The Financial Sector Advisory Committee (FSC) has issued a number of recommendations on the guarantee of disability and the pricing of borrower insurance premiums. Objective: to improve borrower information.
The Advisory Committee on the Financial Sector (CCSF), in a Plenary Committee of 12 October 2021, issued several recommendations improve the information of borrowers taking out borrower insuranceto increase the comparability of offers.
These recommendations follow the balance sheet of the borrower insurance market carried out by CCSF in 2020, at the request of the Minister of Economy, Bruno Le Maire.
The best information about the invalidity of the guarantee
Coverage difficulties Invalidité constituent une important part of the reasons for complaints. Either the insured did not know the limits of the coverage of the disability guarantee taken out, or this guarantee is insufficiently covered.
So, Insured persons who are declared “disabled 2” by the Social Security are not covered by the invalidity guarantee of their borrower insurance contract. Even though they may have previously been covered under the incapacity guarantee of that same contract.
Several categories of disability
Social security has defined three levels of disability:
1ERE category: disabled able to engage in gainful employment (often part-time)
2ème category: disabled in the inability to practice any profession
3ème category: beyond category 2, the obligation to resort to assistance for ordinary acts of life.
The CCSF recommends them when the “invalidity” guarantee of the insurance contract, the borrower differs from the notion of invalidity retained by Securité socialeor appear to be a body ruling on professional incapacity, the contract must state this clearly. He must also specify that the recognition of a state of disability by one of these naked bodies is not required of the insurer.
An example to illustrate how premiums are priced
There are two forms of borrowing insurance pricing:
- a fixed premium, as a percentage of the initial borrowed capital. Its amount is constant over the life of the loan;
- a prime variable, as a percentage of the remaining capital due. Its amount decreases as the loan repayment progresses.
The interest for one or the other of these pricing methods is related in particular to the expected duration of loan repayment. In practice, the average shelf life of a price would be eight years.
Evaluate the cost of borrower insurance, the key elements of the price are already communicated: the annual effective insurance rate (TAEA), the total monthly cost of premiums, the total cost of premiums payable during the price. .
The CCSF recommends them to borrower insurance distributors (insurers, bankers, brokers) to tell the consumer ” the cumulative amounts of its premiums after eight years of insurancein order to illustrate the mechanism of operation of the contract ».
No agreement on infra-annual termination of borrower insurance
At the request of the Minister of Economy, the CCSF carried out its work on the right to terminate borrower insurance contracts at any time. Several representatives of the financial sector and consumers, members of the CCSF, have not reached an agreement allowing the introduction of an infra-annual termination of these contracts, beyond the first year. The current framework for annual termination, on the anniversary date, beyond the first twelve months, is therefore maintained to date.