Insurance surcharge
An insurance surcharge is a premium loading applied by the insurer when a borrower's profile presents above-average risk — most commonly due to health conditions, hazardous occupations, or high-risk sports. It reflects the actuarial extra cost the insurer estimates for covering that specific profile.
Key points
- A surcharge may apply to one or more guarantees (death, disability, temporary work incapacity).
- It is expressed as additional rate points or as a percentage of the insured capital.
- Certain elevated health risks benefit from a mediation scheme (the AERAS convention).
- The Lemoine Act eliminated the medical questionnaire for loans below a certain capital and duration threshold.
- An insurance broker may negotiate or circumvent a surcharge by sourcing a more specialized insurer.
Frequently asked questions
How is a borrower-insurance surcharge calculated?
The insurer evaluates the additional risk using medical or professional information provided during underwriting, then increases the base rate by a number of points defined by its internal actuarial tables. The final amount depends on the severity of the identified risk and the loan term.
What can I do if the surcharge I am quoted seems too high?
Several options exist: challenge the decision by providing additional medical documentation, approach another insurer specializing in elevated risks, or activate the AERAS scheme if the surcharge or refusal relates to a serious health condition. A specialist insurance broker can guide these steps and identify the most competitive insurers for the specific risk.
What is the difference between a surcharge and a cover exclusion?
A surcharge means the insurer agrees to cover the risk but at a higher premium to reflect the greater probability of a claim. A cover exclusion means the insurer refuses to cover that specific risk at all, regardless of the premium. A surcharge therefore preserves coverage, whereas an exclusion removes it.
In practice
Thomas, a well-controlled type-2 diabetic, is quoted an 80% surcharge on his temporary work incapacity guarantee by his bank's group insurer. His broker approaches two specialist insurers and secures a surcharge of only 30% under identical conditions, significantly reducing the total cost of his insurance.
Put it into practice with CourtImmo
See how CourtImmo software helps brokers on this topic:
Official sources
- Borrower insurance: guarantees and pricing · Service-Public.gouv.fr
- Right to be forgotten and the AERAS reference grid · AERAS
- Borrower insurance for a mortgage · Service-Public.gouv.fr