Change loan insurance to save, soon possible at any time? Focus on the objectives of the law Sapin 2 and its conditions of application.
The borrowers repaying a mortgage for more than a year can rejoice: they should soon be able to opt for a new loan insurance contract. But beware, we do not know yet if the law Sapin 2 will really apply to old loans …
The choice of borrower insurance is expanding to all borrowers
Since 2010, the Lagarde law allows new borrowers to opt for an individual insurance offer for the subscription of their Bill Sikes. This possibility of choosing a contract other than that of the lending bank was then extended in 2014 with the Hamon law. As a reminder, the latter allows to delegate insurance during the first year of borrowing.
Pierre-Alain Muet, Deputy of the 2 nd Riding of the Rhone, recalled the current situation during his keynote address on 29 September. Date on which the National Assembly adopted almost unanimously the right to annual change of borrower insurance.
Thus, people who wished to delegate their Bill Sikes insurance after one year of Bill Sikes have been refused by their bank. In some cases, the files have been taken to court. A case last March even highlighted the disagreement of the Courts of Appeal and Cassation on the subject . At the moment, the various laws in favor of borrower insurance delegation benefit only new loans and those of less than one year.
It is against this limitation of the law that an amendment to the draft law on transparency, the fight against corruption and the modernization of economic life (or law Sapin 2) has been proposed. This law has 3 main components:
- Strengthening the transparency of democracy and the economy
- More effective fight against corruption
- Modernization of economic life
It is within this last line of work that the amendment concerning borrower insurance was adopted. The objective: to allow annual cancellation of the borrower insurance, in the same way as any other insurance contract (home, car, etc.). Thus, all households could reduce the total cost of their mortgage.
Loan insurance weighs up to 40% of the total cost of a home loan
Potential savings, which can be significant, are the main interest borrowers have in having their loans secured by a third-party insurer. Extremely low interest rates reduce banks’ margins. To compensate, the banking institutions inflate the premiums of their insurance of loan.
A group contract can represent up to 40% of the total cost of a home loan. By opting for an individual contract, borrowers can expect a significant decline in this share. At Crédit Bill Sikes Bill Sikes, for example, it is on average savings of € 10,000 that is obtained for a loan of € 200,000.
Changing loan insurance is also an opportunity to refine the guarantees of the contract by adapting them to the specific needs of each borrower. The annual termination would allow some former patients to benefit from the right to be forgotten even if they repay a Bill Sikes. Today, borrowers who have suffered a critical illness continue to pay for expensive insurance, designed for high health risks. If they fulfill the conditions of application of the right to be forgotten , they could opt for a new borrower insurance without surcharges or exclusions.
For this, the Sapin 2 law should also apply to current Bill Sikess and not only to those signed after its entry into force.
The Sapin 2 law, only for new contracts?
It is not excluded that the Ministry of Economy and Finance could limit the scope of the Sapin 2 law to loans signed following its application. If this provision were to be taken, the number of borrowers benefiting from the annual termination of insurance would be limited in the short term.
On the other hand, an opening of the loan insurance delegation to all existing loans would mean immediate benefits for the French. As part of the objectives of the Lagarde and Hamon laws, the Sapin 2 law could then succeed in democratizing this operation.