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what really changes for FSI

Borrower insurance: what’s really changing for FSI

The standardized information sheet (FSI) gives the borrower all the keys to comparing insurance policies. An essential document when establishing property financing. This has just been strengthened under the Lemoine Act, which aims to promote fairer and more transparent access to the mortgage insurance market.

What is the standardized information sheet for borrowers’ insurance?

The standardized information sheet (or FSI) is an essential document when taking out a mortgage loan. Since 2015, financial institutions are obliged to provide certain information to the borrower as part of an insurance policy that accompanies a credit offer. This document provides information about the rights in relation to loan insurance. In addition, FSI must contain the bank’s personal list of requirements, up to a maximum of 11. To define it, banks use the 18 legal equivalence criteria set by the Financial Sector Advisory Committee (CCSF). The FSI is a mandatory system that provides the borrower with an interpretive grid that summarizes the guarantees and support criteria as well as the bank’s requirements. FSI thus facilitates the comparison of insurance contracts and competition.

Mentions already mandatory

As a reminder, FSI must necessarily include statements specifying the organization’s requirements in relation to loan insurance:

  • the different guarantees offered in the borrower’s insurance contract and their precise characteristics with the guarantees for death, total and irreversible loss of autonomy (PTIA), total permanent disability (IPT), permanent partial disability (IPP), total incapacity for work (ITT) and job loss ( PE);
  • the minimum level of coverage required for each of the guarantees in the loan insurance agreement;
  • the minimum quota imposed;
  • an estimate of the total cost of the insurance over the entire term of the loan with the applied effective annual insurance rate (TAEA) and the amount of the monthly or annual contribution
  • right to take out loan insurance with the insurance company of your choice with delegation of insurance.

New mentions to bring to FSI

With the new Lemoine Act, which aims for fairer, simpler and more transparent access to the loan insurance market, new elements must be integrated into the FSI. Thus, according to the provisions of this law of 28 February 2022, an executive order published in May updated the contents of the FSI. From now on, the standardized information sheet must inform the borrower in particular about:

  • the total cost of loan insurance over 8 years;
  • the ability to terminate the borrower insurance agreement at any time if the level of guarantee is equivalent;
  • the concept of disability;
  • removal of the medical questionnaire if the outstanding insurance amount does not exceed €200,000 (all loans combined) and if the last repayment date falls before the insured’s 60th birthday.

When looking for financing to acquire a property, you should know that you should not rely solely on the interest rate. There must be vigilance with regard to loan insurance. And with good reason, this alone represents almost a third of the total cost of credit. The standardized information sheet makes it easier to compare insurance offers. To ease the process, it is still recommended to use an insurance broker. Thanks to his network and his knowledge, this expert verifies whether the delegation of insurance is an interesting operation.

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