Last February 3, parliamentarians voted in favor of the Lemoine law proposal, which eliminates the health questionnaire for some borrowers and offers the possibility for any policyholder to terminate their borrower insurance contract at any time and free of charge.. One of the French leaders in real estate loan brokerage, The Financing Center, wonders about the consequences of this decision : the end of the health questionnaire will automatically lead to additional risk for insurance companies. Who will pay for this risk ?
A look back at a complete change in current insurance logic. In November 2021, Crédit Mutuel created a surprise by announcing the end of the medical questionnaire for taking out borrower insurance in the context of a real estate loan, for certain customers and under certain conditions. With this unprecedented change in the field of borrower insurance, Crédit Mutuel wanted to put an end to medical formalities sometimes considered unequal between individuals who are considered at risk and those who are not.. The end of this questionnaire concerned 91,000 customers of the Crédit Mutuel bank, and could, eventually, reach one in two customers. This announcement did not remain without consequences : last February 3, parliamentarians meeting in a joint committee voted in favor of the Lemoine bill, which notably includes the removal of the health questionnaire for some borrowers, whatever their bank. From now on, for a loan of less than 200,000 euros and when the repayment deadline for the loan taken out is before the policyholder's sixtieth birthday, the latter will no longer need to complete a health questionnaire.
The Lemoine law and risk pooling
The removal of the health questionnaire demonstrates the shift from an insurance logic of individualization to a logic of risk pooling. The principle of risk pooling consists of distributing the cost of causing a claim between the members of a group potentially subject to the same risk.. Concretely, each insured person pays a contribution or insurance premium to be able to protect themselves financially against risks, events, damages that may affect his property or his responsibilities. Premiums paid, added to those of other policyholders, are used to settle losses that occur to only a few. Make sure, it is therefore accepting the principle of paying for others knowing that perhaps one day, it will be for yourself. In the case of the end of the health questionnaire, risk pooling means standardizing prices for all customers who no longer need to complete a health questionnaire. A healthy person will then pay the same insurance as a person with health problems.
Young people hampered in their access to property ?
This pooling is therefore not profitable for all types of customers. : statistically, we observe that borrowers in the lowest age group (25-35 ans)are less at risk of health problems. These same customers, often first-time buyers, are also generally those who enjoy the lowest standard of living, and will therefore be the most impacted by an increase in insurance prices. Second-time buyers, from 35 to 50 years old, will pay, as far as they are concerned, the same insurance price as first-time buyers, even if their standard of living is generally higher and their risk of contracting a health problem is higher. " One more time, young people, often first-time buyers, are hampered in their access to property. The pooling of risks will be to the detriment of young people, in good health, seeking access to property. Eventually, it’s a double punishment for them : already often paid less due to their entry into working life, they will have to pay more expensive insurance despite their good health ! Conversely, an older person, who earns a better living, having had a health accident but with a standard of living that allows them to pay a little higher insurance, will be doubly advantaged ! “ summarizes Sylvain Lefèvre, president of La Centrale de Financement. Furthermore, the increase in prices due to the pooling of risks, would hinder the attractiveness of the prices of alternative contracts compared to bank contracts, reducing the competitiveness of insurance.
Solutions considered by insurers
This law also raises many questions for insurers, who will have to make decisions accordingly. To avoid excessively reckless risk-taking which could lead insurance companies to risk bankruptcy, it must be considered probable that some will choose to withdraw from the market for loans of less than 200,000 euros. We can also expect them to put in place a refusal clause to exclude a client's liabilities from the insurance., which appears difficult to do since everything will now be based on declarative. Many practical questions remain unanswered regarding the implementation of the Lemoine law. It is not possible to know how the real estate market will react in the long term., but it is necessary to take into account these potential negative effects. The Lemoine bill also requires public authorities to submit a report on the removal of the health questionnaire., within two years.
On this topic, we also refer our readers to the opposite point of view – in favor of the measure – from the VousFinancer credit brokerage network, published in Leader Réunion n° 211, mars 2022.
