Crédit immobilier: 5 questions on the new liberalization of the borrower insurance market

Repeatedly rejected by parliamentarians, the full competition of borrower insurance contracts will finally materialize. According to the votes of the parliamentarians gathered this winter in the Joint Joint Committee, the newly signed contracts may be terminated at any time from 1 June. The measure will be extended to all contracts already signed from 1 September. How to make life easier for borrowers who are having a hard time changing their contracts, as Capital had already explained. Other measures accompany this reform, and with them, so many questions. Explanations, point by point.

Why put contracts more in competition?

The fact is that banks have a lion’s share of the loan insurance market. They pocket 88% of the 7 billion annual contributions. And the product is heavily marginalized, at 68% on average, far from the figures found in home insurance (34%) and car (21%). At 100 euros of contribution, only 32 are redistributed in premiums for households.

Competing insurers – Axa, Generali, Allianz – are picking up the crumbs, despite more attractive rates for most borrowers. The latter, like professionals, complain about the obstacles they face when applying for a contract change. Sufficient to maintain the Prudential Supervision and Resolution Authority (ACPR), the bank and assurance gendarme, denounced the public for the illegal practices of certain banks, citing, in particular, the delay, or worse, the absence response from credit institutions.

How could we change contracts until then?

Three liberalization laws have been passed in 12 years, without cracking down on borrowers. Since 2010, they have been able to choose to take out external insurance – different from that of the lending bank – as soon as their home loan is signed. If they fail to do so, in the absence of an agreement with their bank, they have the option of changing their contract at any time during the first year of the loan under the so-called Hamon Act. Finally, if they have missed the car again, they can repeat their request on each anniversary of the contract, in the next (very) precise calendar.

What is the medical questionnaire, which parliamentarians have partially deleted?

In order to consolidate the inclusion of households with a disease that could make them pay heavy surcharges, deputies and senators acted to remove the medical questionnaire. This formality, which can be required by the insurance to assess the risk posed by the client, disappears for real estate loans of less than 200,000 euros, reaching maturity before 60 years of the borrower. The measure is not insignificant since half of the housing loans granted in France meet these conditions. The most vulnerable borrowers will therefore pay less for their loan insurance from June 1. Industry experts thus fear the creation of a threshold effect.

On the other hand, will rates increase?

This is the flip side of the coin. Insurers will have to cover their clients “blindly”, even if they still have the opportunity to know key dates such as the age, occupation and smoking of the insured. If the sickest borrowers pay less, the healthy ones will have to bear the risk of insurers alone, and therefore see their contract rates rise. “Insurers have no choice but to pool to the extreme to open all the profiles of borrowers,” explains Magnolia. According to the grids received by the loan insurance broker, the increase should be between 20% and 25% on average, penalizing the youngest households as much as possible.

“The abolition of the health questionnaire under certain conditions raises many questions with a possible key inflationary impact, warned the general insurer. At this point, we are looking at the impact that the law would have on our approach and our portfolio. ” Another heavyweight in the industry, Axa, “is considering adjusting its pricing policy, the calibration of which remains to be finalized.”

What gains can be expected from competition?

According to Mangolia broker, being unfaithful to your bank can pay off big. The average 15,000 euros can be saved on average for the total duration of the loan, or 50 euros per month and credit is made for 25 years. Bercy is more cautious, and counts the gain at 4,000 euros for 25 years. However, this data was calculated before the increase in rates expected by insurers and may be lower in the future.

According to Capital simulations, the cost of insurance can be divided by 6 with an alternative insurer. A couple in their fifties saved almost 21,000 euros on their 20-year-old son.

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