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The termination of an insurance contract: a fresh air within formalism
Any salesperson knows it: once the prospect has made his decision, any practical difficulty, even minor, must be eliminated on the future customer’s journey, otherwise, he will be discouraged and lost. Keeping your client is the same exercise… terminating your insurance contract … Changing of an insurance company … This is often like a New Year’s resolution. The practical difficulty of changing (and therefore terminating) is not the slightest obstacle to the making of this move. Market players (in this case insurers) know this too. The legislator has (vaguely) realized this.
On the road to a more fluid economy, a paving stone has recently been laid.
Under Article L. 113-12 of the French Insurance Code, the duration of an insurance contract and the conditions for its termination are set by the policy. Before December 1, 2020, the insured had the right to terminate the contract after the expiration of a one-year delay by sending a registered letter to the insurer at least two months before the due date.
Since December 1, 2020, the legislator has modified the conditions for terminating an insurance contract: termination can now be carried out by any means, as long as it is “lasting: or has been provided for by the contract. This is a very material improvement, but also significant for the insured, who can now terminate their contract more freely.
The law n °2019-733 of July 14, 2019, at the origin of this modification, has purely and simply eliminated the obligation to terminate an insurance contract by a registered letter. The reform concerns all damage insurance contracts, such as home, automobile, legal protection, or even supplementary health insurances. This provision applies to contracts underwritten by individuals as well as those underwritten by professionals, whether they are physical or legal persons. However, it is not applicable for savings, death insurance and provident / life contracts.
Regarding the practical supports for the termination, in accordance with article 6 of this law, article L113-14 of the Insurance Code has been amended so that the request for termination by the insured can be notified to the insurer in five ways:
- Either by a letter or any other durable support, such as emails.
- Either by a declaration made to the headquarters or to the representative of the insurer.
- By extrajudicial act,
- Either by the same remote communication mode as the one offered to sign the contract,
- Or by any other mean provided for in the contract
If the gain in flexibility for the insured is not negligible, requests notified by telephone, SMS, or even via a social network remain inadmissible.
Article L121-16 3° of the Consumer Code defines a “durable” support as “any instrument allowing the consumer or professional to store information addressed to him personally in order to be able to refer to it later for a period of time suitable for the purposes for which the information is intended and which allows the identical reproduction of the stored information”. This definition, which comes from several European directives (2002/65/CE, 2002/92/CE, 2008/48/CE, 2011/83/CE), includes emails, memory cards, computer hard drives, DVD-Roms, DC-Roms or even USB keys.
Regarding the termination procedure, if the rules supporting the termination request are amended by the law of July 2019, the admissibility rules do not change. We published a practical summary of these dates and delays below.
TERMINATION OF AN INSURANCE CONTRACT: SUMMARY OF DELAYS TO TAKE ACTIONS.
The legislator has also placed the burden of the “administrative” work on the insurer and therefore of proof: upon receipt of the client’s request, the insurer or the broker must necessarily acknowledge receipt, by mail or by email (article L113-14). This confirmation must be made even in the event that the request is not valid. The insured must then be informed of the action taken on his request. In the event of a refusal, the grounds for inadmissibility of the request must be established.
The legislation in force is therefore now more favorable to the insured, who have new flexibility as to the choice of the termination support, without the admissibility rules being changed. Step by step, the flexibility is spreading to the world of insurance, to the benefit of the insured.