Two and a half years after the Lemoine law’s introduction aimed at enhancing mortgage insurance accessibility, only 4% of borrowers have switched their policies. A recent survey reveals that 70% of industry professionals believe market activity has remained stable, with perceptions of banks improving as they streamline processes. However, awareness among borrowers about potential savings from changing insurance is lacking, with challenges remaining on both borrower and bank sides. Active comparison of insurance offers is encouraged for better decision-making.
The Lemoine Law: A Mixed Impact on Mortgage Insurance
Two and a half years after the implementation of the Lemoine law, it is evident that its intended overhaul of the mortgage insurance landscape has not fully materialized. This legislation, enacted in February 2022, aimed to make mortgage insurance more accessible and affordable for borrowers, enabling them to switch their mortgage insurance at any time without incurring fees. Initially effective for new loans from June 1, 2022, it extended to existing loans by September 1, 2022.
Despite the law’s promise, a report released in January 2024 by the Financial Sector Advisory Committee (CCSF) revealed that only 4% of borrowers have opted to change their mortgage insurance since the law took effect. Furthermore, while the market share of bank-distributed contracts has slightly declined, it remains relatively stable, dropping from 80.3% at the end of 2021 to 79.6% by May 2023.
Awareness and Perceptions Among Borrowers
As we near the end of 2024, trends suggest that the situation has not significantly improved. An annual barometer conducted by MetLife and CSA, which surveyed 200 professionals in insurance and credit brokerage, indicates that 70% of respondents feel market activity has remained steady. In contrast, only 24% reported an increase in activity, down from 57% the previous year.
Émilie Ruben, a representative from the broker Sécurimut, asserts that while there is a steady influx of quote requests for mortgage insurance changes, the anticipated impact of the Lemoine law has not been realized. She notes that since the CCSF’s January 2024 study, reliable statistics have been scarce, yet the overall sentiment remains that the law’s influence has been muted.
Interestingly, the perception of banks has shifted among professionals surveyed. A growing number, now 41%, believe that banks are no longer employing defensive strategies to retain clients, a sentiment supported by Ruben, who emphasizes that processes have become more streamlined and efficient. However, the challenge lies with borrowers themselves; changing mortgage insurance is still not a common practice for many, highlighting the need for enhanced communication and education on potential savings.
According to Christophe Boiché, director of insurance at Meilleurtaux and CCSF member, only about 5% of borrowers have actively sought to change their mortgage insurance. He notes that borrowers tend to consider changes primarily within the first two years of securing a loan, after which the topic often fades from their minds. Thus, raising awareness regarding the savings available through switching insurance remains crucial.
However, not all industry experts agree with this assessment. Apcade, a collective formed to promote competition in mortgage insurance, conducted a study revealing that 55% of banks reportedly delay the process of changing insurance, citing administrative issues and requesting excessive documentation. This indicates that both banks and borrowers have room for improvement in navigating the mortgage insurance landscape.
To make informed decisions, borrowers are encouraged to compare various loan insurance offers actively.