France: New Consumer Protection Law

Law No. 2014-344 of 17 March 2014 on Consumer Protection (known as the Hamon Law) makes a number of changes to provisions for insurance contracts covering property damage where the insured is a consumer. These include the rights of insureds and obligations of insurers in respect of the cancellation of a contract.

Under the Law, property damage refers to all material damage to movable or immovable property, eg, buildings, contents, livestock, mobile phones and motor vehicles. Consumers are natural persons who are not acting in a professional capacity.

In summary, the changes are as follows:

• Where an insurance contract is sold as an “add on” product, the insured may cancel it within 14 days if there is duplicate insurance in place.
• Insurers will be obliged to provide insureds with a product information document for “add on” products.
• Where an insurer wishes to terminate a contract mid-term or at renewal, it must inform the insured of its reason for doing so.
• Insureds are permitted to terminate certain types of contract at any time after the first renewal date.
• Master policies for property damage risks for consumers are permitted and are subject to the same insurance contract law requirements as individual property damage policies.
• In respect of motor vehicle damage insurance contracts, all insureds, whether they are consumers or commercial entities, have the right to choose the garage that will carry out the repairs to the damaged vehicle. 

For further details of the above, please refer to the relevant section of Crystal – Class specific regulations/Motor, Pre-contractual information, Master policies or Cancellation and non-renewal.

Class Actions

The Law also makes the commencement of class actions easier. Class actions can be brought by a recognised consumer association on behalf of individual consumers (not corporate entities) for failure of a business to comply with its legal or contractual obligations or in respect of anti-competitive practices. Managing agents are advised to check whether any of their counterparts that sell goods or services to consumers in France would potentially have an exposure to class actions. Lloyd’s brokers are advised to check that their clients have appropriate professional indemnity or other liability insurance in place.

Some measures are subject to further details in a decree that will be published in summer 2014. Lloyd’s will provide the market with these details when they are available.