Insurance sales by banks? Government reopens possibility.

"To establish one or more insurance contracts through a provider other than the lender's preference"

During the "Build Portugal" Government program, the possibility of selling insurance related to mortgage loans by the banks that grant them was introduced.

This is a market of nearly 900 million euros, for the annual awards related to housing, which was now only in the hands of banks.

Note that in point 17 of the program in question, the possibility of "establishing one or more insurance contracts through a provider other than the preferred one by the lender" is then raised to "promote healthy market competition."  

The initial proposal would be from the PSD in the State Budget of 2024, included in the electoral proposal of the Democratic Alliance, and would aim to end some competitive privileges of banks, granting benefits to housing credit customers who opted for insurance associated with banks' insurers.

By law, customers are allowed to choose the insurance company they want to contract for credit-linked insurance (life insurance and home insurance). However, banks always recommend contracting with their partner insurance company in exchange for a reduction in the spread. This often does not compensate for the cost difference they would have with insurance from a different company.

This measure of selling insurance through banks will not have a big impact on insurers, but on insurance brokers it will.

According to the Eco website, in the case of pure risk life insurance - coverage for death or disability - "premium revenue reached 803 million euros in 2023, of which 587 million (73%) were sold through banks. In home multi-risk insurance, sales through banks are lower, but still significant. Of the 711 million premiums collected in 2023, 300 million (42%) were issued at the request of banks acting as agents."

“Although not all the amount is related to housing, overall it is close to 900 million euros per year of insurance that can be disputed by brokers to banks”, it can still be read. 

Thus, insurance intermediaries - such as Poupança no Minuto - recommend to housing credit customers who have taken out insurance through the bank's recommendation, to transfer it to another insurer with better conditions and lower cost.

Even though this measure does not have defined deadlines yet, the transfer of life insurance can be done at any time during the contract.  

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