At a time when borrowing rates are rising, borrower insurance remains the essential lever for saving on the overall cost of your mortgage. From this Wednesday, June 1, competition in borrower insurance will take place in a new regulatory framework with the entry into force of the Lemoine law.
For new loan offers issued from June 1, it becomes possible to change borrower insurance at any time, as is the case for car or home insurance, and no longer only in the first 12 months of the subscription of the loan or on the anniversary date. For borrowers with a credit in progress, this possibility will be offered to them from September 1, 2022. In both cases, the only condition is to present an offer with equivalent guarantees.
End of the medical questionnaire
The other major change in force today concerns the end of the medical questionnaire for borrower insurance for loans of less than €200,000 (or €400,000 for a couple in a 50/50 ratio), once the repayment deadline credit is prior to the insured’s 60th birthday. This applies, for example, to borrowers whose age does not exceed 45 years for a 15-year loan, 40 years for a 20-year loan or 35 years for a 25-year loan.
Many financings will be affected by this absence of a medical questionnaire, which will have serious consequences, both for insurers and for borrowers. Insurers will no longer be able to operate medical selection and will have no choice but to pool the risk to replace the additional premiums and partial exclusions. This pooling of risk is rightly defended by the banks and explains why the rates of bank insurance are more expensive than those of alternative insurers, personalized according to each profile.
Price increase
This lack of medical selection will therefore inevitably have an upward impact on the price of delegated insurance. Young people in good health should in particular see their discounts reduced significantly with alternative insurers. More than ever, it will therefore be necessary to compare to find the best price. The broker Meilleurtaux has just redesigned the customer journeys and digital interfaces of its site and its application in order to streamline and simplify the comparison of insurance offers. By integrating a client’s eligibility for subscription without a health questionnaire, Meilleurtaux promises the possibility of changing borrower insurance in a few clicks.
Behavioral questionnaires
Insurers will still try to find out more about the profile of borrowers by means of behavioral questionnaires which will make it possible to better personalize the rates. They will also continue to address the status of smoker or non-smoker which is not medical information. Crédit Mutuel, the first bank to have instituted the end of the medical questionnaire for its loyal customers (under certain conditions) independently of this regulatory change, always asks borrowers if they are smokers or not, this status being very decisive in the proposed price.
Information relating to the practice of sports activities may also be requested on this type of questionnaire. On the other hand, it is possible that the competitive landscape will be reduced because some insurers that do not have the critical size to bear the health risk will probably prefer to abandon cover for loans of less than €200,000 not subject to a health questionnaire.
TO KNOW
Another change brought about by the Lemoine law, the time limit for benefiting from the right to be forgotten, which concerns people cured of cancer or hepatitis C, has been reduced from 10 years to 5 years after the end of the protocol.