Real Estate Credit: Who will really benefit from the end of the health survey?

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Posted on April 15, 2022 at 4:00 pm

What if certain provisions of the Remoin Act, which had been waiting to inject competition into the bank-controlled creditor insurance market, turned out to be dangerous to healthy first-time buyers? In any case, this is the expectation of Cyrille CharterKastler, the founder of the site that prescribes the Good Value for Money (GVfM) for insurance policies.

Indeed, in addition to the possibility of terminating the borrower’s insurance at any time, this text states that it will facilitate the acquisition of mortgages for the original patient or those suffering from a medical condition stigmatized by the insurance company. Includes other means of purpose. In particular, the law shortens the right to be forgotten period to five years for all people with cancer.

End of health questionnaire

However, the provisions under the GVfM warning relate to the end of the medical questionnaire from 1.er In June, mortgages less than € 200,000 per loan (€ 400,000 for couples) will be settled before the borrower turns 60.

“I think we’ll witness a potential market explosion for people at high risk of getting interesting premiums, with more expensive pricing for people borrowing up to € 200,000 and increased price segmentation beyond that.” Predicts Cyril Chartier-Castler. Insurance broker Magnolia shares an opinion: “All loans affected by the abolition of the health survey are estimated to be raised during June,” explains its spokesman Astrid Cousin.

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To understand their concerns, we must return to the purpose of the health survey. It aims to keep track of the borrower’s medical history in order to assess the risk of premature death, unemployment, or nullifying the illness. If the insurer considers these risks too likely or annoying, it may refuse to cover the borrower, impose a cover exclusion, or apply additional premiums. ..

Favorable bank

Insurance companies are blindly sailing because they are prohibited from requesting medical information from their customers. Enough to encourage them to increase their premiums to secure a loan without a medical survey. Therefore, GVfM could increase the cost of insurance for a borrower of a risk-free person (young, non-smoker, no difficult or dangerous work) by 20% if the borrower is less than € 200,000. I presume there is. A similar quote on the Magnolia Insurance Comparator side. Consulting firm Actélior is considering raising insurance premiums by 3-15%. The abolition of medical surveys affects almost half of loans.

However, in reality, the pricing of a bank’s insurance subsidiary may be less affected than the pricing of an independent insurance company. Banks have close customer relationships and a large customer portfolio, so they can conduct macro-surveys on risk even after the health survey is complete.

“Banks have a wealth of statistics on loan insurance that alternative insurers have little or no access to,” emphasizes Cyrille Charter-Kastler. They may establish a risk profile depending on the client’s occupation, age, smoking status, and even place of residence, allowing them to reach discriminatory pricing. This reform, aimed at reducing the bank’s market share, will not really change anything, “he explains.

On the other hand, a Good Value for Money spokesperson is more skeptical when it comes to using bank account data to improve borrower insurance scores, as certain establishments do to make loans. If there is data, deviations, it’s not an overall policy, but an isolated act, “he explains. To Echoes..

In addition, the increase in borrower insurance costs can be curbed by usury, at least initially. Usury remains low despite recent rises in real estate prices. This wear rate, which banks cannot exceed, takes into account the borrower’s insurance. Therefore, raising tariffs can disrupt a bank’s annual loan production target.

Workaround

On the healthy borrower side, these experts expect to develop avoidance strategies to reduce insurance costs. These strategies could pass a request for funding of just over € 200,000 to submit to a medical questionnaire. This limit applies to the amount of the insured, so as a couple, the percentage of the loan that the insurer must cover if insured by one of the co-borrowers exceeds 200,000 euros. You can also play it. Insured.

“The obligation of the broker to advise applies. Magnolia displays the price with an allocation of 50-50. But in the end, it may be cheaper to increase the quota and lower the total cost of the borrower’s insurance. There is sex, “reports Astrid Cousin. Instead of insuring each head up to € 150,000 (50-50 quotas), by forcing the line with a couple loan of € 300,000, you can switch to a quota of 75-75 to cover up to € 225,000. May be. For each borrower.

On the other hand, the lack of low-value loan medical surveys may encourage people at risk to adapt their arrangements. “People at low risk will be interested in splitting the loan into tranches of less than € 200,000 and pooling the risk with the right profile,” Cyrille Charter-Kastler predicts.