Last Updated on June 30, 2023 by Fumipets
ASIC Issues Interim Stop Orders for Pet Insurance Products in Australia
In a significant regulatory move, the Australian Securities and Investments Commission (ASIC) has issued 38 interim stop orders concerning 67 pet insurance products offered by The Hollard Insurance Company and PetSure (Australia). These orders are a result of deficiencies found in the target market determinations (TMDs) associated with the products. This development marks ASIC’s first use of stop order powers under the design and distribution obligations (DDO) framework for insurance products.
Details of the Stop Orders
The interim stop orders prohibit the insurers from engaging in retail product distribution of the identified pet insurance products to new customers. The affected insurance brands include Woolworths, RSPCA, Petbarn, Guide Dogs, Medibank, Bupa, and HCF. The orders, valid for 21 days unless revoked earlier, have been implemented to safeguard consumers from acquiring insurance products that may not align with their objectives and financial circumstances.
Concerns Raised by ASIC
ASIC expressed concerns regarding the insurers’ failure to adequately define the target market for these pet insurance products using clear and measurable parameters. In particular, the financial situation of consumers, including their ability to afford premiums and upfront payment for treatments before reimbursement, was not adequately considered. Additionally, ASIC noted that the key terms, features, and attributes of the products were not thoroughly assessed for alignment with consumers’ objectives and financial needs. The requirement for consumers to pay veterinary expenses upfront before receiving partial reimbursement under a claim was among the issues identified.
Expectations and Compliance
ASIC expects the insurers to address the concerns raised regarding the TMDs and take immediate steps to ensure compliance. Failure to address these concerns in a timely manner may lead to the imposition of final stop orders. The insurers will have an opportunity to make submissions before any decisions regarding final stop orders are made.
Overall Progress under DDO
With the issuance of these stop orders, ASIC has now issued a total of 80 interim stop orders under the design and distribution obligations framework. Notably, 36 interim stop orders have been lifted following remedial actions taken by the entities to address ASIC’s concerns or product withdrawals, while 44 interim stop orders remain in effect. ASIC continues to conduct targeted surveillance to assess compliance with the DDO requirements, taking swift action where necessary to protect consumers and prevent potential harm.
ASIC’s issuance of interim stop orders for pet insurance products emphasizes the regulator’s commitment to ensuring consumer protection and adherence to the design and distribution obligations framework. By addressing deficiencies in target market determinations, ASIC aims to ensure that insurance products are aligned with consumers’ objectives and financial situations.
Source: Asia Insurance Review