paid out (plus provisions for outstanding claims) and the amount of net premiums collected over a given period (usually 12 months). 
When the S/P ratio exceeds the equilibrium threshold set by the risk bearer, the contract is in deficit. To restore its balance and ensure its solvency, the insurer must increase premiums.

Corporate Demographics

The structure of the payroll (variations in staff, age pyramid) directly influences the consumption of benefits:

  • The average age of employees affects the frequency and nature of care. According to the data from Health Insurance The average individual health expenditure gradually increases with age, particularly in the following areas: hospitalization, cardiology, vision, and dental care.
  • Staff turnover, the onboarding of new hires, and changes in employees’ family structures (such as switching from “single employee” coverage to family coverage) alter the company’s overall risk profile from one year to the next.
     

Economic environment and medical inflation: what impacts?

Beyond the specific loss experience of each company, group contracts are subject to inflation linked to the healthcare sector as a whole.

The increase in national healthcare spending

According to INSEE The Consumption of Healthcare and Medical Goods (CSBM) is steadily increasing year after year in France. +3.7% in 2024, +4.8% in 2023, +4% in 2022. 
This constant increase is driven by: 
•     An increase in the fees for general and specialty medical consultations.
•    Access to cutting-edge medical technologies and more expensive treatments.
•    The expansion of services not included in standard coverage (e.g., alternative medicine, osteopathy, psychology) that are incorporated into corporate health plans to meet employees’ changing expectations.

The gap between general inflation and medical inflation

It is important to differentiate between the Consumer Price Index (CPI) published by INSEE and medical inflation (often referred to as "medical drift"). Medical inflation includes not only the unit increase in the cost of procedures, but also the increase in the volume of consumption per insured person. Historically, medical inflation increases faster than general inflation: +2 to 4 points depending on the year.

The consequences of the transfer of charges from Health Insurance and regulatory developments.

The French healthcare system is based on a two-tier system: the Compulsory Health Insurance (AMO) and the Complementary Health Insurance (AMC). Budget decisions made each year as part of the Social Security Financing Law (LFSS) directly impact the costs borne by complementary organizations.

The disengagement of Social Security and additional taxes.

When the state adjusts the level of coverage for certain items by Social Security, the balance - called the co-payment - is automatically transferred to the supplementary contracts of companies, without changing the overall level of coverage for the employee.

For example:

  • The decision made in the summer of 2026 to reduce the rate of coverage for dental care. By the Health Insurance from 60% to 50% automatically transfers the difference to complementary organizations, representing an additional charge estimated at over 510 million euros by year
  • The device 100% Health: destined to eliminate the remaining charge on defined care baskets in optics, dental and audiology, this device has led to a sharp increase in the use of the equipment concerned. The increase in the volume of dental and hearing aid acts fully financed by responsible contracts requires a constant rebalancing of the financial reserves of insurance organizations.
  • The Additional Solidarity Tax (AST) is deducted from health contributions by risk bearers and represents a total deduction of 13.27% on contributions from so-called "responsible" contracts (and up to 20.27% for non-responsible contracts), impacting the gross cost of the contract for the employer.
Collègues travaillant ensemble

What specific features in foresight?

If health risk is characterized by a large number of moderate-cost acts and high frequency, the risk of providence (disability, invalidity, death) is considered a heavy risk. Adjustments in providence pricing follow specific logics.

The increase in long-term sick leave.

Health Insurance data And specialized observatories highlight a continuous increase in long-term sick leave (over 90 days). This trend is amplified by:

  • The increase in the prevalence of Psychosocial Risks (PSR), burnout, and Musculoskeletal Disorders (MSDs).
  • The increase in the legal retirement age, which keeps employees in older age groups more exposed to long-term illnesses (ALD).

Mandatory provision of pensions

In insurance, a case of disability or death implies for the insurer the legal obligation to immediately establish provisions to cover future benefits (disability pensions, invalidity pensions, education pensions). A single major claim within an SME can thus require the immobilization of several tens or hundreds of thousands of euros of equity, disrupting the accounting period of the collective contract over several years.

The obligation of maintaining balance by insurers

The rate increases implemented by mutual insurance companies, pension funds, and insurance companies are carried out in strict compliance with European solvency regulations (Solvency II). Insurance companies do not change their rate schedules arbitrarily. They are subject to oversight by the Prudential Supervision and Resolution Authority (ACPR), which requires them to maintain sufficient capital to ensure the payment of benefits over the long term. 
The annual review of rates therefore meets a triple requirement ensure the financial sustainability of the schemes, comply with regulatory solvency ratios, and honor contractual commitments to cover current and future claims.

How does a specialized broker like Howden support you in managing your contract?

Contradictory analysis and audit of financial statements

We act as an independent third-party expert. When receiving the loss reports transmitted by the insurer, our experts conduct a comprehensive audit:

  • They verify the accuracy of the S/P ratio calculations and analyze the distribution of expenses by care category.
  • They isolate exceptional or non-recurring losses to limit their impact on the pricing of future years.
  • They verify the adequacy of the provisions established by the insurer.

Technical negotiation with risk bearers

Thanks to our thorough understanding of the insurance market and actuarial rules, we conduct direct negotiations with the risk carrier. We highlight all prevention actions implemented by the company or the prospects for workforce evolution to moderate requests for revaluation and obtain measured and justified rate adjustments.

Contract engineering and restructuring of guarantees

If the financial imbalance of the contract proves to be structural, we provide you with tailor-made solutions:

  • Redefinition of guarantee grids (adjustment of reimbursement ceilings for items with low perceived value while strengthening essential guarantees).
  • Setting up customized contribution structures or optional benefits for employees to pay for.
  • Analysis of opportunities for tax and social optimization of the contract.

The transparent competition of the market

As a representative of the company and not the insurer, we are a neutral partner. If necessary, we organize a call for tenders with our insurer partners. This competition ensures you the best quality/price ratio on the market, without any interruption in coverage for employees.

Our experts audit your contract for free.

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Frequently Asked Questions

As a general guideline, a ratio between 75% and 85% is generally considered balanced. If the ratio exceeds 100%, the plan is in the red, and a premium increase is likely. These benchmarks vary depending on the sector and the size of the workforce.

Yes, for responsible and socially conscious insurance policies, providing the claims-to-premiums ratio report has been a legal requirement prior to underwriting and at each annual renewal since the decree of May 6, 2020.

Ideally on a quarterly or semiannual basis, not just at renewal time, so that action can be taken before a rate increase is finalized.