Pet Insurance… how does the “Pet” side get compliant?Published on 11th April 2023
Pet insurance? You mean like human health insurance, but for pets? Yes, but did you know that these policies are regulated by regulatory authorities and have strict regulatory rules applied to them? This means that if you want to sell pet insurance in regulated jurisdictions then you need to know the in’s and out’s of compliance to avoid non-compliance with your regulatory obligations.
Pets are a lot like humans – well in a way; they have a family, some of them go to work (think sheepdogs, guard dogs and dogs working for those that are visually or hearing impaired and vermin catchers and controllers) and have fun on the weekends chasing a ball around, catching toys or just enjoying some treats. They are very much a part of society. As such, pet health insurance is becoming increasingly popular as we learn more about the needs of our furry friends who share our homes with us. So how does this fit in with compliance?
The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA), UK financial regulators, have a duty of care towards consumers, and this duty is changing rapidly. This means that pet insurance companies need to ensure they are complying with these changes or risk the wrath of the regulators. A key part of this has been the publication of guidelines around Treating Customers Fairly (TCF) and all firms must be able to evidence that fair treatment of customers is at the heart of their business model. This includes such things as clear information (so no hidden T&Cs), correct targeting of marketing materials and the ability for customers to terminate a policy or switch provider without unreasonable barriers to exit.
Does my pet understand regulation? Probably not! But if you’re looking for something close enough then try giving your pet some treats for complying and a stern look if they’re not complying!
In speaking with Leon Wilson, Compliance Officer at the award winning pet insurance provider ManyPets – who insure around half a million pets globally – about the regulatory regime within the UK, he noted that there were a few areas on his regulatory horizon at the moment:
- Consumer Duty is a significant new regulation that sets higher expectations for the standard of care firms across the financial services. It aims to ensure that consumers should get communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.
- Post-Brexit, the Future Regulatory Framework (FRF) Review aimed to ensure the UK’s financial services sector can have tailored rules to best suit UK markets. So, looking at removing red tape and seeing if things can be done more quicker and more easily.
- The Data Protection and Digital Information Bill, relating to issues around what data can be held, distributed etc. Once again, this is looking at the UK’s regulatory regime post-Brexit and removing red tape. Data protection is a key concern for all businesses, but it’s especially important when you’re dealing with sensitive personal data. We’ve seen how consumers can be put off by companies who don’t take their data privacy seriously enough – and this has resulted in some bad PR and fines for those companies.
- CP23/1: Insurance guidance for the support of customers in financial difficulty – a very topical issue. Pets and their pet parents are feeling the pinch. The recent cost of living crises has seen people struggling with insurance premiums, pet insurance included. A consultancy paper has been launched to help research what sort of solutions can be put in place to protect consumers who are struggling financially and cannot have their finances stretched by unexpected bills, which of course is why people invest in insurance policies to cover those unexpected expenses. It’s expected that this paper will contain thoughts on policy cancellation and non-renewal and if there are ways of looking a policy continuation and renewal even when a customer is in financial difficulties.
- DP22/3: Operational resilience: critical third parties to the UK financial sector – a consultancy paper concerned with the interconnected supply chain and, for instance, where data is being held. If it’s on the cloud, then is it correctly protected.
The UK financial regulators and government has made it clear that they are not going to leave insurance companies, pet insurance companies included, to their own devices and are continuing to consider how best to protect the consumer, or pet parents.
They have set out a framework and launched consultancy papers of what is expected from pet insurance companies and how they can achieve this through their products, marketing material and business practices. The regulators will also be keeping an eye on all financial products including pet insurance so that consumers know what they are buying into before making any decisions which could potentially impact their finances in future years or months when buying a policy today. As with all regulatory change management, pet insurance firms have to continue to manage their policies and business practices to meet their regulatory obligation. And pet parents will continue to indulge their pets with extra walks, ear scratching and treats.