Borrower insurance: a step towards more competition

Posted on Nov 18, 2021, 7:05 p.m.Updated Nov 18, 2021, 7:20 PM

Insurers and brokers eager to push their pawns in borrower insurance have the wind in their backs. On Thursday, the National Assembly’s Economic Affairs Committee approved a bill to strengthen competition in this historically bank-dominated market.

The proposal, carried by the MP Patricia Lemoine (Agir ensemble), aims to allow policyholders to terminate their borrower insurance contract free of charge and at any time in order to achieve “substantial savings”. This termination is only possible today on the anniversary date of the contract.

Lower prices for the consumer

“It is a text of simplification, transparency and purchasing power, which will increase the liberalization of the creditor insurance market and lower prices for the consumer”, welcomed the APCADE, the Association for the Promotion of Competition in Creditor Insurance, which brings together insurers and brokers.

Loan insurance guarantees to those who go into debt a support of all or part of their credit in the event of accident or illness, leading to death, inability to work or even disability. Intimately linked to mortgage loans, some 88% of these coverages are distributed by banks.

“Americanization” of creditor insurance

The latter take a very dim view of the idea that policyholders can terminate their contract at any time. They argue that the current model allows bank insurers to pool risks. And therefore to cover individuals with fragile health, who could not otherwise be protected or would be so at prohibitive cost.

The model carried by the bill “will lead to discriminate between the fifties and the most vulnerable in favor of the youngest and in good health”, reacted Thursday the president of the French Banking Federation (FBF), Nicolas Théry, also boss of Crédit Mutuel. And this one to denounce an “Americanization of borrower insurance”.

Last week, bancassurers stepped up interventions to act as guarantors of access to credit and affordable borrower insurance.

The bill has yet to be discussed in public session on November 25. It must then be considered in the Senate. The government has initiated an accelerated procedure on this text. Enough to give hope to its promoters that Parliament will have time to make a final decision before the end of the legislature.

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