GDV: Waiting period for residual credit insurance “actual ban on sales”

Insurers have significant legal reservations about the planned introduction of a seven-day waiting period between the conclusion of a consumer loan and residual credit insurance. “This waiting period actually represents a sales ban,” says GDV managing director Jörg Asmussen. “In our view, the draft law is a quick fix that violates EU law. It contradicts the EU consumer credit directive, which was only revised in October.”

On November 17th, the Bundestag approved the introduction of a seven-day waiting period between the conclusion of a consumer loan and residual credit insurance with the Future Financing Act. The Federal Council has now also approved the law.

Germany must implement the EU Consumer Credit Directive into national law by November 2025 at the latest. It expressly obliges the Member States to allow the conclusion of a credit agreement in a bundle together with residual credit insurance. “The Consumer Credit Directive is fully harmonizing in this respect and prohibits member states from deviating requirements,” says Asmussen. Customers should be allowed to take out loans and insurance together. “This possibility of product bundling is effectively made impossible by the waiting period now planned,” says Asmussen.

Residual credit insurance protects against the consequences of existential risks

The GDV estimates the premium volume for residual credit insurance for 2022 at around 4 billion euros in Germany. After such a waiting period was introduced in Great Britain, the market there almost completely collapsed.

Remaining credit insurance protects borrowers from the consequences of existential risks: If customers cannot repay a loan as agreed, for example because they become unemployed or can no longer work for health reasons, the insurance covers the loan installments for a set period of time.

Since July 2022, a commission cap has been in effect when selling residual credit insurance. According to this, closing commissions may amount to a maximum of 2.5 percent of the insured loan amount. The financial regulator BaFin believes that the objectives of the commission cap have been achieved and that there is no need for further legislative action with regard to commissions.