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. 

Background

The Hollard Insurance Company Pty Ltd is a general insurer that underwrites a range of insurance products including motor, home, contents and pet insurance. It also offers pet insurance via a binding authority with PetSure (Australia) Pty Ltd. 

PetSure (Australia) Pty Ltd is a general insurer that also offers pet insurance across several brands. 

ASIC has issued one stop order per TMD for each of the 38 TMDs issued by the insurers. Collectively the TMDs relate to 67 pet insurance products across different levels of cover that are distributed through various brands.  

The design and distribution obligations (DDO) require firms to design financial products that meet the needs of consumers, and to distribute those products in a more targeted manner. A TMD is an important requirement under DDO. It is a mandatory public document that sets out the class of consumers a financial product is likely to be appropriate for (the target market) and matters relevant to the product’s distribution and review. A TMD needs to: 

• describe (all three of) the likely objectives, financial situation and needs of the consumers in the target market,  
• describe the product, including its key attributes, and 
• explain why the product is likely to be consistent with the objectives, financial situation and needs of those consumers in the target market (see RG 274.68). 

ASIC has targeted surveillances underway to check whether product issuers and distributors are complying with DDO. Where firms are not doing the right thing, ASIC can take quick action under DDO to disrupt poor conduct and prevent potential consumer harm. 

To date, ASIC has issued 80 interim stop orders under DDO, including the orders for Hollard and PetSure. Of these, 36 interim stop orders have been lifted following actions taken by the entities to address ASIC’s concerns or where the products were withdrawn and 44 remain in place. 

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

Editor's note 1:

Following the interim stop order, the insurers made amendments to their TMD documents that addressed ASIC's concerns. The new TMDs include information about the financial situation of consumers in the target market. Consumers will be in the target market only if they have the ability to pay premiums for the product, upfront cost of vet expenses and any other veterinary expenses above the accepted claim amount. As a result, on 29 June 2023, ASIC revoked the interim stop orders on the pet insurance products and no final stop orders were made. ASIC inquiries into this matter are ongoing.