Legislation has paved the way for mobility in loan insurance, but competition between banks and insurers is based on one crucial element: the equivalence of guarantees. If this condition is met, the change in borrower insurance is only a matter of timing.
Competition established since 2010
Since 2010, the Lagarde law allows a borrower not to blindly choose the group contract offered by his bank to insure his home loan. It can in fact bring competition into play by favoring the individual contract of an insurer. This is called delegation insurance. This legislative provision aims to reduce the cost of borrower insurance, and it was reinforced in 2014 by the Hamon law and then in 2018 by the Bourquin amendment to the Sapin 2 law.
But what remained unchanged was the condition of the equivalence of the guarantees registered in article L, 312-9 of the Lagarde law. It authorizes the lending institution to refuse a request for delegation of insurance if the individual contract offered by the organization does not have a level of guarantee equivalent to that of the group contract.
The limiting list as a reference
The equivalence of guarantees is not judged at the whim of the lending institution: it is based on a restrictive list of 26 criteria decreed by the Advisory Committee on the Financial Sector (CCSF). There are 18 for borrower guarantees and 8 for the optional loss of employment guarantee. Among these criteria, the lending institution is entitled to demand 11 on DC, PTIA, ITT, IPT and IPP guarantees. And in the event that he demands the loss of employment guarantee (PE), he can demand equivalence on 4 criteria.
Several shooting windows for the borrower
The required criteria must appear on the standardized information sheet (FSI), a document that can be used by the borrower to bring competition into play. The insurer who wishes to make a contract proposal will then only have to match the criteria required. This can be done at the time of signing the loan contract, but also at any time during the twelve months that follow as well as on each anniversary date of the mortgage.