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The banks want to repeal the law on annual cancellation of the insurance borrower. They appealed to the Constitutional Council last October 11, which had three months to consider this request.

Loan Insurance Act, what is it now?

We will know Friday what the Constitutional Council has decided on the annual termination of the insurance borrower. This came into effect on January 1st. Depending on the decision, the consequences for the consumer are significant. The banks want to repeal this law that would make them lose a lot of money. They seized the constitutional council on October 11th. The Council had three months to consider this request.

Since January 1, 2018, a person who applies for or has subscribed to a mortgage loan may change the loan insurance contract every year on the anniversary date of his subscription (date of signature of the contract) if he is offered a higher rate. down elsewhere.

Arguments for and against

The banks have appealed to the Constitutional Council to cancel the amendment stating “a risk of demutualization”. The insurance-borrower is a group contract that protects everyone despite different profiles. Annual termination would, therefore, allow stronger customers to access a less expensive individual contract, leaving the “group” contracts to the weakest. The costs would then increase, reducing the opportunities for the most fragile to borrow for their real estate purchase. Alternative insurers, bancassurance, brokers, online banks and consumer associations speak for themselves of a “banking oligopoly that hinders competition”.

If the Constitutional Council does not repeat the law

If the Council declares that the law is in conformity with the constitution, the text remains in force, applies and all jurisdictions must apply it. No way to derogate for banks! You can then compete and save money. You must start building your file two to three months before the anniversary date of the contract. We must look for offers that must be equivalent to those of the initial contract.

Once the establishment and offer found, you will then have to write a registered letter to your bank two months before the anniversary date of the contract to inform him of your decision to terminate your credit insurance. From the reception of the mail, the banking organization has 10 days to study your request and make a decision. If it accepts, an amendment to the contract will be established free of charge. If she refuses the request of the borrower, she will have to justify in writing this motivation. The rider fees in the event of a change of insurance are prohibited by the Hamon law, on pain of a fine of 3,000 euros.

If the Constitutional Council repeals the law on loan insurance

If the Council declares that the law does not conform to the constitution, the text is repealed immediately. It is no longer valid and applicable. If the legislator (deputies or senators) absolutely wants this type of law to pass, it is necessary to represent another text in this sense before the assemblies. And so wait a few months before its final adoption and a possible passage before the Constitutional Council. It will be necessary to be patient.