Life & Disability Insurance: why premiums are likely to rise again in 2027
French employers should prepare for another increase in Life & Disability Insurance costs in 2027. Social Security now pays less on sick leave, a second reform is on the table for accidents at work, and long absences keep growing. All three feed directly into the cost of employer-sponsored plans.
French employers should prepare for another increase in Life & Disability Insurance costs in 2027. Social Security now pays less on sick leave, a second reform is on the table for accidents at work, and long absences keep growing. All three feed directly into the cost of employer-sponsored plans.
French social protection: a system under pressure
The French social protection system faces a familiar problem: social spending keeps rising while public finances remain under strain. The response has been a gradual shift in the way that protection is financed, moving part of the burden to employers, employees and private insurers.
This matters more in Life & Disability Insurance than in most other benefits, because what the insurer pays is directly linked to what Social Security pays first. Most French plans are built to top up the statutory benefit until the employee reaches the level of income guaranteed by the plan. When the statutory benefit falls, the insurer's share rises automatically, without a single line of the contract being changed.
A lower ceiling for daily sickness benefits
The first change took effect on July 1, 2026. For sick leave prescribed from that date, the maximum daily sickness benefit paid by Social Security is 42.97 euros.
The effect depends entirely on salary level. For an employee close to the minimum wage, very little changes. For managers and senior staff, the gap between normal income and what Social Security pays during sick leave has widened significantly.
That gap is precisely what employer-sponsored plans are designed to fill. Insurers therefore have to pay more to maintain the same level of protection for the same employee.
A second reform is on the table for accidents at work
A draft decree presented to social partners in September 2026 would apply the same logic to accidents at work and occupational diseases, for accidents occurring from November 1, 2026.
The order of magnitude is significant. The maximum daily benefit, currently above 240 euros, would fall to somewhere around 112 euros. The text had not been published at the time of writing and the final wording could still change, but it points in the same direction as the July 2026 reform: less public cover, and more exposure for the private layer sitting on top of it.
Absence is settling at a structurally higher level
The second driver is claims experience. The absence rate in the French private sector reached 4.3% in 2025, an increase of 25.5% compared with 2019. Close to one employee in three had at least one period of sick leave during the year, and the average absence lasted 23.7 days.
The distribution matters more than the average. Absences of more than 60 days account for only 9.4% of sick leave events, but for 63.8% of all days lost, and their number rose by 4.9% in one year.
Long absences are where Life & Disability insurers are exposed. Short absences are largely carried by the employer. Once an absence extends beyond the waiting period set in the contract, the cost sits with the insurer, and it can sit there for months or years.
Mental health has become the leading cause of long absences
Psychological conditions, mainly depression and burnout, have moved ahead of musculoskeletal disorders as the first cause of long-term absence.
This looks structural rather than temporary, and it has two consequences for employers. Claims experience deteriorates in a way that cutting benefits will not fix. And the causes are, at least in part, within the company's reach.
Prevention has therefore moved from a nice to have to a budget item. Acting on workload, working conditions and early detection can limit both the frequency and the duration of absence. For insurers, a portfolio with an active prevention policy is also easier to defend at renewal.
What the market is announcing for 2027
Renewal announcements in Life & Disability are far more dispersed than in Health. The terms communicated to brokers for 2027 range from no increase at all to around 7%, with most sitting between 4% and 5%.
That dispersion is informative in itself. In Life & Disability, the renewal is driven mainly by your own contract: claims experience over several years, the demographics of the population covered, salary levels and the benefits provided carry far more weight than the general market trend.
The direction of travel is nonetheless clear. Insurers face higher exposure while part of the burden previously absorbed by Social Security moves to the private layer. For many employers, an increase in 2027 is a realistic working assumption.
Preparing for renewal
For a company with a French subsidiary, and particularly one without a local HR team or a French social law specialist, the renewal process is difficult to read from the outside.
Most group contracts run to December 31 and notice of termination generally has to be given two months in advance, which places the decision point at the end of October. The coming weeks are therefore the real window for the 2027 budget.
Three questions are worth asking now. Does the proposed increase reflect your own claims experience or a general market movement? Does your plan absorb the reduction in Social Security benefits automatically, and at what cost? What would the market offer for the same population and the same benefits?
At KMH Benefits, we help employers review their Life & Disability arrangements, understand what sits behind the renewal terms and anticipate the financial impact on their French workforce.
If your company has a French subsidiary and you want to know what your 2027 Life & Disability costs could look like, our team can help you assess the situation before renewal.