Termination of insurance contracts will be easier

Insurers will have to comply with the new rules from July 1, 2023.

Termination and simplicity have never gone hand in hand. Alerted by the insurance mediator to the confusion and incomprehension in a number of contract termination procedures, the Financial Sector Advisory Committee (CCSF) took up the issue by creating a working group specially devoted to this thematic. After five meetings held between November 2021 and April 2022, the various members of the committee, made up of bankers, insurers, but also consumers and craftsmen, have reached an agreement in order to harmonize the contract termination procedures. The latter will be implemented from July 1, 2023, and constitutes, according to the CCSF, a “very significant progress for consumers“.

Cancel anytime after one year

The various consultation sequences notably enabled the committee to agree on the reform of the conditions for the termination of insurance contracts, for which the overhaul was adopted unanimously. The committee proposed thatall individual insurance contracts covering insured natural persons outside their professional activities, can be canceled at any time after the first year of subscription», on the basis of a freeze in the first year. This legislation is already in place in multi-risk home insurance, automobile or health insurance contracts and the committee has therefore decided to extend it to other types of contract.

Insurers will therefore have to strive to implement this new termination method with a view to application on July 1, 2023. It should also be noted that certain types of specific contracts are not subject to this harmonization: provident insurance contracts (disability/ incapacity/death) and dependency, seasonal contracts (school contracts, hunting contracts), as well as contracts covering yachting and motorized and non-motorized personal transport vehicles.

Simplify processes and protect the insured

The actors of the CCSF also acted on the information obligations imposed by the Chatel law. Since 2005, this has required insurers to notify their customers in writing of the upcoming renewal of their contract, so that they can choose to renew or terminate it. This obligation was subject to sometimes confusing deadlines, which is why the committee agreed on the removal of these information obligations for all contracts that can be canceled at any time after the first year of subscription, in order to “simplify the legislation and thus the information that must be given to policyholders“. From now on, the insurer will simply have to inform his client each year of the annual amount of the premiums and remind him that his contract can be terminated at any time.

Finally, the committee chose to highlight the specific difficulties linked to affinity insurance contracts, ie extensions of guarantees generally covering products in the event of breakdown or breakage. In question, the fact that certain contracts can be taken out without the insured being sufficiently informed, which can in fact lead to mishaps, as was the case with the insurer Indexia.

Under the Hamon law promulgated in 2014, the insured had up to 14 days to exercise his right to waive the contract from the date of subscription. The committee unanimously decided to extend this period to 30 days and to “launch work on strengthening policyholder information on these contracts from autumn 2022“. The CCSF also opted to lift the clause restricting the waiver of having equivalent insurance. In fact, the insured will have 30 days to waive his contract without the risk of being subscribed to insurance without his knowledge.

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