Need to know
- On June 29, the Australian Securities and Investments Commission issued 38 stop orders covering 67 PetSure insurance products, including those sold by Woolworths, RSPCA, Petbarn, Guide Dogs, Medibank, Bupa and HCF.
- The regulator was concerned that Petsur had failed to properly consider its customers’ financial situation, breaching its design and supply obligations.
- One issue is that the pet insurance brands in question require policyholders to pay upfront for their pet’s medical care before filing a claim.
In a dramatic move, the Australian Securities and Investments Commission (ASIC) last week issued stop orders temporarily banning the sale of 67 pet insurance products offered by Petsur and its owner Hollard Insurance, whose brand accounts for 80% of the pet insurance market. Australia.
The 38 stop orders halted sales of pet insurance products – including Woolworths, RSPCA, Petbarn, Guide Dogs, Medibank, Bupa and HCF – although PetSure quickly took steps to address ASIC’s concerns and had the orders lifted.
ASIC said the orders were made to protect consumers from finding pet insurance products that do not suit their objectives, financial situation or needs.
Improper design and distribution
ASIC is concerned that Hollard and Petsur may have breached their design and distribution obligations (DDOs), which require businesses to design financial products to meet the needs of their target customers.
To comply with their DDO, financial firms must create a publicly available marketing decision (TMD) document that defines the types of customers for which the products are appropriate.
ASIC’s concern was that Hollard and Petsur could breach their duty to design financial products to meet the needs of their customers.
ASIC said it had found ‘deficiencies’ in Hollard and Petsur’s TMDs covering 67 products, notably that they failed to adequately consider customers’ financial circumstances.
ASIC said the documents “do not appear to properly consider whether the key terms, features and characteristics of the products are consistent with the objectives, financial situation and needs of consumers in the target market”.
Pay first, ask later
ASIC pointed out that insurance products require policyholders to pay for their pet’s treatment and then claim from the insurer for part of the payment – a requirement that may surprise policyholders who haven’t read every word. Relevant product disclosures.
ASIC has pointed out that insurance products require policyholders to pay for pets’ treatment.
Paying up front is one issue customers have with pet insurance products. Choice has heard from many pet insurance customers that their policies are becoming unaffordable as their pets age and premiums increase.
In February of this year, the owner of Pomchi, 14, said: “After ten years of no claims, on a 13-year policy and paying over $6000 in premiums, the smelly poets are rife with loads and knowing full well that one cannot change insurance providers, advancing age, worse the policy Quitting leaves them high and dry and they know it.
A first stop order container for TMDs
The pet insurance stop orders are the first time ASIC has used these powers against non-defective TMDs. PetSure took swift action to resolve the issues.
A spokesperson for Petsur told CHOICE on the day the order was issued: “Petsur can confirm after consultation with ASIC that we have considered the concerns raised about the target market decision and subsequently lifted the temporary stop order.
Target marketing decisions are an important part of ensuring that products are only sold to customers who can afford the service.
Election policy Patrick Veyret
How many customers bought a PetSure product that was inappropriate for their financial situation before ASIC’s intervention became clear.
“Target market decisions are an important part of ensuring that products are only sold to customers who can afford the service, and it’s unfortunate that many pet insurers fail to do so,” said Patrick Veiret, Choice’s head of policy.
“Instead of taking advantage of people’s love for pets and selling insurance that causes financial problems, these insurers need to ensure that their products are only sold to potential customers.”
Stock images: Getty, unless otherwise noted.