Product terms not transparent: pet insurance

When financial product features, costs and incentives are not transparent consumers are prevented from making well-informed financial decisions or comparing products.

ASIC has announced that improvements have been made to disclosure in pet insurance product disclosure statements (PDSs) and websites in response to concerns raised by ASIC as part of a targeted industry-wide review.

There has been a significant increase in disputes received by the Financial Ombudsman Service Limited (FOS) about pet insurance during 2012 and 2013.

ASIC’s review identified concerns about disclosure in some pet insurance PDSs and websites including:

  • Insufficient or confusing disclosure about policy limits, pre-existing conditions (including conditions that consumers are likely to consider unusual or unexpected) and policy exclusions.
  • some of the PDSs did not make it clear that pet insurance generally excludes cover for pre-existing conditions that occurred prior to the purchase of pet insurance, even if the pre-existing condition last resulted in symptoms or treatment many years beforehand, and
  • some of the PDSs and some of the online material (such as online quotes) did not clearly state the limits to the amount of cover provided per year and/or per illness or accident.
  • Insufficient disclosure or non-disclosure of the need for consumers to make co-payments and pay excesses in the event of a claim.
  • The use of worked examples of benefit amounts and other promotional material conflicting with or not accurately reflective of the policy
  • Representations comparing pet insurance to health insurance (which is a different type of insurance product with different features of cover).

ASIC has previously raised disclosure issues in respect of funeral insurance.

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