Borrower insurance cancellable at any time, what are the consequences?


“It is a measure of purchasing power that does not cost the state one euro”. With these words, the rapporteur of the bill “for fairer, simpler and more transparent access to the borrower insurance market”, Patricia Lemoine (Agir), concludes the first reading in the National Assembly. Adopted by 61 votes to 1, the text notably offers borrowers the possibility of changing insurer at any time. A proposal which could indirectly put an end to the quasi-monopoly of banks: in 2019, the latter had thus sold 88% of borrower insurance. A market that weighs more than 10 billion euros in France. The Minister of Economy and Finance said he was “favorable” to this measure “protective for the purchasing power of the French.”

Savings of up to 15,000 euros

Until now, policyholders could only change borrower insurance organization during the first twelve months of the contract, or each year, on the date of its signature. An opportunity that consumers have not seized, due to a difficult termination. “This bill would put an end to the delaying maneuvers of the banks, explains Matthieu Robin, project manager for the financial sector at UFC-Que Choisir, interviewed by Challenges. They blocked the policyholders on the pretext of a problem with the address in the papers or by responding too late.” An observation shared by Eric Maury, CEO of April and spokesperson for the Association for the promotion of competition in creditor insurance ( Apcade): “All the interstices that existed in the law had allowed bankers to prevent free competition.” The bill now provides for a sanction in the event of exceeding the legal response time of 10 days: a fine of 15,000 euros According to the UFC Que Choisir, the banks make margins of 68% on borrower insurance. “For car insurance, this margin is 21%. Still according to the consumer association, this change in free insurance could save borrowers up to 550 million euros per year. For home loan insurance, “policyholders could save up to 15,000 euros for a couple of borrowers aged 55 who have just taken out a loan of 200,000 euros over 20 years. Between 5,000 to 6,000 euros on average.” Bercy estimates that a 35-year-old first-time buyer would save 3,800 euros for a loan of 250,000 euros over 25 years.

Discrimination of risk profiles?

The banks, standing up against this reform, warn of the risk of demutualization of risks, which could penalize profiles deemed “at risk” by insurers. “This proposal for the Americanization of borrower insurance is highly contested. It will lead to discrimination between the fifty-somethings and the most vulnerable in favor of the youngest and most healthy profiles. It is a demutualization of risks which will weigh heavily on the solidarity between generations. This is why we are very opposed to this measure which is a form of absolute individualization of insurance”, worries Nicolas Théry, president of the French Banking Federation. An argument swept away by insurers who recall that for a market share of 12%, they already insure 43% of customers with an aggravated health risk. “These insurances are extremely profitable for the banks. The rates of other insurance organizations, even if more extensive depending on the profiles, remain more advantageous than theirs.” The bill also provides for work with banks and insurers on discrimination in access to credit and insurance due to illness. It wishes, for example, to reduce the time limits for the right to be forgotten granted to cancerous pathologies and to extend to other pathologies the obligations for the insurer set by the AERAS convention (insure and borrow with an aggravated health risk ).

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