Millions of individuals will soon be able to change loan insurance more easily for their mortgage. A novelty supposed to allow them to make thousands of euros in savings. Except that in practice, they might have to pay more. Explanations.
The soap opera of the reform of borrower insurance has finally found its end. On Thursday, Parliament definitively adopted the bill brought by MP Patricia Lemoine (Agir) and supported by the government. In summary, the text provides for the termination at any time, the removal under conditions of the health questionnaire and the reduction of the period of the right to be forgotten. Three strong new measures that look like a happy ending for individuals. It is a law that will change the lives of many owners, welcomes Patricia Lemoine. But several experts fear that the advances of this text will backfire on those it is supposed to benefit. Explanations.
Mortgage loan insurance: these 3 upheavals that await you
Changing insurance, finally easier
Return purchasing power to consumers by lowering the cost of borrower insurance, here is the key argument of this reform. Borrowers who do not insure a mortgage with their bank can expect save 5000 15000euros for a loan of 200,000 euros, according to the assessment quoted by the promoters of the reform. In total, 500million euros in purchasing power should be redistributed each year to borrowers according to UFC-Que Choisir.
Quasi-compulsory, loan insurance covers all or part of the risks in the event of a claim (death, incapacity-invalidity, unemployment, etc.). But its cost is often much higher than the amount of interest on the credit to pay since real estate rates are at their lowest. On paper, refusing insurance from your bank to choose a cheaper one elsewhere – or with better guarantees – is possible. And this, at any time during the first year of the loan, then every year thereafter on the anniversary date of the contract.
But the banks are accused of putting obstacles in the way of their customers by taking advantage of the complexity of the legislation. As a result, they hold nearly 90% of this market, which weighs 7 billion euros of turnover per year, with an estimated margin of 68%! Only the wealthiest and most knowledgeable manage to impose on their bank the change of borrower insurance, according to Mal Bernier, spokesperson for Meilleurtaux.
A situation which could therefore change as soon as the termination comes into force at any time, from June 1 for new home loans, and from September 1 for borrowers who are already repaying their credit. Changing insurance should therefore be easier than today. But what price?
Where are the advertised economies?
The anticipated savings for borrowers may not always be there. at the initiative of the senators, the health section of the bill has been beefed up. The medical questionnaire is removed for real estate loans below 200,000 euros per person (i.e. 400,000 euros for a couple) and whose term occurs before the 60th birthday of the borrower. The abolition of the medical questionnaire will allow those who have a health problem or who have had one in recent years – to avoid exclusions from cover or additional premiums which would greatly increase the insurance rate, explains Sandrine Allonier, spokesperson for Vousfinancer.
We understand the generous intention. But it will be necessary to be vigilant with the evolutions of tariffs that this could involve. Indeed, this should not lead to a price increase which will affect all borrowers, adds Mal Bernier, director of communication at Meilleurtaux.
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An analysis shared by Pascale Sciacalugua, deputy director of the Crdit Coopratif network: We welcome this decision by Parliament, which goes in the direction of greater fairness for borrowers. This could also allow people who had given up their purchase because of the extra cost of their insurance, to activate their acquisition project again. The logic of global solidarity is the starting point of this reform since henceforth, the cost of borrower insurance will be mutualis for all customers. To see if, during the effective implementation of its measures, the increase in the price of the individual contribution will be or not painless for the borrower. Indeed, the “risk” as insurers apprehend it, remains the same but it will henceforth be shared.
Aeras Convention and the right to be forgotten: borrowing with a health problem
In this context, a study by Actlior, obtained by MoneyVox, estimated that insurance premiums could increase between 3 and 15% according to the actors. The consulting firm is wondering, among other things, about the windfall effect that the end of the medical questionnaire could have on sick people to borrow at the end of their lives. According to Actlior, the abolition of the medical questionnaire would concern 52% of the loans in number, and 36% of the amounts loaned today.
Very worried, an alternative insurer believes that the abolition of health questionnaires risks destabilizing the market by weakening competition that is structurally less able to absorb this additional risk. By claiming to improve access to property for a few thousand people at aggravated health risk, the law would in reality lead to an increase in insurance rates for all borrowers, with a much stronger impact on access to credit for many households. It would also definitively put an end to competition between banks by alternative players, reconstituting a banking monopoly and free setting of insurance prices, he explains.
Degraded warranties?
In the eyes of this alternative insurer, some bank-insurers or insurers might want to curb the effect of anti-selection by excluding the consequences and consequences of health problems prior to the effective date of the insurance, as is the case today for what is not declared to the health questionnaires. The risk of deterioration of guarantees is therefore too great not to be raised and anticipated.
Daniel Gremillet, rapporteur for the Senate for this reform and who campaigned for the abolition of the health questionnaire, is not of this opinion: This abolition will not lead to an increase in prices for policyholders because the reputational risk will encourage insurers do not start an upward price spiral.
We will therefore have to wait for the implementation of the reform to see who is telling the truth. In any case, according to the law, the financial sector advisory committee will be responsible for evaluating the impact of this reform within two years. This will then allow it to be adjusted if necessary. The borrower insurance reform project may not be complete.
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