On Wednesday, November 11, the Comité Consultatif du Secteur Financier (CCSF) published a report on borrower's insurance, taken out by individuals when they take out a mortgage. While the opening up of the market to competition has benefited consumers, there are still many complaints about compensation.
Loan insurance: progress in opening up to competition
The CCSF report, commissioned by Bruno Le Maire, the French Minister of the Economy, Finance and Economic Recovery, highlights the progress made in opening up to competition.
"Consumers are now the main beneficiaries, with reduced rates and enhanced guarantees," the report points out.
In concrete terms, the share of group contracts, i.e. contracts offered by lending banks, is declining, while the share of alternative contracts, offered by other banks or insurance delegations, is on the rise and now accounts for up to 40% of contracts. However, the market is still dominated by the banking networks, some of which have developed their own alternative contracts.
As a result, consumers benefit from significant price reductions, ranging from 10% to 40%, with guarantees that are sometimes superior. However, the report stresses that the price cuts must be put into perspective, as they correspond to "contrasting realities: alternative contracts are very often highly segmented, and their average price curves - from under €70 to over €1,000 a year - correspond to risk-taking age by age, depending on socio-professional category or smoking/non-smoking status". Group contracts, meanwhile, continue to offer "fairly concentrated average rates".
Numerous complaints about compensation refusals
The report does mention one fly in the ointment: 60% of customer complaints lodged with consumer associations and ombudsmen concern refusals to pay compensation, "particularly for work incapacity and disability risks".
These claims therefore highlight a lack of information on the conditions of cover when the contract is signed, or insufficient guarantees.
The report also points out that "pricing methods can be difficult for consumers to understand, making it difficult to compare rates". Indeed, "several types of premiums are offered on the market" and "the consequences in terms of charges for the customer are very different depending on whether he keeps the loan until the end or repays it early".
In the coming year, the Comité consultatif du secteur financier will be paying particular attention to these two points.