Since 1er September 2022, the Lemoine law allows all borrowers to change the insurance of their mortgage at any time, with no minimum commitment. This revolutionary measure in insurance allows them to make significant savings. The law also facilitates access to loan insurance by removing the health questionnaire under certain conditions. The impact of the device has an impact on prices, confirmed by a recent study by the Moneyvox site.
Savings with the change of borrower insurance
Adopted in Parliament on February 28, 2022, the Lemoine law aims to make access fairer, simpler and more transparent to borrower insurance market. A market 87% owned by bank insurers, a quasi-monopoly that must be broken to allow borrowers to access more competitive home loan insurance contracts. The banking contracts are indeed between two and three times more expensive than the offers offered by alternative insurers.
The central measure of the Lemoine law is the change of borrower insurance at any time. Regardless of the age of their home loan, any borrower can, from the 1er September 2022, terminate the current insurance contract and replace it with an offer with at least equivalent guarantees. This provision is all the more important as the subscription to insurance within the framework of a mortgage loan is constrained: the banks require it to secure the loan in the event of borrower default (death, invalidity, incapacity or even loss of employment). Power freely choose your contract is now a right made effective by the Lemoine law.
Since 1er September is the home loan insurance change boom. At the broker Magnolia.fr, requests for termination/substitution have jumped 300% and now represent 80% of files, against 20% for the delegation of new loans. Borrowers have understood thefinancial stake of the Lemoine law. The key savings are substantial and generally amount to thousands of euros over the remaining term of a loan.
Check out our latest real estate purchasing power barometer to see supporting figures that it is possible to significantly reduce the cost of your mortgage by quickly changing borrower insurance. At the time when the mortgage becomes more expensive, save on borrower insurance.
The end of medical selection in borrower insurance
Change mortgage insurance was a right long awaited by consumer associations and brokers. The Lemoine law introduces the opportunity to easily replace bank insurance with a delegated offerwhere the Bourquin law had failed by imposing a maturity date on which the bank could play to prevent his client from going elsewhere.
The legislator has also adopted another strong measure: the deletion of the health questionnaire under certain conditions. For everything home loan of less than €200,000 (per insured, i.e. €400,000 in the event of a loan as a couple) refunded before 60th birthday of the borrower, the insurer is prohibited from seeking any information relating to the health of its client.
It’s about a inclusive measure for people with health problems, who can thus have easier access to insurance and mortgages. The borrowers concerned can now take out a home loan insurance without having to inform the service provider about their health history; they thus benefit from standard ratesand escape the additional premiums and exclusions of guarantees that could frustrate their request for financing.
The impact of the Lemoine law on tariffs
The end of medical selection in some cases, however, modifies the pricing approach of insurers by preventing them from pricing based on risk thanks to the data provided in the health questionnaire. This measure was a fear of insurers, forcing them to pool offers to spread the risk on the community of borrowers.
This blind pricing results inpremium increase. Before the entry into force of the Lemoine law, insurers anticipated increases in the segment concerned of up to 40%. The increase is there, but it is less marked. According to an exclusive study carried out by Moneyvox based on 51 contracts with banking and alternative insurers, prices have increased on average between 18% and 20%.
In detail, we learn that banks tend to lower their prices. For a 35-year-old executive borrower who took out a loan of €200,000 over 15 years and therefore eligible for insurance without a health questionnaire, the bank insurance rate went from 0.29% to 0.22% on average between May and November 2022. For the same profile, insurance delegated to an external provider today costs 0.11% of loan amount versus 0.09% before the entry of the Lemoine law.
One thing is clear: even by increasing their prices, alternatives remain much cheaper than bank-insurers. The latter are free to lower their prices because they apply colossal margins in borrower insurancewhich can go up to 70%.
Experience it for yourself by competing bids thanks to a home loan insurance comparator. With this simple, fast and free tool, you have access to several of the most competitive contracts of the market and can compare them with your bank contract. Changing insurance is child’s play: entrust all the cancellation/substitution procedures to our experts to be covered without delay by a cheaper insurance with tailor-made guarantees.