UFC-Que Choisir’s campaigns on « Small Insurances »

1. UFC-Que Choisir’scampaigns on « Small Insurances » November 15th 2013

2. A growingnumber of smallinsurances in France • A recentproliferation of smallinsurances: • On goods : smartphones, computers, bikes, washing machine… • On services : bankcards, flight and train cancelation, travel cancellation, water supplies… • But also : cats and dogs, wedding (!), etc. • A lot of people already equipped : • A 3 billion euros market at least, fastlygrowing • Poll from the recent “French federation of small insurances” : • 81% of French consumers declare having at least 1 small insurance • 2,4 small insurance per French consumers …and it’s only a declarative poll, whereas one of the main characteristic of these insurance is to be missold (i.e without transparency) • Two main characteristics…: • Sold by non-professional insurers (ex : in phone stores, in supermarket) • Accessory of a good or a service : the consumer don’t come to buy the insurance, but the good or the service

3. A lot of complaints from consumers • During the “sell” : • Sells without the consumer’s consent : for example, bundled with the good • Sells without verification of the use for the consumer • An idealized presentation : if you listen to the seller, no exclusion in the contract! • The contract is only available after signature…no way to verify the assertions • When using the insurance : • Very large exclusions with a huge possibility of interpretation by the insurance manager. Ex : (Phone) for “pickpocketing” you have to be aware of the theft “immediately” to be reimbursed. • Requalification by the insurance manager to “fit” in the exclusions • « Low cost » repairing services • When the consumer tries to terminate the insurance : • In France, two legal rules : one protecting the consumer, one not… • …guess which of the two is chosen by these insurances? A growingsector + a lot of complaints = an action from UFC-Que Choisir!

4. An action in two times • Due to the very large scope of “small insurances”, we concentrated on the “archetypicals” insurances, in two times : • December 2012 : phone insurances • One of the most important small insurance (≈ 500 M€), thousands of complaints • Christmas : 2 millions phones sold • June 2013 : cards and water supplies insurances • Cards : an insurance bundled in bank packages, owned by the majority of French consumers • Water supplies : sold at a distance, without any verification by the professional of the use for the consumer • June 2013 : beginning of the discussions on Consumer Protection law in the French Parliament Impose the issue during the discussions

5. What we discovered : phone insurances (1/2) • Contracts study : a lot of exclusions that make the consumer protected… ….Onlyin cases thatnearlyneverexist (25% of real accidents are well-covered)! ...Onlyin cases thatnearlyneverexist in facts • 25% of real accidents are well-covered! Comparison with the statistics : ex for theft

6. What we discovered : phone insurances (2/2) • An organisation of the marketthatfacilitate complains • Attenuation of responsabilitiesbetween : • Retailer : onlysells the productheorderd to insurance company, socan promise « miracles » • Manager : the consumer contact when a problem arrives, not tyed by what the seller said. Itsaimis to avoid « toomuch » indemnisation. • Insurance : creates the product, and pays when manager says • A 80% marginfor professionals! • Estimation based on accidents statistics, datas fromprofessionalpress, etc. • Consumers: 18% of pay-back • Retailer: between 20% and 50% of the premium (hold the market) • Manager : between 10 and 30% of the premium • Insurance : only 10 to 15%

7. What we discovered : insurances for fraud by card • An insurance massively sold : • Aim of the insurance : protect against fraud on payments • Sold by banks via packages, that equip at least 55% of French consumers • Poor presentation of the package + of the insurance by bank employees • An interest that disappeared : • Since 2009, PSD : bank must cover all remote fraud, which is the huge majority of frauds in France • + Filings of complaints to the Police decrease (and no covering whithout complaining) • But not change in the practices, and no change in the prices! • At least, a 94% margin! : • 2007 : leak in the press of the results of Crédit Agricole on this insurance… • …and this huge margin was before the PSD!

8. What we discovered : water leaks insurance • Insurancecoveringleaks «between water meter and house walls » • Uselessfor tenants (covered by the ownerinsurance), and flats owners (covered by their house insurance or co-ownershipinsurance) • Usefull for Lessthan 46% of French consumers : owners of houseswith water meter in the garden • Massive mailing campaings, withoutanytargeting • The 1st retailerdeclaressending 40 millions mail/year… • A confusion between water bills and insurance • Retailers (independantfirms) use water suppliers logo + clients file + Use of ambiguousterms  : f.e, « To bepaidbeforemarch 21st» • As for cardinsurance, a recentlawlimitingconsumer’sresponsability for waters leaks… • …And one more time, a very profitable insurance for retailers : • Only16% paid back to consumers!

9. A successful campaign • In media : an easy topic that interests journalists in search of “scandals” (cf. margins) and ways for consumers to save money - + No contesting of our figures by the professionals of the sector • With members of Parliament : the “mother-was-victim effect” • Many MP’s know relatives victims of this type of insurance No need to convince them of the necessity to regulate this sector • Integration in the draft law on Consumer Protection • Creation of a cooling-off period (with conditions that we want to suppress) • Facilitation of terminating the contract (whenever you want after 1 year in the contract) • Also professionals’ reaction • Insurers’ syndicate, insurance mediator now want to “clean” the sector