About Certain Issues of Hard Selling of Insurance Services when Concluding a Loan Agreement: Law and Practice

Abstract

Based on the analysis of materials of law enforcement practice on the issue of imposing additional insurance services on the borrower at the conclusion of a loan agreement, the most typical cases of violation of the borrower’s rights regarding compliance with their right to refuse additional insurance services, including life and/or health insurance of the borrower, have been identified; providing the borrower with a consumer loan on the same terms if the borrower has independently insured his life, health/ other insurance interest in favor of the lender from the insurer that meets the criteria established by the lender in accordance with the requirements of the legislation; refund to the policyholder of the insurance premium paid in case of refusal of the policyholder from the voluntary insurance contract, etc.

The article proposes at the legislative level to fix the bank’s obligation to reflect in lending documents information about the full cost of the loan with the presence of risk insurance, as well as information about the full cost of the loan without the purchase of insurance services, and, accordingly, the consolidation of this right in the insurance policy, which will give the relationship between the bank and the borrower more transparency.