ASIC has issued 38 interim stop orders that relate to 67 pet insurance products issued by The Hollard Insurance Company Pty Ltd and PetSure (Australia) Pty Ltd (the insurers) across different levels of cover.
The stop orders relate to pet insurance products issued by the insurers via brands including Woolworths, RSPCA, Petbarn, Guide Dogs, Medibank, Bupa and HCF.
ASIC issued the stop orders 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). This action follows a risk-based and targeted review of insurance TMDs. ASIC is considering further stop orders for other insurance products.
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 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 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 the DDO regime) of consumers in the target market, such as their ability to afford premiums and to pay for treatments upfront before being reimbursed by the insurer (after 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.
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.