Lagarde law
A 2010 law that established the principle of insurance delegation: a bank cannot impose its own contract once an external policy offers equivalent cover. The first milestone toward opening the market, it laid the foundations later widened by the Hamon, Bourquin and Lemoine laws.
Key points
- Founding 2010 law establishing the right to borrower insurance delegation.
- The bank cannot refuse an external policy offering at least equivalent cover.
- Prohibits any change to loan terms when a delegation is accepted.
- The first legislative milestone; subsequently extended by the Hamon, Bourquin, and Lemoine laws.
Frequently asked questions
What did the Lagarde law concretely change for borrowers in 2010?
Before the Lagarde law, banks frequently made loan approval conditional on subscribing to their own group insurance, which was captive and often uncompetitive. The law ended this practice by establishing that the borrower can freely choose their insurer as long as the external policy's cover is at least equivalent to the bank's. This first piece of legislation opened a crack in what had been a near-monopolistic market.
Why was the Lagarde law not sufficient to liberalize the market on its own?
While the Lagarde law established the delegation principle, it only allowed this choice at the initial loan subscription, leaving borrowers captive once the contract was signed. Moreover, banks had wide latitude to refuse a delegation by arguing non-equivalence of cover, without transparency obligations on their criteria. These gaps made subsequent laws necessary to expand portability rights and more strictly govern the comparison process.
What is the real scope of the prohibition on changing loan terms when delegation is accepted?
The Lagarde law prohibits the bank from raising the loan rate, changing its terms (processing fees, term, amount), or imposing commercial conditions in exchange for accepting a delegation. This protection is essential because, without it, banks could have made delegation economically neutral by raising the cost of credit. In practice, some banks attempted workarounds that led authorities to strengthen sanctions.
In practice
In 2011, a borrower presents their bank with a delegation insurance policy offering equivalent death/total disability/temporary disability cover at a 40% lower premium. Thanks to the Lagarde law, the bank must accept it and has no right to raise the loan rate in return.
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Official sources
- Borrower insurance for a mortgage · Service-Public.gouv.fr
- Law of 28 February 2022 (Lemoine Act) · Vie-publique.fr