Changing borrower insurance gets easier, but watch out for price increases, Real Estate News/Analysis

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At a time when debt ratios are soaring, borrower insurance remains the main leverage for saving on the total cost of your mortgage. From Wednesday, June 1, competition in borrower insurance will take place within a new regulatory framework, with the entry into force of the Lemoine law.

With new loan offers issued from June 1, it will be possible to change borrower insurance at any time, not just in the first 12 months or anniversary of the loan subscription, as is the case with car or home insurance. Date. This facility will be available to borrowers with ongoing loans as of September 1, 2022. In both cases, the only condition is to submit an offer with equivalent security.

End of medical survey

The other major change, in effect from 1 June, concerns the expiration of the medical survey for borrower insurance for loans less than 200,000 Euros (or 400,000 Euros at a 50/50 ratio for a couple). 60th birthday of the insured. This applies, for example, to borrowers who do not exceed 45 years for a 15-year loan, 40 years for a 20-year loan, or 35 years for a 25-year loan.

Many funding will be affected by the absence of a medical survey, with serious consequences for both insurers and borrowers. Insurers will no longer be able to make the medical choice and will have no choice but to pool the risk to change the additional premiums and partial exclusions. This pool of risk is rightly advocated by banks and explains why bank insurance rates are more expensive than alternative insurers personalized to each profile.

Price increase

Therefore, this lack of medical choice will inevitably have an upward effect on the price of rolled-over insurance. Young people in good health should especially see their discounts significantly reduced thanks to alternative insurance companies. Therefore, more comparisons will be required than ever before to find the best price. Broker Meilleurtaux has redesigned the customer journeys and digital interfaces of its site and app to facilitate and simplify the comparison of insurance quotes. By integrating a customer’s eligibility for subscription without a health survey, Meilleurtaux promises the possibility of changing borrower insurance in a few clicks.

behavioral surveys

Insurers will seek to learn more about the profile of borrowers through behavioral surveys that will make it possible to better customize rates. They will also continue to address the situation of smokers or non-smokers without medical knowledge. Regardless of this legislative change, Crédit Mutuel, the first bank to mark the end of the medical survey for its loyal customers (under certain conditions), always asks borrowers if they smoke, which is very decisive in the suggested price.

In such surveys, information on the implementation of sports activities may also be requested. On the other hand, competition is likely to decrease, as some insurers who are not critically sized to assume the health risk will probably choose to forego collateral for loans less than €200,000 that are not subject to a health survey.

TO KNOW

Another change brought by the Lemoine law was that the period of benefiting from the right to be forgotten, which concerns people who are treated for cancer or hepatitis C, was reduced from 10 to 5 years after the end of the protocol.