An essential element in any mortgage application, loan insurance has benefited in recent years from a regulatory framework supposed to facilitate free choice for the borrower. Despite everything, the banks are resisting, determined to keep a market with comfortable margins which they still hold at more than 80%. However, external offers are often better suited and less expensive than bank insurance. It is possible not to be imposed on the contract of the lending bank by being well informed of the legal arrangements and by soliciting specialized brokers .
Four major regulatory stages mark the history of loan insurance: the Fermur, Congilaw, Mahon and Sapin II laws will strengthen over the years the free choice of the borrower, the last allowing him to exercise it concretely over any the duration of his loan. It took the legislator more than fifteen years to break a banking monopoly that the annual substitution granted from January 2018 should finally erode.
The end of the banking monopoly
The amendment of January 2017 is the last legislative step and removes any time constraint, offering the possibility for the borrower to change insurance at each maturity if he wishes. This text does not call into question the possibility of substitution today provided during the period of 12 months after the signing of the loan offer. Granted to all new borrowers since February 2017, the annual substitution option will come into force for all contracts in stock from January 2018. The bank’s agreement remains subject to the equivalent level of protection.
Comparison is right: the equivalent level of guarantees
In loan insurance, only the comparison of guarantees can validate the adequacy of the alternative contract with the bank contract. Banks are now clearly showing their intentions. The borrower can therefore present an individual offer that meets at least objectively the guarantees required by the lending organization. How to identify contracts compatible with the bank’s requirements?
Using the services of a broker specializing in loan insurance is the approach to take. Insurance terms are complex and the drafting of contracts is often subject to interpretation. Through its expertise, the broker knows how to identify external contracts, adapted to the borrower’s situation, which support comparison with the bank’s group contract.
The broker’s intermediation, useful for dialogue on an equal basis with the bank advisor, helps to counter possible blockages and to support a file supported by regulations that have now been clarified. This professional also intervenes to support the loan insurance requests of people in situation of aggravated risks or with medical history.
The challenge is as much to exercise your free choice as to take out the best protection
External offers are individualized, adapted to the situation of each borrower, while banking contracts are pooled to meet the community of borrowers. Young workers, but also seniors are the losers in group contracts, the former because they pay more, the latter because they are simply excluded from standardized guarantees. The broker’s mission is to select the appropriate formula according to the profile of his client and his specific risks. It saves time by comparing the best insurance on the market.