The borrower insurance of a mortgage can represent up to 40% of its total cost . However, banks’ proposals can be up to 4 times higher than those of specialized organizations in the field. By opting for the insurance delegation, it is thus possible to reduce its cost up to 75%, and thanks to the FSI (Standardized Information Sheet), the comparison of offers becomes easy ! A free choice offered to the borrower, which can be worn by a broker to impose it more easily on the lender.
What is the role and content of the ISP?
Since 1 October 2015, banks must accompany their loan offer of a Standardized Information Sheet (ISP). A document listing and specifying the minimum guarantees retained by the bank, among the 26 criteria defined by the CCSF (Advisory Committee of the Financial Sector), the cost estimate of the insurance solution and the mention concerning the possibility to choose freely its loan insurer.
Each institution must select up to 15 standardized guarantees – 11 under general guarantees and 4 more specific, covering the risk of job loss. This document also specifies the Annual Effective Rate of Insurance (TAEA), expressing the cost of insurance per month, per quarter, per year and over the entire duration of the loan.
Thus formalized, it facilitates the game of competition, through a better comparison of insurance offers.
Does the ISP allow the delegation of insurance?
Since the Lagarde Act of 2010 , borrowers can take out insurance with another organization than the one selected for credit. Legislation difficult to apply in the field. With the Hamon law , it is possible for them to change their insurance one year after the signature.
But to take advantage of this freedom, it is absolutely necessary to find an insurance contract with “at least equivalent guarantees” . An equivalence remained very “fuzzy” until the arrival of the ISF, a Decree No. 2015-460 of 20 April 2016 made mandatory to all lenders. It formalizes the relationship between the lender and the borrower and lists the guarantees required by the bank in loan insurance.
This Standardized Information Sheet completes the delegation mechanism.
Indeed, thanks to it, the discretion of the banks is framed and their refusal of delegation must be motivated.
In theory, this system allows the comparison of insurance coverage between group insurance offered by the bank and delegated insurance in the best conditions. And thus allow each of the borrowers to be able to benefit from a real free choice … in theory …
How to find an insurance offer equivalent to that offered by the banks?
… In practice, these legal provisions supposed to remove the last barriers of the delegation of insurance sadly encounter the reluctance of many banks who wish to maintain this market.
Today, the best “weapon” to present to banks remains the use of a credit broker: a professional able to meet the bank’s insurance requirements.
In order to facilitate the exchanges between the bank and the delegated insurance, a second sheet was introduced by decree n ° 2015-494 of April 29th, 2015. It makes it possible to frame the practices of the banks and to find an equivalent offer .
This “personalized” form specifies various information concerning the loan in particular and the borrowed capital, the duration of the loan, the interest rate applied, the depreciation schedule but also the criteria used for the equivalence of the level of guarantee.
It is given to the borrower who must transfer it to his insurer or his broker. On the delegated insurance proposal is notified the bank’s guarantee requirements, the sum insured by guarantee and the cost of each.
The bank has 10 days to analyze the delegated insurance proposal and formulate a response .
Expert in his field, the credit broker works every loan application and insurance, depending on the situation of the borrower and the requirements of banks.
He knows how to establish the level of guarantee required and draw up an equivalent insurance proposal that meets your needs.
Savings can be several thousand euros on the entire credit
Moreover, with a delegation of insurance, savings can be several thousand euros on the entire credit …
Finally, since January 17, 2017, the path of the annual contract termination of the borrower’s possible for lending rates established as of 1 March 2017. Regarding the current contracts, this right of termination or substitution right is force on 1 January 2018!
In these favorable conditions for the delegation of insurance, it would be a shame not to take advantage of the competence of a free broker!