Banks mislead customers to believe that their insurance is mandatory.

According to the College of Mediators, this practice happens in 75% of the occasions and the product they sell is more expensive by almost 80%

Two out of three loan applicants believe that they are obliged to contract insurance with the bank, something that is not actually legal, as denounced on Tuesday by the General Council of Colleges of Mediators,a group of 7,000 professionals in the sector, also including brokers .

Cover photo: Banking24seven

The banks, in addition to pressing for insurance to be contracted by linking them to the granting of credit, sell them at a far greater price than in the open market. They say…”According to our data, the average premium of a policy contracted in an entity is 79% higher than that of insurers and, in addition, on many occasions, coverage is offered above the real needs of the person needing it”

The agency has denounced the latest campaign by banks that linked the loans with ICO guarantees to alleviate the effects of the pandemic on contracting insurance from the bank, which led to the opening of an investigation by the National Commission of Markets and Competition (CNMC). “We filed complaints with different organisations to stop this abuse ” says Javier Barberá, President of the Insurance Business School, CECAS. 

However, the College of Mediators admit that there are few complaints filed with the General Directorate of Insurance for this reason. “Those who have suffered this type of abuse say that they cannot report the bank because they depend on it for private financing or on their company. It is not easy to get whistleblowers, so we ask Seguros to take the initiative to tackle this situation as a supervisor, ”adds Barberá.

Abusive and illegal practices

The study on contracting insurance linked to mortgages and loans has been carried out through the School of Business, CECAS, and the market research company GAD3. The nationwide survey was conducted in May 2020, among bank clients who have contracted a mortgage or consumer loan in the last ten years.

“Six years after our first study, we verified that the situation continues and even new branches of insurance are linked that have little or nothing to do with credit, such as automobile policies. For some time now, mediators have detected abusive and illegal commercial practices in the sale of insurance by banks that go against the freedom of clients and competition, taking advantage of their dominant position, ”indicates this manager.

The preferred entities when contracting loans and mortgages are BBVA (25%), Santander (22%) and CaixaBank (18%). 66% of mortgage applicants or consumer loans have not been informed by the banks of the possibility of contracting the insurance policy with any other entity and believe that they should do so with the one that grants the credit, according to the study.

 In addition, in 59% of the cases analysed, the subscription of insurance was a necessary condition to formalise the granting of the loan, which increases to 74% in the case of mortgages and decreases to 53% in consumer loans. On average, only 39% of respondents said that taking out insurance was not a necessary condition.