New, customer-friendly changes in the Hungarian housing market

The government is introducing new, customer-friendly changes to the home insurance market. The amendments to the legislation on home insurance have already been published in the Hungarian Gazette (Magyar Közlöny). Here are the details.

In order for Hungary to avoid recession in 2023, “despite the war and harmful sanctions”, competition and competitiveness must be increased in all areas of the economy, said Minister of Economic Development Márton Nagy, according to a statement by the Ministry.

Increasing competitiveness

They also recall that the Hungarian government adopted the Ministry’s proposal at its meeting on 1 February 2023. The cabinet decided to reform the regulation of housing insurance. The relevant legislation has already been published in the Hungarian Gazette. Under the legislation, new changes in the interests of customers will come into force from 30 April 2023, leaving sufficient time to prepare, Világgazdaság reports.

Márton Nagy expects the measures to increase competition in the housing insurance market, further strengthen consumer protection and broaden the options for customers.

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The new changes

As a result of the published legislative changes, the following are amended:

For property insurance contracts, the amount of remuneration paid to the insurance intermediary is capped, so that it cannot exceed 20 percent of the annual premium.
Under the amendment, when providing personalised information on a mortgage loan, the lender will be required to demonstrate the use of the MNB’s Qualified Consumer-Friendly Home Insurance (Minősített Fogyasztóbarát Otthonbiztosítás, MFO) calculator, which will help consumers to choose the best insurance offer for them.
Under the rule change, property insurance premiums will be taken into account uniformly when applying the APR (Annual Percentage Rate) cap, with a view to reducing the costs for the consumer.
A new renewal option will be introduced, in addition to the normal cancellation option on the contract anniversary date. Customers will be offered a no-cost cancellation period in March each year. In other words, an extra “free” option will be available to customers in terms of switching costs.