Coming into force in the summer of 2022, the Lemoine Law should greatly facilitate the change of mortgage insurance for borrowers. 18 months later, it is clear that certain difficulties remain, despite the positive points.
Cancel your home loan insurance at any time to choose another one, without having to wait for the anniversary of your contract: here is one of the main measures of the law of February 28, 2022 for fairer, simpler and more transparent access in the borrower insurance market. also called Loi Lemoine, named after the Agir deputy Patricia Lemoine, who carried out this reform, it came into force on June 1, 2022 for new real estate loans and was extended to all loans on September 1, 2022.
Home loan insurance: what has changed for borrowers
Borrowers have taken advantage of this new regulation to make sometimes substantial savings. If the CCSF estimates that for two thirds of customers, the price difference is either favorable to the group contract (in 32% of cases), or less than 2000 euros over the entire duration of the credit (for 36% of credit subscribers), this which represents a monthly saving of only 8.50 euros for an average loan of 20 years, the figures provided by the alternatives are very different. Thus, Magnolia.fr reports an average gain of 10,000 euros. For its part, the broker Meilleurtaux ensures that on average on the files it took charge of in 2023, the saving was 24,500 euros on average by changing loan insurance.
At first glance, the Lemoine Law is therefore a success. But many professionals in the sector, particularly alternative insurers, are warning of a perverse effect that has occurred in recent months. The loan insurance market for alternatives has become a substitute market, assures Astrid Cousin, spokesperson for the insurance broker Magniolia.fr in a press release. Borrowers give up in the face of pressure from banks and prefer to take out the lender’s insurance to obtain financing. At Magnolia.fr, we have noticed that the number of first-line refusals to delegate insurance has increased by 30%.
A 20% reduction on new credits insured by alternatives
We see that the Lagarde law (which removed the legislative provision authorizing banks, when applying for a real estate loan, to require the consumer to adhere to the borrower insurance contract that they market, Editor’s note) no longer works at all, regrets milie Ruben, communications manager at Scurimut. I think that borrowers decide to stop fighting when taking out the loan, so as not to risk having worse loan conditions or even a refusal of financing. They prefer to tell themselves that they will do it later, in a slightly more secure manner.
While a borrower can, in theory, request a delegation of loan insurance even before signing the real estate loan, the banks would not necessarily play the game, insisting at the time of signing the contract that the borrower take the insurance offered by the bank. So, 7.5% of new loans have alternative insurance, compared to 9.3% in 2021, a drop of 20% over the period, explains Scurimut. Over the same period, defensive banking contracts (that is to say alternative contracts of the lending bank) went from 8.7% to 10.4%, an increase of +20%. For its part, Assurly reports a share of substitutions of around 93.5% compared to 6.5% for the delegations.
The trend of people who take out their bank’s insurance in order to obtain their loan and then quickly make the change, thus seems to be confirmed
A vision also confirmed by Metlife, for whom 56% of policyholders cancel within the first year of subscribing to the insurance taken out with their bank (and 80% within the first 2 years). The trend of people taking out their bank’s insurance in order to obtain their loan and then quickly making the change seems to be confirmed.
And not all borrowers have the same weapons when taking out the loan. The most armed borrowers negotiate with their bank and obtain a delegation of insurance with the credit. Those who did not want to compromise their credit use substitution which is now better protected. Substitution therefore affects a less easy target than delegation, concludes Scurimut.