Since September 1, 2022, the Lemoine Law allows all borrowers to change loan insurance at any time but also, in certain cases, to no longer complete a health questionnaire. The opportunity to save money, even if prices have sometimes increased for certain profiles, reveals a study carried out by MoneyVox.
If you have a mortgage, perhaps you have already benefited from it: since September 1, 2022, the Lemoine Law has reshuffled the cards for borrower insurance. Originally known as the law of February 28, 2022 for fairer, simpler and more transparent access in the borrower’s insurance market, it takes its name from the Deputy Agir Patricia Lemoine, who carried out this reform.
After a first part put in place from June 1 for new borrowers, the law came into force for all real estate loans in progress since September 1, 2022. It allows in particular to cancel your loan insurance at any time to choose anotheras long as the latter offers equivalent guarantees.
Partial end of the medical questionnaire
The other main change lies in the possibility for certain borrowers to take out a contract without completing a medical questionnaire. The insurer can no longer request information relating to the state of health of the borrower, provided that the insured share of the total outstanding credit contracts does not exceed 200,000 euros per insured. This ceiling applies per person, which means that a couple of borrowers can be loaned up to 400,000 euros without having to complete a medical questionnaire, as long as the credit is repaid before their 60th birthday.
This last point was of particular concern to insurers, who feared having to insure the blind without being able to charge an additional premium, but also that all customers who had paid an additional premium up to now because of a health problem would change contracts from 1 September. As a result, many observers were expecting a price increase of around 20%.
Rising rates, especially with alternative insurers
According to an exclusive study by MoneyVox, based on data from 51 contracts with banking and alternative players, this increase has indeed taken place: for Lemoine contracts, i.e. without a health questionnairerates have actually taken between 18 and 20% on average. A figure which, however, hides certain disparities: in detail, bank insurers, who represented 87.6% of borrower insurance contracts in November 2020 according to a report by the Financial Sector Advisory Committee (CCSF), have instead chosen to lower their rates, unlike alternative insurers.
For example, for a 35-year-old executive profile, taking out a loan of 200,000 euros over 15 years and therefore eligible for an insurance contract without a health questionnaire, the insurance rate for bank contracts has increased by an average of 0.29% 0.22% between May and November 2022. On the same profile, the average rate for alternative insurers fell from 0.09% to 0.11%. Be one increase of 20% on average for the alternative, when the bank insurers have reduced their rates by 26.56%.
On a 45-year-old executive profile, who would borrow over 15 years and can therefore claim a contract without a health questionnaire, the rates vary much less (from 0.21% to 0.22% with alternative insurers and from 0.48% to 0 .47% for bank insurers). That is an increase of 7.42% for the former and a decrease of 1.90% for the latter.
save up to 70% on your borrower insurance
On the youngest profiles and on which the insurance delegations are particularly interesting, the banks therefore decided to reduce their margins. While a bank contract for the 35-year-old executive profile was on average three times more expensive than an alternative contract in May 2022, the price only varied from simple to double (+103%) in November of the same year. .
A beginning of harmonization of tariffs which is explained by the volume of contracts held by the banks, more even to dilute a potential risk, but also by the margins so far achieved on borrower insurance, which represents the main gain on a real estate loan. Gold, opening up to competition obliges bank-insurers to offer more competitive rates, but also better personalize their offers. To do this, bank insurance is moving towards more segmentation according to age. If the contract price drops for 35-year-old profiles, this is passed on to other borrowers, especially borrowers aged 50 and over. Conversely, alternative insurers have no choice but to increase their prices. Indeed, their lower margins force them to raise prices to take into account the additional risk of insuring borrowers who have not completed a health questionnaire.
Much more change of insurance than new credits
Another lesson from this study: while the Lemoine Law must allow all new mortgage subscribers to choose between the contract offered by the bank and an alternative contract, the truth is quite different. The data collected by MoneyVox show that the majority of contracts recovered by alternative insurers are cancellations (in 70% of cases)more than new credits.
In a period when access to real estate credit is complicated, in particular because of the rise in interest rates, borrowers agree to take out the insurance offered by the bank to obtain their credit, even if it means changing to a cheaper alternative contract afterwards. .
save on your loan insurance