Real estate credit: what will change the reform of borrower insurance

The subscription to a borrower’s insurance is inseparable from a mortgage. Because it allows reimbursement of installments by the insurer in the event of a claim: death, disability, or sometimes even loss of employment. Still, the bill can sometimes be salty for the purchasers of a property. And the possibilities of changing it are very restrictive, especially after a year of contract, or a termination only takes place on the anniversary date (recently…). Everything is now reworked. Parliament, after a final vote by the Senate on Thursday, adopted the bill “for fairer, simpler and more transparent access to the borrower’s insurance market”, carried by MP Patricia Lemoine (Act, majority) .

Here is what it changes, for a very important market, in particular for the banks, evaluated at nearly 10 billion euros of contributions per year, with nearly seven million owners having a credit in progress.

  • Change insurance free of charge and at any time

This is the first flagship provision of this law: the possibility, from June 1 for new contracts, and September 1 for others, to change your borrower insurance at any time, and free of charge. This new rule will probably have the effect of increasing competition – banks currently represent 88% of the market – and thus, driving prices down.

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“Borrower insurance is above all a tremendous cash cow for banks. Out of 100 euros of premium paid by policyholders, only 32 euros are paid back in compensation. In other words, banks make a margin of 68%. Such a level is without equal in insurance. By way of comparison, it is two to three times higher than those practiced in home and automobile insurance”, noted a few months ago the UFC-Que-Choisir. The association also expected savings, thanks to this Lemoine law, of 5,000 to 15,000 euros for a loan of 250,000 euros over 20 years. With franceinfo, the leader in insurance brokerage, April, also judged the new significant negotiation margins: “If you play the competition, you will be able to obtain 50% savings.”

“This bill represents a real gain in purchasing power for our compatriots”, also assured the Minister in charge of Public Accounts Olivier Dussopt, quantifying it overall at “around 550 million euros per year”. A figure, however, disputed by the president of the Economic Affairs Committee of the Senate Sophie Primas (LR).

  • The medical questionnaire removed for a large number of loans

The medical questionnaire, allowing a borrower’s health risks to be judged quickly, is removed for mortgages of less than 200,000 euros per person (i.e. 400,000 euros for a couple) and whose term occurs before the 60th anniversary of the loan. ‘borrower. These thresholds can be modulated by decree, only in a direction favorable to the borrower, specified the rapporteur of the text in the Senate Daniel Gremillet (LR). For The echoeswhich cites a study by the Actélior actuarial firm, this removal of the medical questionnaire would concern 52% of the loans in number, and 36% of the amounts loaned today.

  • The right to be forgotten reduced from ten to five years

The period of the “right to be forgotten” for cancers and hepatitis C is reduced from ten to five years. “It was a measure demanded by patient associations for several years”, recalled Patricia Lemoine during the last vote in the National Assembly on Tuesday. The “right to be forgotten” now allows former cancer patients to no longer have to declare their illness to their insurer ten years after the end of their therapeutic protocol. This right to be forgotten had already gone from twenty years to ten years in 2016. The signatories of the AERAS convention (Insuring and Borrowing with an Aggravated Health Risk) will also have the obligation to hire by 31 July 2022 a negotiation on pathologies other than cancer.


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