Corporate regulator Asic has frozen 67 pet insurance products, including programs sold by Woolworths, Petbarn, the RSPCA, and several health insurers. Asic said more may follow as a review continues. 

Thirty-eight interim stop orders were issued today relating to 67 pet insurance schemes operated by The Hollard Insurance Company and PetSure (Australia) across different levels of cover. The orders mean that no new policies can be issued to new customers for 21 days unless the orders are revoked. 

“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 in a statement.   

It cited “deficiencies in the target market determinations (TMD) for the products” adding that it had conducted a “risk-based and targeted review” of insurance TMDs.  

“Asic was concerned that the insurers failed to appropriately define the target market for these products using objective and tangible parameters.”

In particular, the insurers may not have properly considered the ‘financial situation’, one of the key characteristics in Asic’s ‘design and distribution obligations’ (DDO) that require firms to design financial products that meet the needs of consumers, and to distribute those products in a more targeted manner. In particular, it referred to the ability of consumers to afford premiums and to pay for treatments upfront before being reimbursed by the insurer, once a claim is approved. 

“Asic was concerned that the insurers did not appear to properly consider whether the key terms, features and attributes of the products would be consistent with the objectives, financial situation and needs of consumers in the target market. In particular, in defining the target market, it appears that the insurers did not properly consider the requirement for consumers to pay for veterinary expenses in full and upfront before receiving a partial reimbursement under a claim.”

The affected companies must now consider the concerns raised by Asic and take immediate steps to ensure compliance. 

“Asic will consider making a final order if the concerns are not addressed in a timely manner. The insurers will have an opportunity to make submissions before a decision is made about any final stop orders.” 

A spokesperson for PetSure said that the company, and Hollard, have temporarily paused new policy sales for some insurance products as a result of Asic concerns regarding target market determination (TMD).

“PetSure is committed to swiftly resolving these concerns by working constructively with the regulator in relation to the TMD. Existing customers can make pet insurance claims as normal.” 

Meanwhile, the regulator says it has “targeted surveillances underway” to check whether product issuers and distributors are complying with design and distribution obligations. “Where firms are not doing the right thing, Asic can take quick action under DDO to disrupt poor conduct and prevent potential consumer harm.”

• Further reading: Pet Circle launches insurance for cats and dogs.