Real Estate Loan Insurance: towards a wave of terminations?
The fateful date for the mortgage insurance market is approaching, one where annual termination will be facilitated. As of January 1, 2018, borrowers will have the opportunity to “break” their contract on each anniversary date. A right that has not fallen on deaf ears, according to a recent poll published by the comparator.
What does the legislation say?
Little reminder. Today, two laws allow borrowers to compare mortgage insurance:
the law (2010), which establishes the insurance delegation, that is to say the possibility of signing a credit insurance other than that proposed by its bank;
the law (2014), which allows to terminate his insurance contract until 1 year after the signature of the mortgage;
the amendment (2017), which authorizes the annual cancellation from January 1st, that is to say the termination of his contract on each anniversary date (after the 1 year deadline of the law). Unless the Constitutional Council vetoes it. An appeal has been lodged by the banks to repeal the amendment.
More than half of the borrowers interested in the termination
Still, if the Constitutional Council agrees, this provision could make a stir if we believe the recent survey comparator. On a sample of 10,000 owners from several socio-professional categories, 52% of them say they are ready to terminate their insurance. What give smile to independent insurers, especially as the market has a huge potential. 78% of respondents actually preferred to sign an insurance at their bank (the insurance delegation weighs ” only ” 22%).
How can this monopoly of banks be explained?
Why go through a bank when you can get personalized rates? First, there is the simplicity of the process (for 43% of respondents). When negotiating home loans, borrowers do not have the urge or the time to look for another insurance.
Another reason given is the lack of information. They are 24% not to have heard about the delegation of insurance. On the other hand, some knew the principle, but either their request for delegation was refused (23%) or they hoped to benefit from better financial guarantees (5%).
But the entry into force of the annual termination could reshuffle the cards. Or maybe not. 54% of respondents are reluctant to deal with formalities.