Efficiency, competition and the development of life insurance in France (1870-1939) Or: should we trust pension funds ?

French life insurance remained underdeveloped in comparison with other countries during a long period between 1870 and 1939. We show that technical peculiarities of the contracts used and their interaction with macroeconomic fluctuations explain the wide fluctuations we observe in insurance operations. In an industry where the accumulation both of long-lived contracts and reputation is central, it is likely that these fluctuations may have slowed the enlargement of the client population and the increase in managed assets ; nevertheless, we suggest they are not sufficient to explain their long term stagnation. Low returns paid to clients, resulting from very conservative investment strategies, were the main reason for that stagnation, since only those interested by the life-cycle related aspects of insurance contracts continued to put money in these institutions, with most savers investing directly in the market or through State-owned financial institutions. The main reason for such an investment (and then low-growth) strategy is the existence of a set of conservative regulations and a stable oligopoly in the industry from the 1880s onwards. We suggest that established insurance companies were able to impose regulations and barriers to entry blocking the access of competitors to their market, so maintaining a hold on a small but very profitable market.