Sunday, May 22

The Senate embarks on the battle for borrower insurance

The Senate in Paris, July 16, 2020Bertrand GUAY

The Senate with a right-wing majority tackles on Wednesday the reform of borrower insurance, whose flagship measure, the possibility for the buyer of a home to change it, free of charge, at any time and no longer only at the anniversary date, was deleted in committee.

The consumer defense association UFC-Que Choisir called on senators to reintroduce this provision in the hemicycle, “the only antidote to the sclerosis of the market, and the opportunity to free up 550 million euros per year of power to purchase”, theme at the heart of the presidential campaign.

Supported by the Minister of the Economy Bruno Le Maire, the bill “for fairer, simpler and more transparent access to the borrower’s insurance market”, carried by the deputy Patricia Lemoine (Agir group), was adopted almost unanimously by the National Assembly at first reading.

If the senators remain in session on their version, and then deputies and senators do not reach a compromise in a joint committee, it is the National Assembly which will have the last word. The next step in the hemicycle of the Palais Bourbon is set for February 10.

The borrower’s insurance market is valued at nearly 10 billion euros in premiums per year, and concerns nearly seven million homeowners with outstanding credit.

The objective of the bill is to introduce more competition in the banking sector, in a strong position in this area (88% market share), and in the insurance sector, in order to lower costs.

Since 2010, the Lagarde law allows borrowers to opt for another insurance than that offered by their bank. And several other laws have then already worked for more competition, in particular allowing customers to change insurance every year, but alternative insurers accuse the banks, which hold the majority of the market, of obstructing.

This possibility “works” and has led “to an effective reduction in costs” for the insured, for his part, supports the rapporteur for the text in the Senate Daniel Gremillet (LR).

– 3,800 euros gain –

The senators removed in committee the possibility of termination at any time, considering that this device would not create new savings, but would risk penalizing the elderly and fragile public.

They have instead proposed to strengthen the information of policyholders on the current law.

The insurer would in particular have the obligation to inform his client each year of his right of termination as well as the terms of implementation of said termination and the various deadlines he must respect. The concept of “expiry date”, from which the period during which the insured is authorized to terminate is calculated today, would be clarified.

The government has tabled an amendment to try to restore the heart of the bill during the session. This provision should allow “a first-time buyer” to save on average “more than 3,800 euros in insurance costs over the duration of his loan”, according to the explanatory memorandum of the amendment.

For his part Nicolas Théry, president of the French Banking Federation, welcomed the “point of balance” proposed by the senators in committee “which reconciles risk sharing, inclusion of the least favored and fair competition”.

On the other hand, Eric Maumy, managing director of the wholesale insurance broker April and member of the Association for the promotion of competition in creditor insurance (Apcade), was surprised “that the Senate can become the spokesperson for bankers against consumers.

Another major modification introduced in committee by the senators which is also debated: the abolition of the medical questionnaire for mortgages of less than 200,000 euros which expire before the borrower’s 65th birthday.

Other points should also be fiercely discussed, including the reduction of the “right to be forgotten” period for cancer pathologies and the opening up to new diseases of the so-called AERAS convention (Insuring and Borrowing with an Aggravated Risk health).

Borrower insurance covers various risks such as death, illness or disability, protecting both borrowers and banks against possible default.

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