Real Estate: Loan insurance may well be renegotiated each year

The standoff between banks and insurance runs thanks to recent and consumers: the Constitutional Council validated Friday the right of borrowers to terminate each year their insurance contracted for a mortgage to choose another insurer, with retroactively to existing contracts.

The Constitutional Council was seized October 12, 2017, by the State Council as a priority issue of constitutionality was lodged by the French Banking Federation (FBF) challenging the provision of the law of 21 February 2017, in particular, the amendment Bourquin says that establishes the principle of the annual termination and its retroactivity.

“Not only will this breakthrough plays for all contracts of loans taken from the day after the law of 21 February 2017, but also, from 1 January 2018 to all previous” welcomed the association UFC-Que choose which had intervened before the Constitutional Council to defend the measure.

The Consumer Association invites policyholders to seize the opportunity encrypting the potential gain to “several thousand euros over the life of a contract.”

Measures of general interest

The institution held that all the challenged provisions were consistent with the Constitution.
“By establishing an annual right of termination of group insurance contracts in favor of borrowers, the legislature intended to strengthen consumer protection by ensuring a better contractual balance between the insured borrower and banks and their insurance partners.

Applying this right of cancellation to contracts he wanted, given the long duration of those contracts, that this reform can enjoy a large number of borrowers having already concluded a group insurance contract. He has pursued a general interest objective, “justifies e Constitutional Council in its decision.

If borrowers are in principle free to choose their insurance, in fact, they contract overwhelmingly that proposed by their bank: 88% of mortgages today are provided by these contracts “group”. A huge market share for banks, which would clear margin of 40% to 50% on these products.

The well-validated measure makes cancellable and 30 million insurance contracts borrower.

This is a victory for the French Federation of Insurance (FFA), which hopes to recover a greater part of this cake of 8.8 billion euros per year. An online broker, Reassure me, had estimated that if 8% of French renegotiating their loan insurance, the purchasing power gain could reach 2.8 billion euros in 2018 and 6.310 euros on average per contract.

A group bringing together insurers Allianz, Aviva, Cover, Macif, MACSF, MAIF and Swiss Life, welcomed this “major advance for consumers”:

“We welcome the decision of the Constitutional Council confirmed the text of eligibility for the annual termination, not only for all French who aspires to become homeowners but also for 6 million households already hold a mortgage. We are pleased that this decision will allow the largest number to have access to the “creditor insurance in the best conditions,” he said in a statement.

These insurers, however, say “particular attention” to the terms of law enforcement.