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A major creditor insurance reform took effect on June 1, 2022, and some of the dire consequences for consumers are already beginning to be felt. what are they ?
40% increase in the borrower’s insurance fee since June 1st: this is the remark made by Magnolia.fr spokesperson, Astrid Kosin. For a comparator who specializes in mortgage insurance, the fault lies in implementing the borrower’s insurance reform, the Lemoine Act. However, this reform was aimed at making borrower insurance more accessible and increasing competition in a sector monopolized by bank insurers. Why this contradiction between these goals and reality?
Ending the applause for the health survey .. and the explosion in prices
Enacted on February 28, 2022, the Lemoine Law, named after the deputy Agir who implemented the project, Patricia Lemoine, wanted to return power to the borrowers. From now on, it is no longer necessary to complete a medical questionnaire when obtaining a mortgage of less than 200,000 euros (for an individual, or 400,000 euros for a couple), whose repayment expires before the age of 60. . Good news on paper, because it saves time and simplicity, while providing better access to credit for people with a health problem.
And that’s exactly where the shoe hits: to compensate for the lack of data on the health status of their customers, some insurance companies have decided to increase their rates. According to Astrid Cusin, prices have already gone up “by 15% to 40% depending on the company, with an average increase of about 25%”. A real price boom since June 1, 2022, the date of entry into force of the Lemoine law, although MP Agger promoted it as: “A law beneficial to many French who will save money on their immovable credits.”
Read also: Mortgage credit: 3 figures that show the tightening of grant conditions
Will the borrower’s insurance fee be able to increase indefinitely?
The end of the health questionnaire is not the only major measure of Lemoine’s law. In fact, the reform also provides for the possibility of terminating the borrower’s insurance at any time, while until now it was necessary to wait for the annual expiration date of his contract. This gives policyholders the opportunity to benefit from better guarantees and/or a better price. This measure aims to strengthen the market by making competition more difficult.
While 88% of the market is owned by bank insurers, the vast majority of which also provide financing, such a reform is welcome, and may eventually lead to lower prices. Thus, specialized insurance companies or alternative companies, especially online, will be able to gain new market shares.
Lemoine’s law, sophisticated regulation
For Patricia Lemoine, “From September 1, the competition game for all contracts will begin. And overpricing insurers will find themselves out of the market.” Why is this deadline on September 1st? Since the entry into force on June 1, 2022 is only for new loans, you will have to wait until September 1 to be able to take advantage of the Lemoine Act for an existing loan. Before this date, other changes may occur. In fact, the Lemoine Act is a developing law that can be amended by decree of the Council of State.
On July 31, a decision could be made on new additions, notably the expansion of the Arras Agreement, which allows people with increased health risks to obtain insurance for their loans. Senator L.R. Daniel Gremillet explains: “There are a certain number of diseases we live with very well today that should not result in an additional premium or insurance denial,” for example diabetes.