“Belgian Hamon Law”: from constraint to opportunity?
Following France, Belgium will soon make it easier for consumers to switch insurer. A constraint or an opportunity for insurers? How will this law shape the Belgian insurance market?
What does the new legislation say?
On 9 October 2023, Belgium adopted a law similar to the French Hamon Law. As in France, the Belgian version is intended to
- Allow policyholders to cancel their insurance contracts easily
- Simplify the procedures policyholders face when switching insurer
The details of the new legislation can be found in the Belgian commercial law review. Here, let us focus mainly on the consequences and opportunities that may arise from the change in the law.
A law that makes it easier for policyholders to leave…
When new legislation comes into force, being compliant is probably the absolute priority for insurers. Such changes are naturally perceived as a constraint by the industry, all the more so since, at first sight, it means investing sometimes considerable time and resources to potentially make it easier for customers to leave for a competitor.
It is nevertheless possible to turn this constraint into an opportunity. Every customer who cancels a contract becomes a potential prospect for another insurer. The new legislation can then be seen as an accelerator of customer migration towards the most attractive offers.
“It is nevertheless possible to turn this constraint into an opportunity.”
… or that encourages them to join!
The change in the law opens up opportunities for insurers, notably to increase the performance of their new offers and recoup their development costs. A more fluid market also makes it possible to test new approaches and new concepts, or to reach new market niches.
Let us also not forget that this new market flexibility makes customer retention all the more important! If it is easy to move from one insurer to another, it is important to stand out from competitors, for example through the quality of the service offered, rewards for loyalty, personalised offers, and so on.
How did the French market react? 🇫🇷
The new Belgian legislation follows the spirit of the 2014 Hamon Law in France. That law was greatly feared by French insurers: loss of market share, administrative burdens… Some even predicted a veritable tidal wave for insurance.
Ten years on, what lessons can be drawn from the French market?
- In the 12 months following the entry into force of the Hamon Law, we saw a 16% rise in the number of contract cancellations. However, the much-feared upheaval did not happen. For some, this is explained by the structure of the French retail insurance market. The French system relies mainly on intermediation through a network of agents. By definition, an agent cannot play providers off against each other. The request to switch insurer therefore has to come from the end policyholder, who did not use this new right en masse.
- In a second phase, we observe an increase and a diversification of the offering. The market is therefore more dynamic.
The Hamon Law is not the only cause of this change. But it certainly helps foster a climate in which innovation and quality for the end customer drive change.
Of course, Belgium differs from France. 60% of the Belgian market goes through independent brokers who work for their clients.
And while it is not yet possible to know how Belgian policyholders will react, there is no doubt that opportunities will arise for insurers to retain, or even increase, their market share.
