Insurance. Change borrower insurance at any time with the Lemoine law

Since 1er June 2022, any new borrower can terminate their insurance contract at any time, free of charge and without penalty. It is no longer necessary to wait for the expiry date of your contract! For contracts in progress on 1er June, they will benefit from this new right from September 1, 2022. This right to infra-annual termination of borrower insurance is one of the key measures of the Lemoine law, adopted at the beginning of the year. Some precisions.

Infra-annual termination of loan insurance

While some relaxations had already been introduced in the borrower insurance sector (Hamon law and Bourquin amendment), policyholders could only terminate their contract in two situations:

  • Within 12 months of signing the loan offer.
  • Each year on the anniversary date of the signing of the loan offer.

A relative freedom therefore, which now belongs to the past, since borrowers now benefit from a right of infra-annual termination allowing them to change insurance contract at any time to turn to a more advantageous offer.

This measure already applies to loan offers signed from June 1, and will concern borrowers who have signed their offer before this date from September 1.

Note, however, that it will not be possible to use the infra-annual termination to take out an insurance contract with less coverage. The guarantees of the new loan insurance contract taken out must in fact be at least equivalent to those of the contract offered by the lending bank.

Only loan insurance contracts taken out by natural persons in the context of a loan used to finance a real estate project for residential use or mixed use (residential and professional) are concerned.

Bright prospects for borrowers

While the banks shared the overwhelming majority of loan insurance contracts, the Lemoine law comes at the right time, for borrowers as well as for specialist insurers.

Under little pressure from competition, banks could charge high, uncompetitive rates without having to worry about losing customers. On the side of external insurers, needless to say that the quasi-monopoly exercised by banks on the borrower insurance market was not a profitable situation.

Thanks to infra-annual termination, banks and insurance companies specializing in borrower insurance will have every interest in offering attractive offers to keep their customers and win others.

We can therefore expect to see the borrower insurance market undergo a facelift, with increased competitiveness and increasingly advantageous offers. A major step forward which should enable borrowers to make considerable savings on the total cost of their credit, in the order of €5,000 to €15,000 according to MP Patricia Lemoine.

Other changes brought about by the Lemoine law

If infra-annual termination is undoubtedly the measure of the Lemoine law that has had the greatest impact, other provisions deserve attention:

  • The abolition of the health questionnaire for home loans whose final repayment date is scheduled before the insured’s 60th birthday and whose cumulative outstandings do not exceed €200,000 per insured.
  • A right to be forgotten shortened to 5 years instead of 10 years for borrowers cured of cancer or hepatitis C.

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