A revolution in loan insurance?

Disabled or chronically ill borrowers will soon be able to make more use of the competition between insurers to guarantee their loans.

Telephony providers had already understood it: we must stop taking the customer for a fool...

For several years now, it has been possible to terminate a subscription to another supplier without having to enter into a two-year commitment with the latter...

Energy suppliers have also understood this: you can change your contract in the middle of the year and you can be sure that the new supplier will take care of the arrangements with the old one.

This transformation is related to the fact that all contracts with tacit renewal, which refers to a contract where you do not have to make any request to continue to benefit from it since you signed up, have been profoundly modified since the March 14 2016 order.

Article L.215-1 of the Consumer Code provides that: " the trader providing the services shall inform the consumer in writing, by letter or dedicated e-mail, no earlier than three months and no later than one month before the end of the period authorizing the rejection of the renewal, of the possibility of not renewing the contract he has concluded [Failing this] the consumer may terminate the contract free of charge, at any time from the renewal date "

The root of this transformation actually lies in article 1103 of the Civil Code amended itself on February 10, 2016: " Legally formed contracts take the place of law for those who have made them. ". So much so that if the provider did not prove that the client was fully aware of the provisions applicable to the contracts, the latter were invalidated.

Yet many consumers were caught in the trap, "We're sorry but your contract was tacitly renewed...". And there were still strongholds left: the insurance field is or was one of them?

The principles prior to the establishment of the law of 28 February 2022

The cancellation of the insurance contract of a loan is possible at the latest fifteen days before its anniversary date during the first year, and at least two months before its anniversary date after the first year of your contract. However, this cancellation is then subject to the sending of the famous registered letter with acknowledgement of receipt. You still have to keep the receipt of the letter!

The Bourquin law came in a second time to provide for the opening to competition of insurers. Its objective was indeed to give borrowers a wider period of time to play the competition between the different insurers, and thus find a more competitive real estate loan insurance, with equivalent guarantees. Entering into force since February 22, 2017, it completely overturns the rules of the game by allowing borrowers to terminate their real estate loan insurance contract at each anniversary date. For all that, the borrower remained bound for a period of 12 months...

Principles subsequent to the implementation of the law of February 28, 2022

However, it will begin to apply as of June 1, 2022 in the tradition of laws that apply only to the future. These are the first paragraphs of article L.113-12-2 of the insurance code which have been modified to include an undefined period. The customer can now cancel his loan insurance contract at any time.

This can be done by registered letter or by electronic registered mail. But above all, it is clearly stipulated that in case of refusal by the lender, the insurance contract is not cancelled. But again, the insurer cannot cancel the insurance contract for aggravation of the risk, except under certain conditions (defined by decree) resulting from a change in the insured's voluntary behavior. As you can see, the insurer is in the legislator's sights.