The coming into force of the law Sapin 2: a step forward for the termination of mortgage insurance

Image result for mortgage insurance On 1 January 2018 will mark the borrower the insurance market a major turning point.

As of 2018 and with the entry into force of the Bourquin amendment, it will be possible to change each year of loan insurance.

Bourquin amendment and Sapin 2 law: a delayed entry into force?

This amendment, which complements the Lagarde and Hamon laws, is not in favor of banks, but rather in favor of borrowers. This opening of competition should allow households to save more easily and at the same time reduce the current virtual monopoly of banks on this product. Indeed, a delegation of insurance can represent up to 10 000 € of savings.

However, the banks, via the FBF (French Banking Federation) decided to seize last July the Council of State, which instructed the Constitutional Council to work on the subject and say whether or not the opening of the market respects the constitution.

State Council Constitutional Council One of the arguments put forward by banks is that people wishing to insure will choose only individual contracts.

The principle of group contracts is that people in good health and / or young people pay more to help sick and / or elderly people to benefit from loan insurance.

Marie-Anne Barbat-Layani, who is at the helm of the French Banking Federation, explained in Les Echos : “the group contracts will have their economy totally upset, the banks-insurers will be gradually led to differentiate the tariffs more and inevitably these will increase.

The banks therefore want to stay in the situation that allows since 2014, via the Hamon law, to terminate only the first year.

On its website, the UFC Que Choisir announces that it has made observations to the Conseil Constitutionnel to defend the Sapin 2 law. Its President Alain Bazot explains: “Concerned to promote the general interest of allowing the consumers borrowers of power to compete in a sclerotic market (…), the UFC-Que Choisir intervened before the Constitutional Council to formulate a series of observations in support of this major breakthrough “.

Also according to the UFC, if the Constitutional Council validates, nearly 8 million households will effectively from 1 January 2018 to enjoy substantial savings … To be continued.

Will this decision of the banks to seize the Council of State delay the beginning of the application of the law Sapin 2? Answers in a few weeks.

Termination of borrower insurance for real estate credit: state of play

Now let’s have a look back at the different developments in the laws related to loan insurance.

We offer the summary below:

  1. September 2010: the Lagarde law . This law allows anyone who subscribes to a loan to choose insurance freely, so competition can take place. It is no longer obligatory to take out insurance from your lending institution. However, it is mandatory that the new insurance contract provide minimum guarantees required by the bank.
  1. July 26, 2014: the Hamon law . Possibility of breaking his home loan insurance contract during the first 12 months of the contract.

Some additional information for the Hamon law:

  • 15 days notice.
  • The bank has 10 days to give an answer after receiving the request by mail with acknowledgment of receipt. In the event of non-respect of the deadlines, she is exposed to a fine of 3 000 €.
  • As with the Lagarde law, the new insurance must provide minimum guarantees. To ensure that this condition is met, borrowers can compare the offers themselves or use a specialized broker .
  1. Loi Sapin 2 or Bourquin amendment : it will be possible to terminate the borrower’s insurance beyond the first year on each anniversary date. Example: a contract signed on February 24, 2016 will be terminable every February 24.

To take advantage of this new opportunity, it will still be vigilant and predicting. Indeed, it will be necessary to make his request with his current insurance by letter with acknowledgment of receipt 2 months before the anniversary date. The current insurance can not refuse this change subject, as in the Hamon law, that the new contract provides minimum guarantees.

In fact, the law is in force since its publication on February 22, 2017 applies to contracts signed after that date. However, the contracts in this case can already rely on the Hamon law during the first year. From 1 January 2018, absolutely all contracts will benefit from “the amendment Bourquin.”

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