Woolworths, RSPCA blocked in pet insurance crackdown

The RSPCA and Woolworths are among major brands that have been blocked from selling pet insurance over concerns they haven’t considered their customers’ financial situations.

The brands were slapped with “stop orders” by the Australian Security and Investments Commission on Thursday.

ASIC invoked 38 interim stop orders relating to 67 pet insurance products issued by The Hollard Insurance Company and PetSure — both general underwriters.

The products are issued by the insurers via brands including Woolworths, RSPCA, Petbarn, Guide Dogs, Medibank, Bupa and HCF.

ASIC warned that the customer’s ability to afford the full upfront costs of veterinary bills was not considered when selling insurance.

The interim orders protect consumers from acquiring pet insurance products during the stop order period.

ASIC said it issued crackdown because of deficiencies in the target market determinations (TMD) for the products.

“This is ASIC’s first use of its stop order powers in response to deficiencies in a TMD for an insurance product under the design and distribution obligations (DDO),” said a media statement.

“The interim orders prohibit the insurers from engaging in retail product distribution in respect of the products for new customers.

“The orders are valid for 21 days unless revoked earlier.”

ASIC said the insurers may not have properly considered the customer’s ability to afford premiums and pay for treatments upfront before being reimbursed by the insurer (after a claim is approved).

“In particular … 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.”

ASIC has targeted surveillances underway to check whether product issuers and distributors are in compliance.

ASIC’s Moneysmart website has information for consumers on pet insurance.

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