Update (30 June, 2023): After publication of the original article, PetSure has since announced that in consultation with ASIC it has addressed concerns around target market determinations (TMDs), and "the interim stop order has been lifted". The company has resumed new policy sales.
Australia's corporate watchdog has called out the country's largest pet insurer over concerns its products failed to meet the needs of the target market, such as requiring consumers to pay for veterinary expenses upfront in full before receiving a partial reimbursement under a claim.
The Australian Securities and Investments Commission (ASIC) has issued 38 interim stop orders relating to 67 pet insurance products issued by The Hollard Insurance Company Pty Ltd and its underwriting management agency subsidiary PetSure (Australia) Pty Ltd , which will be in place for 21 days and prohibit retail distribution to new customers.
The stop orders relate to pet insurance products issued by the insurers via brands including Woolworths, the RSPCA, Petbarn, Guide Dogs, Medibank, Bupa and HCF.
Deficiencies in the products' target market determinations (TMD) were behind the decision, representing the first action of its kind for insurance products under the design and distribution obligations (DDO) that dictate how financial products are set up to meet the needs of consumers.
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.
"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," the regulator said in a statement published this morning.
"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.
"ASIC expects the insurers to consider the concerns raised regarding the TMDs 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."
Today's announcement also represents almost half of the regulator's 80 interim stop orders issued to date under DDO, of which 36 have been lifted following actions taken by the entities to address ASIC’s concerns or where the products were withdrawn.
A PetSure spokeswoman said the two companies had 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," she said.
PetSure has reimbursed more than $1.5 billion of vet invoices since inception, and currently provides insurance covering more than 4,000 pets daily. The company adds its 'GapOnly' product, available at more than 1,000 clinics Australia-wide, is reducing customers out-of-pocket vet expenses before claiming.
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