Involuntary unemployment insurance

Unemployment is a hard risk for the market to insure: it strikes massively in recessions, and so in a correlated way, and moral hazard is strong, since the insured influences his or her own situation. That is why the main cover is public. Private insurance steps in in three situations. As optional cover on a mortgage or consumer loan, it pays all or part of the installments for a limited period, often twelve to twenty-four months per claim and thirty-six over the life of the loan, after an elimination period of a few months and a waiting period after inception that rules out layoffs already foreseeable. For company executives and officers, who fall outside employees' unemployment insurance, private schemes pay compensation on dismissal or the company's liquidation. For the self-employed, Madelin involuntary loss of business contracts predated the public allowance created in 2019, which remains narrowly accessible. Exclusions are numerous: resignation, often negotiated termination, end of a fixed-term contract, probationary period. The product has often been criticized for its ratio of benefits paid to premiums collected, low relative to the cost borne by the borrower, especially in bank distribution.