Termination of insurance contracts is made easier

Insurers must comply with the new rules from 1 July 2023.

Termination and simplicity have never gone hand in hand. Alarmed by the insurance broker at the confusion and misunderstanding in some contract termination procedures, the Financial Sector Advisory Committee (CCSF) has addressed the issue by establishing a working group dedicated to this topic. After five meetings between November 2021 and April 2022, the various members of the committee, made up of bankers, insurers, but also consumers and craftsmen, reached an agreement to harmonize the procedures for terminating contracts. The latter will be introduced from 1 July 2023 and, according to the CCSF, constitutes a “very significant progress for consumers

Cancel anytime after one year

In particular, the different sequences of consultations allowed the committee to agree on the reform of insurance contract termination conditions, the revision of which was unanimously approved. The committee suggested that:all individual insurance contracts covering insured natural persons outside their professional activities can be canceled at any time after the first year of registration», based on a freeze in the first year. This legislation is already in place in multi-risk home insurance, car or health insurance contracts and the committee has therefore decided to extend it to other types of contracts.

Insurers will therefore have to strive to introduce this new method of termination with a view to applying on 1 July 2023. It should also be noted that certain types of specific contracts are not covered by this harmonisation: provident insurance contracts (disability/incapacity/death) and dependency, seasonal contracts (school contracts, yacht contracts), as well as contracts relating to sailing and motorized and non-motorized personal transport vehicles.

Simplify processes and protect policyholders

The CCSF actors also acted on the information obligations imposed by the Chatel Act. 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, so the committee agreed to delete these information obligations for all contracts that can be canceled at any time after the first year of subscription, in order to “simplification of legislation and thus the information to be provided to policyholdersFrom now on, the insurer only needs to inform its client annually 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 issues associated with affinity insurance contracts, ie extensions of warranties that generally cover products in the event of defect or breakage. It concerns the fact that certain contracts can be concluded without the insured person being sufficiently informed, which can in fact lead to accidents, as was the case with the insurer Indexia

According to the Hamon law enacted in 2014, the insured had up to 14 days to exercise his right to withdraw from the contract from the date of registration. The committee unanimously decided to extend this period to 30 days and to “start strengthening the information to policyholders about these contracts from the autumn of 2022The CCSF has also chosen to remove the clause limiting the exemption from having an equivalent insurance policy. In fact, the insured will have 30 days to waive his contract without being exposed to the risk subscribed to an insurance policy without his knowledge.