Understanding the Lemoine Law and its Impact on Mortgage Insurance

A Brief Overview of the Lemoine Law

In 2022, the Lemoine Law came into effect, allowing borrowers to change their mortgage insurance at any time, providing a greater level of flexibility. However, this new legislation has not equally benefited all demographics within the market. This article will delve into the details of the Lemoine Law, its impact on various segments of the market, and how it has affected medical selection for policyholders.

The Lemoine Law Mainly Benefits Wealthier Profiles

According to a recent report from the financial advisory committee, the market share of external alternative contracts has increased from 15.3% to 16.1% between December 31st, 2021, and May 31st, 2023. While this serves as evidence that the Lemoine Law has certainly had an impact on the marketplace, further analysis reveals that it mainly benefits wealthier profiles.

  • The majority of credit subscribers have an insured amount below €200,000.
  • Only 23% of these contracts qualify for no medical selection.
  • Contracts without medical selection make up only 31% of substitutions.

Redefining Medical Selection with the Lemoine Law

One significant aspect of the Lemoine law is the possibility for the removal of medical selection under certain conditions. Previously, this was a common practice used by insurers to assess applicants’ health status and the potential risk they posed.

However, only 23% of contracts that have an insured amount on their credit operations below €200,000 are eligible for no medical selection. As a result, many credit subscribers are still subjected to the medical selection process despite the Lemoine Law’s intentions to provide greater accessibility and flexibility to borrowers.

The Problem of Rejected Claims and Misunderstandings

A significant issue that has arisen in the wake of the Lemoine Law is the high number of rejected claims by external alternative actors. According to the financial advisory committee report:

  • 50% to 75% of rejected claims were due to incorrect claim declarations, such as insurer errors, claim declared during the waiting period, or exceeding the maximum coverage age.
  • This situation highlights a poor understanding of insurance borrower contracts by policyholders or their beneficiaries.
  • Insufficient information from insurers contributes to the misunderstanding.

Improving Insurance Education with Annual Information Updates

In response to the aforementioned issues, insurers will now be obligated to provide annual information updates to clients. This measure aims to improve understanding of insurance borrower contracts among policyholders and reduce the rate of rejected claims.

Moving Forward: The Future of the Lemoine Law and Mortgage Insurance

In conclusion, while the Lemoine Law has certainly introduced some positive changes within the mortgage insurance market, it is clear that not all segments of the market are equally benefiting from these developments. Greater efforts need to be made to ensure that less wealthy profiles have access to the full range of benefits provided by the law.

Furthermore, improving expertise and understanding of insurance borrower contracts must remain a priority for both policyholders and insurers to minimize claim rejections and enhance overall satisfaction within the industry.

As regulatory bodies continue to monitor the effects of the Lemoine Law on the market, it remains crucial for policyholders to stay informed about their rights and options when selecting mortgage insurance.

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