ASIC slaps Medibank, Bupa, Woolworths, RSPCA and others with pet insurance ban

ASIC says scores of pet products — many offered by some of the nation’s best-known brands — did not consider the customer’s ability to pay for treatment.

Brisbane vet Remona Horn says vets have been forced to euthanise pets if their owner cannot pay for treatment.

Medibank, Bupa, Woolworths and other leading brands were hit with 24-hour bans from selling pet insurance products after the corporate regulator found they may not have “properly considered the financial situation” of customers.

The Australian Securities and Investments Commission issued 38 interim stop orders that relate to 67 pet insurance products issued by The Hollard Insurance Company and PetSure.

PetSure and Hollard provide pet insurance to Medibank, Bupa, HCF, Woolworths, RSPCA, Petbarn and Guide Dogs under white label agreements.

The ASIC action prevented them signing on new customers. Existing customers are not affected.

Late on Thursday the regulator lifted the orders after PetSure complied with the directives. They were initially in place for 21 days unless revoked earlier.

“PetSure can confirm, after consultation with ASIC, that we have addressed the concerns raised with the Target Market Determination and subsequently, the interim stop order has been lifted,” a PetSure spokeswoman said.

In an earlier statement, ASIC said it was concerned that insurers failed to consider the financial situation of customers, such as their ability to pay upfront for treatment before being reimbursed later.

More Australians are insuring their pets than before.

“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 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.”

A spokeswoman for Medibank said it stopped distributing PetSure products under its brand, following ASIC’s action. PetSure is the only provider Medibank uses for pet insurance. The regulator didn’t stop Medibank and other brands from seeking another wholesaler so they can continue offering the product to new customers.

“PetSure has advised us they are working to resolve the matter,” the Medibank spokeswoman said before the orders were revoked.

“There is no impact on existing pet insurance customers. PetSure will continue to operate its claims and contact centres as normal.”

The ASIC ban came on the same day that Medibank announced it would return a further $125m to its customers, as part of its Covid-19 support package and “give back” program. This brings the total amount of support that Medibank has provided to customers since the start of the pandemic to $1.15bn.

PetSure has paid out about $1.5bn in claims since it began its operations 20 years ago. Before the orders were revoked, a spokeswoman said it was working swiftly with ASIC to resolve the matter.

“PetSure and Hollard have temporarily paused new policy sales for some insurance products as a result of ASIC concerns regarding target market determination (TMD),” she said.

“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.”

A Bupa spokeswoman said: “As a distributor of PetSure’s pet insurance product, Bupa has stopped our distribution and sale of any PetSure policy until this issue has been resolved”.

“Existing customers can still make full use of their policy, including making claims,” she said.

The ban - which can last up to 21 days or longer - is usually an interim measure to allow ASIC to fix the target market determination. If it is not resolved during that time, the regulator could come back to extend the suspension.

“ASIC expects the insurers to consider the concerns raised … 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.”

It comes as four-legged friends have delivered a gold rush from companies from Bunnings to Nestle, with Australia’s overall pet market worth about $13bn. It has also created an adjacent business for traditional health funds, with more Australians taking out pet insurance than before.

As prices for dogs and cats hit nosebleeding-high levels – with some breeds selling for almost $10,000 – pet insurance has become a popular product as Australians place their pets in the same category as diamond rings and fast cars.

Medibank wrote 70 per cent more pet insurance polices last financial year, taking advantage of the boom in pet ownership, which has surged from 61 to 69 per cent in the past two years.

But, with some policies costing more than $1000 a year per pet, while treatments for paralysis tick can have a $1200 sub-limit but costing more than $4300, leaving pet owners thousands of dollars out of pocket – many Australians have also questioned the value of pet insurance, choosing between their finances and pet’s health.

At worst, as Brisbane vet Remona Horn told The Weekend Australian earlier this year, this leads vets being forced to euthanise pets if their owner cannot pay for treatment, which she said was contributing to a nationwide shortage of vets.

Then there is aggression – not from animals – but their owners, which has placed vets at a higher risk – about four times more – of suicide than the general population, according to the Australian Veterinary Association.

If you or someone you know are feeling overwhelmed, phone Lifeline on 13 11 14 or visit lifeline.org.au