As we mentioned in our post on March 17, the debtor insurance market is impacted by the new so-called Lemoine law: which came into force on March 1Ahem June 2022, offers the possibility of canceling your borrower’s insurance at any time and contracting without a medical questionnaire under certain conditions. Through this law, the legislator’s ambition is to boost a market with high margins and very dominated by insurance banks (> 85% market share in 2021).
Like the Hamon laws (infraannual termination in Auto and MRH) and more recently the RIA (infraannual termination in Health), the Lemoine law questions insurers. In particular:
- Will the market really move? Will it experience a jolt and finally stabilize?
- Will insurers capture bad risks? What will be the impact on your margins and ultimately premiums for consumers?
- Who will be the first players to position themselves?
Will policyholders rush to seize the opportunity?
On the part of the insured in the first place, the Individual Well-being study carried out by VERTONE in 2021 taught us that 50% of those surveyed would be willing to change their insurer for a premium savings of €20 per month. A rate benchmark carried out by VERTONE in April 2022 on more than 70 profiles client also shows us that, based on current rates, the savings achieved by signing a contract with an alternative insurer allows average savings of €25 per month (vs. collective agreement of a bank-insurer) and €48 for less greedy alternative insurers. Therefore, in the current state of the market, the interest in the client is confirmed. Many insurers have understood this and are already making this argument. In this field, Luko stands out for a proactive commercial approach and the use of Instagram for its associated communication.
The Individual Well-being study carried out by VERTONE in 2021 also revealed the lack of knowledge of the insured and therefore the need for education by insurers:
In this pedagogical component, as well as in the customer journey component, the benchmark prepared by VERTONE in April 2022 with a panel of alternative insurers confirms that while some insurers have clearly integrated these elements into their strategies, others have obvious areas for improvement, particularly in their simulators (ergonomics, number of data needed to access a 1Ahem interest rates, promotion of savings, etc.) or on the modalities of taking charge by the insurer of the process of changing the debtor’s insurance.
In conclusion, the conditions aimed at promoting the change of insurer by the client seem to be met at least partially to date (savings stand out, simplification of the cancellation/subscription process, proactive communication from certain insurers, etc.).
What about insurers, whether they are market-leading bank-insurers or alternative insurers?
If some insurers start to activate with marketing campaigns, most remain in their reserves.
The timing imposed by the legislator explains, at least in part, the waiting attitude of certain players; in fact, the Lemoine Law was adopted on February 17 for rapid implementation, on June 1, 2022 for new contracts, and on June 1Ahem September of contracts in the pipeline, leaving little time for everyone to define their strategies and prepare for implementation.
We must also consider that the starting point is not the same. the bankers they have large, high-quality client portfolios in their group contracts. The risk taking associated with the elimination under certain conditions of the medical questionnaire, therefore, will have a measured impact on the overall quality of the portfolio and its margins in the end. Either some initiatives have already been taken (Crédit Mutuel by abolishing medical procedures for loyal customers, CNP and La Banque Postale by freezing their standard rates), we have not no significant movement is observed at this stage on the side of the bank-insurer. We have been able Also note, when approaching some bank-insurers, that the latter were already ready to offer significant reductions to clients they wish to retain.
Regarding alternative insurers, two situations should be examined:
- the alternative insurers have a broad portfolio of clients with a pooling effect to absorb certain levels of risk;
- the alternative insurers with small portfolios for which the occurrence of a few large claims may be enough to wipe out the margin and more, or who have built their development on strong risk selection. For the latter, risk apprehension is a key issue for which the need for reinsurance is strong.
Certains actuaires que nous avons sollicités nous partagent que sur des sujets similaires, les populations les plus dynamiques (les plus jeunes et sans medical problem a priori) sont cells que seront les plus inclines à changer d’assureur, ce qui d’emblée pourrait limiter the risk. Will this be enough to reassure?
A solution to integrate future risk will also be to transfer it to the rate. This is the position that certain reinsurers already adopt towards their insurance partners.
Pending a clearer view of the price impacts of the Lemoine law, we are convinced that alternative insurers have a card to play by requesting their client portfolios now. Indeed, the volume of customers who maintain their debtor’s insurance with a bank-insurer and who may allow themselves to be seduced by the savings that the change of contract entails is significant. Additionally, by working across their portfolio, alternative insurers ensure they have a minimum of customer data to target lower-risk customers while limiting acquisition costs.
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