a clear opportunity to free up 550 million in purchasing power!

Loan insurance, a real cash cow for banks
Banks collect nearly € 7 billion in borrower insurance contributions each year to cover mortgage loans (1). Generally imposed on consumers, this guarantee can cover all or part of the loan maturities in the event of a claim (death, incapacity-invalidity, etc.).

Lender insurance is above all a formidable cash cow for banks. Out of 100 euros of premium paid by the insured, only 32 euros are returned in compensation. In other words the banks realize a margin of 68%. Such a level is unmatched in insurance. By way of comparison, it is two to three times higher than those practiced in home and automobile insurance (2).

Under these conditions, and while in theory, it is possible to choose an insurance different from that offered by the banks, to change it during the first year or on the anniversary date of the loan subscription, how is it possible? surprise the pitfalls they set up to discourage borrowers (late responses, no response, unfounded refusals, etc.)?

Let us recall that in reaction the UFC-Que Choisir launched a group action in order to obtain compensation for customers who are victims of such delaying practices at LCL (3), and that to facilitate the comparison of the offers available on the market and support consumers making the choice of change, a dedicated service has been set up (4) in the next address.

Termination at any time, a gain of 550 million euros per year for consumers
To finally materialize the free choice of borrower insurance, a bill that will be debated this Thursday in the National Assembly provides for the termination at any time of borrower insurance.

Supported by all consumer associations (5), it is the appropriate remedy for market lockout. In addition to being simple, this framework is practiced by policyholders and insurers in many other sectors (auto, home, health) and would make gross barriers to competition futile.

Indeed, consumers will more easily be able to negotiate the insurance offered by the bank and / or replace it with an alternative contract. While being equally well covered, a 35-year-old couple who have been repaying their loan for 5 years can hope to save 13,000 euros. This amount can reach more than 15,000 euros for a couple of borrowers aged 55 who have just taken out their loan (6). Overall, for all loans in repayment, households can on average obtain savings of at least 550 million euros per year (7).

A backfire from banks to prevent termination at any time
Decided to jealously keep its annuity, the banking lobby fired at all costs to prevent the implementation of the measure, by waving the red rag of the risk of demutualization while borrowers suffering from aggravated health risks are already numerous in their favor. insure with alternative actors (8).

Crédit Mutuel has announced that it will do away with health questionnaires for some of its customers (9) while making the measure conditional on a seven-year bank immobility. Crédit Agricole, for its part, invited parliamentarians to cap the differences in insurance rates according to a ratio ranging from one to four (10).

The timing of these announcements leaves little doubt as to the willingness of the banking lobby to pollute legislative debates. In addition to being based only on very precarious commitments and failing to be extended to all customers, they sound more like an admission of their bad practices, even like a lamentable bargaining. As such, it should be remembered that with termination at any time former patients will be able to more easily benefit from the right to be forgotten and obtain a contract without additional premium or exclusion.

Decided to finally make effective competition in the borrower insurance market beneficial to consumers, the UFC-Que Choisir, mobilized for a long time on the subject, urges the deputies to institute the termination at any time.

NOTES
(1) L’Assurance Française, 2020 key data, French Insurance Federation, 2021.

(2) The gross margin is estimated from the claims / premiums ratio. On average for 100 euros in premiums paid, 34 euros are kept in home insurance and 21 euros in car insurance. Estimates based on data from the ACPR Conference, 23 November 2018.

(3) Loan insurance Group action against LCL, UFC-Que Choisir, 2020.

(4) Proposed by SAS Que Choisir, a subsidiary of UFC-Que Choisir, registered with ORIAS as an insurance intermediary agent. The change assistance service is offered by a broker who pays a lump sum of 90 euros on behalf of the Internet user calling on it to the SAS Que Choisir in order, in particular, to cover the costs of organizing the comparison service which is accessible to all free of charge.

(5) See the position expressed by all consumer associations in the recommendation of October 12, 2021 of the CCSF on the invalidity guarantee and the pricing of loan insurance premiums.

(6) For a loan of 200,000 euros taken out at the rate of 1% over 20 years. Guaranteed amount of 75% for each borrower.

(7) UFC-Que Choisir estimate based on the CCSF borrower insurance report for 2020.

(8) While the market share of alternative insurers is around 15%, alternative players represent 23% of insurance contracts that have benefited from the AERAS in Convention AERAS: Statistics 2019, FFA.

(9) This measure is reserved in particular for customers who have been domiciling their main income for 7 years in the bank and whose age is less than 62 years in Equality in health and access to property for all: Crédit Mutuel eliminates the questionnaire for its loyal customers, Crédit Mutuel, 2021.

(10) Bancassureurs on the offensive on borrower insurance, S. Poullennec, E. Lederer, Les Echos, 2021.

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