Marc* didn’t expect the change in his borrower’s insurance to be so full of pitfalls. In 2020, this forties resident in the Grand Est and his wife take out a loan when buying their property. “We had a big debt at that time, so we had no choice, from the start we took the insurance of the bank which granted us the loan”, he testifies to L ‘Express. In September 2022, he and his wife decide to change their contract, as the new legislation now allows them.
A law carried by the deputy Patricia Lemoine (Agir), adopted on February 28, 2022, aims to simplify access to contracts and their termination, while seven million French people have a credit in progress. In particular, it opened up the possibility of changing borrower insurance free of charge at any time and no longer just on the anniversary date, for any new contract concluded since June 1, 2022. This provision began to apply to current contracts from from September 1, 2022. Borrower insurance, which is compulsory in practice, covers various risks such as death, illness or disability. It protects both borrowers and banks against possible default.
“We contacted a broker and we received an interesting offer. Therefore, in October 2022, we sent a registered letter to our bank in order to make the change”, says Marc. Everything was ready for the substitution to start in November. Except that his bank, a major player in the borrower insurance market, is absent. “She did not respond to e-mails for three months, despite several reminders from our broker”, he regrets. Banks are however subject to an obligation to respond in writing, within a legal period of 10 working days.
Marc finally receives an answer in January 2023. A bank adviser says he is in favor of the change of insurance, but this is not followed up. Another contacted him in February 2023… and told him of a change. He confides to him that the substitution of his contract will only be possible in April 2023. For Marc, the cup is full. He makes a complaint to the regional branch of his bank. In the aftermath, the director of his bank branch calls him back and tells him that he will study his situation.
An average response time of 26 days
“In this kind of situation, what works to unblock the situation is to contact the complaints department of your bank, because they are afraid that the social networks will then become entangled, relates to L’Express Marie *, a broker specializing in borrower insurance who wishes to remain anonymous. If ever the mediation service does not respond, you have to contact a mediator. It’s still crazy that you have to go through that.”
In a press release sent on Monday, February 27, the APCADE (Association for the promotion of competition in creditor insurance), notes an average response time for banks of 26 days, “which can go up to more than 40 days for certain banking establishments”. This association created in 2021, which brings together several insurance players such as Allianz, APRIL, Aéma Groupe (Macif, Abeille Assurances, etc.), MAIF and Malakoff Humanis, intends “from now on to ensure long-term compliance with the provisions of the Lemoine in the face of certain obstructive practices by banking establishments”, she underlines.
The observation is also made to L’Express by Eric Maumy, president of the APRIL group: “The average which was under 10 days in September-October 2022 has slipped and now this response time is on average 23 days.” For Eric Maumy, if, at the beginning, “the bankers played the game”, they then “saw that the Lemoine law met with exceptional success”. “From September 2022, we saw a surge in cancellations of borrower insurance in favor of subscription with alternatives, of which we are a part. At that time, bankers found a way out which consists of slowing down the examination of the files”, notes the head of the group, historically the inventor of the alternative market in individual borrower insurance.
“The objective of bankers is to discourage customers, to do everything so that borrowers cannot go elsewhere and it works rather well, regrets Eric Maumy. With response times of up to 40 days, We understand that some policyholders give up on initiating the cancellation. Some banks are thus betting on the loss of breath of customers who will end up accepting a commercial gesture. “Everything is done to slow down and that customers give up and can’t take it anymore, even if, moreover, certain files are taken care of quickly”, also observes Marie.
“Change is much easier than before”
The APCADE recommends an “extremely simple solution to solve the problems”, explains Eric Maumy: “If there is no response from the bankers within 10 days, then we consider that their absence of response is worth acceptance”. According to the leader of the French leader in wholesale insurance brokerage, “if this measure is adopted, we defeat all the delaying maneuvers that may exist while protecting the consumer.”
However, it is not always easy for banks to respond quickly. The processing time for files has indeed lengthened due to the numerous requests to change borrower insurance made since September 1, 2022.
In addition, APCADE “observes a revitalization of the borrower insurance market, which is accompanied by a significant increase in competition between players.” Joined by L’Express, Maël Bernier also qualifies the difficulties encountered by individuals: “The change is much simpler than before, even if the banks are not jumping for joy and at worst, they will make the customer wait .” According to the spokesperson for Meilleurtaux.com, if the approach often goes to the end, it is because “the French are becoming less and less discouraged”.
“I will go to the end to assert my rights”
This is the case of Mark. “I will go to the end to assert my rights,” he says. By changing contracts, customers can make substantial savings, without reducing risk coverage since this change can only be made with equivalent protection. “Borrower insurance is the largest insurance budget for the French”, recalls Eric Maumy.
According to APCADE, households who have changed insurance have “realized savings ranging from 5,000 to 25,000 euros and sometimes much more on large capital, with an average of around 10,000 euros.” Already in November 2021, UFC-Que Choisir estimated that termination at any time allowed borrowers to obtain an average saving of at least 550 million euros per year.
Marc confirms the interest of going through a wholesale insurance broker to change contract: “In October 2022, we had 41,000 euros of insurance left to pay over three years, we will go to 14,000 euros, so we will carry out 27 000 euros in savings. “I understand that this is a problem for banks, because it will make them lose a lot of money,” he says. But their lobbying must be done with deputies and the State and not to the detriment of customers. We don’t make the rules and we don’t have to suffer the consequences.”
A colossal financial challenge
The financial challenge is major for players in the sector. The latter would like to share the cake, while banking institutions are “pointed out for their hegemonic position and their anti-competitive practices by the European Authority EIOPA”, notes Catherine Charrier-Leflaive, president of APCADE, opportunely, quoted in the press release. .
As specified Capital, establishments such as Crédit Agricole, Crédit Mutuel and the Banque Populaire-Caisse d’Epargne (BPCE) group have accounted for 70% of the growth of the borrowing market since 2019. The contracts offered by the banks therefore largely dominate the market with 80.2 % of private contributions on this type of contract in 2021, according to data from the consulting firm Facts & Figures unveiled on February 15. The rest of the market is divided between alternative insurance contracts internal to banks and alternative external contracts offered by other insurers or brokers. In addition, banks achieve margins of 68%, according to a study by UFC-Que Choisir dated November 2021. “The creditor insurance market is opening up and there is no reason why this product should not be a competitive product”, notes Maël Bernier.
If individuals sometimes have difficulty changing their borrower insurance once their loan has been signed, above all, they are now less and less in a position of strength in the choice of another borrower insurance when taking out the loan. Near the bank. The context of scarcity of loans, with banks less inclined to lend since the continuous rise in mortgage rates and wear and tear rates, does not work in favor of individuals. “In theory, policyholders are free to take out the borrower insurance of their choice when obtaining their loan, but in reality the less you have the more you will be a prisoner of your bank”, estimates Eric Maumy.
“It is always complicated to take another insurer than the one offered by the lending bank at the time of the loan subscription, abounds Maël Bernier. And it is all the more so with the rise in rates, because you have to go quickly to sign his loan insofar as the proposed rate is not guaranteed for long. Yet another thing to keep in mind.
*Names have been changed