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Health insurance: some change in termination

The government bill to enable policyholders to terminate their top-up health policy after the first anniversary date, at no charge and at any time, was adopted by the National Assembly (Lower House of the French Parliament) on 27 March 2019. It will be implemented by 1st December 2020, at the latest. 

Why introduce such a law?

Previously, top-up health policies were renewed automatically. They could only be cancelled on each annual policy expiry date. That is why the policy renewal notice must mention the termination deadline pursuant to the termination terms specified in the policy. The notice period is generally two months before the anniversary date of the policy.

In response to the “yellow jackets” movement and the protests relating to purchasing power, the Government has introduced the option to terminate a personal (health and personal risk) insurance policy at any time during the year, after the policy has been in force for one year (including for collective policies that companies take out for their employees).

Mixed opinions

This measure, which already exists for automobile and home insurance, has been championed by consumer associations (including UFC Que Choisir), which consider that by making it easier to change policies, the termination of top-up health insurance at no cost and at any time during the policy should enable policyholders to use competition between insurers to their advantage and therefore obtain better prices.

However, several members of the insurance profession and provident sector have spoken out against this draft reform bill. According to the Technical Centre for Provident Institutions (CTIP) and the social partners responsible for managing provident institutions, this reform – imposed without any consultation or impact assessment – is inappropriate, potentially risky and contradicts the desire to promote purchasing power. They consider that the infra-annual termination option for personal insurance policies could have adverse effects on purchasing power since a higher turnover of policies could lead to an increase in management charges and thereby impact the prices.

In addition, according to La Mutualité Française, this measure may only benefit the most knowledgeable and privileged customers who would gain the most from frequently changing their top-up health policies, and it would probably be less beneficial to elderly people and the most vulnerable consumers. 

 

Sources: Les Echos 19/01/2019, 28/01/2019 and 28/03/2019 - Centre technique des institutions de prévoyance (CTIP) – La Mutualité Française

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