Mortgage Insurance: Who Really Benefited from the Annual Cancellation Option?

For the first time, a law appears to be having a real impact on both insurance brokers and policyholders.

MetLife France, a specialist in individual life and health insurance and a long-standing player in credit insurance in France for the past 50 years, presents the results of its Loan Insurance Barometer, which examines the impact of mid-year cancellations on the loan insurance market one year after the Lemoine Law took effect.

Among distributors, 51% have seen an increase in contract cancellations. 56% of distributors have implemented sales initiatives to boost this activity, primarily among their existing customer base.

The primary obstacle identified appears to be the resistance of banks to customer cancellations, at 80 percent, followed by complex procedures (46 percent). Hence the value of establishing an alternative process that handles all steps from start to finish on behalf of the insured, as well as streamlined medical procedures.

In conclusion, it is worth noting the increase in the share of policy cancellations, which now accounts for 53% of distributors’ loan insurance business, compared with 47% in 2022.

However, this average masks some disparities: For 29% of them, the termination of their loan insurance accounts for more than 75%.

As for the latter, they have implemented more sales initiatives than the others (64% vs. 56%) and are therefore reaping the rewards of their efforts.

What about the impact of the Lemoine Act on duration?

Distributors remain optimistic about the future: 73% believe that insurance substitution will increase, on average, over the next 2.2 years. (In 2022, 71% of intermediaries were already expressing optimism on this point thanks to the Lemoine Act.)
31% believe the trend will accelerate in the short term—within just 10 to 12 months—while 39% expect this growth to take slightly longer: more than 18 months or 2 years. The main reason cited for this growth is the backlog of loans to be refinanced, cited by 62% of respondents.

From the perspective of policyholders, 57% of brokers have observed a change in customer behavior since the Lemoine Act took effect. This is particularly evident in the increased number of requests for information, quotes, and direct inquiries regarding switching loan insurance policies.

The average age of policyholders wishing to make this change is between 35 and 45; they account for 68% of customers. 94% of policyholders who cancel their policies have a policy value of 400,000 euros or less.

56% of policyholders cancel the insurance policy they purchased through their bank within the first year of coverage (and 80% within the first two years).
 

The trend of people taking out insurance through their bank in order to obtain a loan and then quickly switching providers afterward thus appears to be holding true.