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Posted: 2023-06-29 04:00:39

The corporate regulator has allowed dozens of pet insurance policies to go back on the market after issuing a ban that lasted less than a day.

Earlier on Thursday, ASIC blocked the sale of certain policies issued by major insurance underwriter Hollard and its subsidiary PetSure. 

The orders meant Woolworths, the RSPCA, Petbarn, Guide Dogs, Medibank, Bupa, HCF and other companies had to immediately stop selling pet insurance.

However, ASIC has confirmed the stop orders were revoked later in the afternoon, after the insurers addressed its concerns.

When ASIC first announced it had issued the orders, it said it was concerned Hollard and PetSure had not properly considered the financial situations of customers when selling the products.

In particular, ASIC said insurers had failed to take into account consumers' ability to pay for vet treatments up front, before they could make a claim and get the funds reimbursed.

"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.

People who already held the insurance policies were not affected by the stop orders.

Retailers are expected to start selling the pet insurance policies again from Friday.

Why was the ban issued in the first place?

ASIC's issue boiled down to a document called a target market determination, or a TMD.

TMDs are required for all financial products, and are basically public statements that describe what kind of customers the product is designed for, and any conditions around selling it to them.

ASIC told the pet insurers it was concerned their TMDs did not appear to consider the "financial situations" of the customers they were targeting.

Choice said people's emotional attachment to their pets means they can be pressured into buying pet insurance.()

The requirement for customers to pay for vet bills up front before getting reimbursed was one of things ASIC felt the insurers did not consider adequately.

It also said customers' ability to pay premiums and gap costs did not appear to be properly considered.

Hollard and PetSure told the ABC they had revised the TMDs to address ASIC's concerns.

Insurance industry in the 'crosshairs'

The brief stop order from ASIC followed years of scrutiny of the pet insurance industry.

Back in 2019, consumer advocacy group Choice reviewed 86 pet insurance policies and concluded none were worth recommending.

The group's head of policy, Patrick Veyret, said the industry had improved since then, but was still full of poor products that did not work for consumers.

"It's our concern that pet insurers are emotionally manipulating people's love for their pets and selling them insurance they might not need," he told the ABC.

"Our research finds that there are still a lot of out-of-pocket costs when you take pet insurance and often it's not very good value for consumers."

Mr Veyret said problems were not limited to the pet insurance industry.

"We see incorrect selling and inappropriate selling across the entire insurance industry," he said.

"It's clear that ASIC has the broader industry in their crosshairs as well."

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