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Woolworths, RSPCA, Medibank caught up in pet insurance crackdown
By Millie Muroi
Well-known brands including RSPCA, Woolworths and Medibank were temporarily blocked from selling pet insurance policies because the insurers failed to properly consider the financial situation of prospective customers.
On Thursday morning, the Australian Securities and Investments Commission (ASIC) issued 38 interim stop orders relating to 67 pet insurance products issued by The Hollard Insurance Company and PetSure Australia across different levels of cover.
These insurance products were issued via brands including Woolworths, RSPCA, Petbarn, Guide Dogs, Medibank, Bupa and HCF. On Thursday evening Hollard and Petsure said they had addressed ASIC’s concerns and the stop orders had been lifted.
The stop orders mean affected insurers will be barred from engaging in the distribution of their products to new customers.Credit: Nine
The stop orders had meant affected insurers were briefly barred from selling their products to new customers. ASIC said it had taken the action because the insurance companies had failed to properly consider the financial situation of prospective customers.
“ASIC made the interim orders to protect consumers from acquiring pet insurance products that may not be consistent with their objectives, financial situation or needs,” the regulator said on Thursday morning, before the orders were revoked.
ASIC’s action comes after pet ownership boomed during the lockdown periods, with average annual vet expenses estimated to cost close to $400 for dogs and around $270 for cats before factoring in medications, surgery and emergency treatment – the cost of which can escalate quickly.
ASIC’s stop orders had no impact on existing pet insurance policyholders.
The regulator said it was concerned that the insurers failed to use objective and tangible parameters in defining their target market. For example, it said the insurers had not given proper consideration to consumers’ ability to afford premiums and pay for treatments upfront, before being partially reimbursed by the insurer after a claim is approved.
It comes after the regulator conducted a risk-based, targeted review of insurance target market determinations - documents setting out who the product is suited to.
ASIC said it expected insurers to consider the concerns raised regarding target market determinations and take immediate steps to ensure compliance. “ASIC will consider making a final order if the concerns are not addressed in a timely manner,” it warned.
Choice head of policy and government relations Patrick Veyret said ASIC’s action was a welcome development for a product that the consumer advocacy group has previously flagged problems with.
“In 2019, Choice awarded the entire pet insurance industry a Shonky award for ‘emotionally manipulating’ pet owners into buying poor-value insurance,” Veyret said. “Choice experts found pet insurance policies riddled with exclusions, many with unfair terms and conditions buried deep in the product disclosure statement. Some insurers have improved their products since then, but it’s clear they still need to do much better.”
Veyret said the group was concerned about ASIC’s finding that pet insurers may be selling people policies who may not be able to afford it, particularly as people across Australia faced heightened cost of living pressures.
The insurers said ASIC’s orders would not affect existing customers, who can still make claims. The companies will have an opportunity to make submissions before a decision is made about any final stop orders.
A PetSure spokesperson said on Thursday night: “PetSure can confirm, after consultation with ASIC, that we have addressed the concerns raised with the Target Market Determination and subsequently, the interim stop order has been lifted.“
A Hollard spokesperson said: “Hollard can confirm after consultation with ASIC that we have addressed the concerns raised with the Target Market Determination and subsequently the interim stop order has been lifted”
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