Borrower insurance: the hassles that customers still have to endure

Despite a liberalization of the market, taking out a borrower insurance contract still poses a number of difficulties for future and current owners.

Increasing competition and reducing the monopoly of banks on the borrower insurance market: these are the objectives of the Lemoine law, passed in 2022. If the first objective is indeed successful – individuals can now terminate their contract at any time to choose a cheaper one that is at least as protective -, the second is still far from being achieved. Banks still collect 84% of market contributions, to the great displeasure of specialized insurers who share the remaining crumbs. An inertia partly due to the difficulties that customers have in asserting their rights.

As the consulting firm Sia Partners points out in a study that Capital was able to consult, not all borrowers have benefited from this reform. The socio-professional categories with the highest incomes represent 58% of requests for changes to contracts during the credit period, thus repeating a study by the Financial Sector Advisory Committee (CCSF). “The advantages of this reform mainly benefit the wealthy populations, whereas the very essence of the Lemoine Law was to promote access to bank credit for a large part of the population.”the document underlines.

Rates, a barrier for modest borrowers

Prices that are still too high represent one of the biggest obstacles for households: “The objective of a liberalization law is to lower rates so that the greatest number of people can benefit. This has not been the case in borrower insurance.”points out Ahmed Langazou, manager at Sia Partners and specialist in pension issues. Both on the side of the banks, which have not revised downwards their very comfortable margins – out of 100 euros collected, only 32 are returned in the form of guarantees on this product, and of the insurers, who have increased their rates by 25% in reaction to the removal of the medical questionnaire.

The lack of understanding of the reform is also glaring on the household side. Also, 42% of people with a mortgage loan are not aware of the Lemoine law, according to a survey conducted by the broker April. And even less so of the guarantee equivalence system contained in this law. When a borrower puts his loan insurance in competition, the new contract must be at least as protective as the previous one. In a desire to save money pushed to its paroxysm, it is not uncommon for households not to respect this condition: “Around one in twelve contracts are rejected by banks when changing insurers”notes Sia Partners. Mainly because of the lack of awareness of this system. Bankers and specialized insurers will therefore have to redouble their efforts in pedagogy and communication to democratize the