Has anyone noticed a sizeable shift in the way insurance companies are selecting against customers who may make a claim.
I recently asked my pet insurer why the premiums have gone up almost 35% in one year. I have an indoor only Brown Burmese cat. She is now 6 years old. I have made NO claims on the policy. I was tld it was because of the added risk. I argued that I had made NO claims, she was always vaccinated, mixed with NO other animals and was highly unlikely to be any added risk.
I asked for the actuarial basis for the increase. They could provide none. When I advised that I thought it was a scam designed to get people to cancel their policies as their pets got older and were more likely to have aged related claims they could NOT present ANY argument to the contrary.
I said I was going to take the matter further. At that time they offered me 2 months free cover.
I previously had a small life insurance policy and when I turned 50 the premiums doubled. Again no explanation was given as to why my risk profile had doubled from aged 49 to 50.
As I am a pensioner I could no longer afford the premiums so I was forced to cancel my policy.
As a former insurance company employee over many years I am seeing more and more evidence of these types of policies proliferating meaning Australians are no longer able to afford the premiums and the companies unload those clients who may POSSIBLY make a claim.
Has anyone else been experiencing these practices?
You have answered why the premium has increased by
As pets get older, the likelihood of a claim increases. This is reflected in the premium price increase as the insurer will pass on risk of increased costs/claims to them through increased premiums. The same applies to life insurance.
Choice has covered Pet Insurance in the past (some member content):
A one year increase in my cat’s age does NOT warrant a 35% increase in premium and my age going from 49-50 does NOT warrant a 50% increase in premiums.
I am not stupid. I worked for several large insurance companies over a period of 17 years and I am fully aware of the risk versus premium basis for increasing premiums over time.
The premium increases should reflect the increase in risk. That is fair but these huge increases are based on an attitude of “make it unaffordable just as a claim MAY be on the horizon”.
In the case of my cat. She went from aged 5 to aged 6. She is an indoor only cat so has no exposure to the normal risks of cat ownership such as cat fights, road risks, injury, sickness or parasites. Please explain to me exactly how her risk: premium ratio has increased by 35%.
Their own staff couldn’t justify the increase for God’s sake. I asked to speak to the Actuary responsible for setting these premiums but, of course, he/she doesn’t talk to policyholders.
None of us are actuaries and we do not have access to the data that they use so it is hard to say why the premiums leaped so much. Your assumption about trying to discourage renewals for older cats may be true but you have no direct evidence for it. You don’t think the alternative explanation given is true but there may be a third or fourth reason that we know nothing about so it isn’t just an either/or choice. I really doubt the people who answer the phone are privy to all the details of how and why premiums are set or that there is always just one reason.
As always the purchaser has the choice to look for better value elsewhere. Many of us review our insurance annually and switch when insurers get too greedy. One reason for switching is to avoid the lazy tax - where existing customers are charged all the traffic will bear and new customers get discounts.
It is consumer action not consumer grumbling that alters vendor behaviour.
For a cat, the risks of a claim appear to increase substantially from a 5 year old to 6 year old cat. It is highly possible that the premiums from a 6 to 7 year old will be even more, thus premiums increasing by a greater amount. Cats on live up to round 12+ years, and using a comparison with other animals (humans), health issues increase substantially in later life.
Likewise, with life insurance. Risk of death (probably) increases substantially after the age 50 is reached. This website shows the distribution in a bar graph…
It isn’t non-sensical, it is a fact. Insurers base their premiums on risk. When risks increase, so do premiums. Being in the insurance industry in the past, you would understand this relationship.
When my pet insurance company (Choice - am I allowed to name them???) changed underwriters they doubled the premium for our 2 dogs - I was horrified and queried why. They were very reticent to tell me but I pushed and pushed - she said
it was increased risk because they were getting older - 5 and 6. I asked for Manager who didn’t want to discuss but gave the person some reasons.
They make comparisons with same breed in our area - and surrounding suburbs - kelpie crosses
Underwriter / Lloyds of London has set the rules
It’s irrelevant that neither of my dogs haven’t ever had a claim - I have had them since they were puppies
Could not explain why the premium of the 5yo was higher than the 6yo.
I phoned a number of times to speak to the manager - she never called back
I asked to speak to the CEO of the company - they claimed they didn’t know who it was !!!
When my cat had a terminal disease
he was referred to other places for ultrasound, x-rays, biopsies, treatments, overnight care etc. They tried to charge an excess for each procedure despite it being part of the same disease. It took phone calls from 2 of the vets and letters from 2 vets to speak to their vet - their vet was a new graduate - had not even looked up the disease and they had left the decision up to her. On top of that they wanted to see a death certificate from a vet. I explained he had passed away on my lap at 11pm and our family had held a ceremony to bury him the next day. They were not at all happy about that - I told them I could send a photo of me laying him in his grave. It took then 24 hours to decide that would be ok. They showed no sympathy at all.
At that time I had both dogs and 5 cats insured with them
Since that time I have done heaps of research. Here is some of what I have found out:
They assess risk in WA as highest in Australia - despite the fact that we don’t have tick-borne diseases
As owners age they increase the premiums - apparently we r likely to take our pets to the vet more frequently for check-ups - totally ridiculous as the checkup costs less than the excess !!!
These reasons are totally pathetic.
Since that time I have been trying to find another company - some say u can claim up to $25000 a year, but when u check the fine print in the Product Disclosure Statement - all but one have sub-limits on different conditions, some only $1000. In order to reach the $25,000 limit - your pet would have to suffer all the different conditions over the 12 months!!! Now if that isn’t dishonest advertising I would be gobsmacked !!!
The only company I would change to is a US company that has just launched in Australia. These r my reasons.
They don’t have an upper limit for claims - they will pay the total cost- no matter how much.
Premiums go up as pet’s age - but they still pay out.
They have 3 different levels of excess - if u take the maximum excess that is quite high ($700) the premium is way cheaper - even cheaper than my existing.
They will take most pets with pre-existing conditions as long as they have recovered and been clear of the condition for a set period of time (different times for different conditions).
They have a 24 hour help line - very helpful with answering questions and giving suggestions.
Again - Choice - am I permitted to name them???
I hope this is helpful, we need an enquiry to shame these rip-off companies - they r a disgrace and they answer to no one
Most pet insurance in Australia ends up being with one company (not all but most) ie Hollard. There has already been some discussion on the pet insurance in a few other topics. Most reflect on whether value for money and many posters offer the advice they often don’t make a lot of sense.
Further a lot of Term Insurances that are pay by the month, week, year are also underwritten by Hollard. Just the front name changes eg Real Life Insurance whose T&Cs spell it out
“ All products except Bike Insurance are promoted and distributed by Greenstone Financial Services Pty Ltd (GFS) ABN 53 128 692 884, AFSL 343079, trading as Real Insurance. The Insurer for general insurance products is The Hollard Insurance Company Pty Ltd ABN 78 090 584 473, AFSL 241436 (Hollard), and for all life insurance products is Hannover Life Re of Australasia Ltd ABN 37 062 395 484, AFSL 530811. Real Pet Insurance is arranged and administered through PetSure (Australia) Pty Ltd ABN 95 075 949 923, AFSL 420183. Bike Insurance is promoted and distributed by Velosure Pty Ltd ABN 81 151 706 697, an Authorised Representative (AR) of Hollard, AR No. 410026.”
PetSure is linked to Hollard as well
“ 2022 PetSure (Australia) Pty Ltd. All Rights Reserved.
Any advice provided is general only and does not take into account your individual objectives, financial situation or needs. Cover is subject to the policy terms and conditions. You should consider the relevant Product Disclosure Statement (PDS) to decide if a product is right for you. PDS and Target Market Determination are available from the relevant partner’s website. Insurance products are issued by The Hollard Insurance Company Pty Ltd ABN [78 090 584 473](tel:78 090 584 473), AFSL 241436, arranged and administered by PetSure (Australia) Pty Ltd ABN [95 075 949 923](tel:95 075 949 923), AFSL 420183 and promoted and distributed through their Authorised Representatives and distribution partners.”
If you notice a rate rise this year on human insurance it may very well be linked to COVID risk affecting older people.
I also have had my pet insurance hiked up and I have never claimed on it. I rang them up asking why a price hike without informing me,answer we sent notification which they didn’t. Think will take dog to Vet ,claim then swap to another provider
Insurance consumers need to keep in mind that insurance, regardless of type, is a business not a public service (excepting for special government programs). As such they are free to set prices however they want with a balance of profitability and attractiveness.
Many customers are attracted by ‘come on’ prices and routinely renew for a few years prior to shopping around again and they bank on that (pun intended). If they lose a customer they deem is likely to claim prior to that claim the premium is 100% to their P/L statement, and on their side of the equation that is good.
No insurance company wants a customer they expect will claim (excepting certain life insurance policies). Yet even term life insurance is priced so as the insured ages the annual price rises, sometimes exponentially, until it becomes unaffordable prior to death. In many circumstances if one loses insurance from ‘company A’ there is no ‘company B’ willing to take them on at all or for less than top prices because of the high likelihood of a claim being made.
Pet insurance is typical noting vet services are expensive and pet insurance is topical in the Community. Choice published some guidance with a link to their product comparison review.
My explanation for that would be that the person on the phone has absolutely no idea. It would all be done by computer these days. You give all the details to the person on the phone, who keys all the details in, and a premium is spat out. There would be little to no transparency to anyone as to how that premium was arrived at.
The only time any of this bubbles out into the open is when someone claims identity-politics-discrimination - and that presumably doesn’t apply to pets.
Of course the Customer Service rep had no idea how the premium was arrived at. My beef is not with those people who are just doing their job.
My beef is with the Underwriters and how premiums are set to select against us as customers. Price gouging is used as a tool to get rid of unwanted risks. Imagine if health insurers were allowed to increase the premiums ad nauseum so that older Australians could no longer afford the policies.
The same principles should apply to ALL insurance. Fair and reasonable premium increases actually based on the claims experience should, of course, be allowed but huge arbitrary increases which in no way reflect the actual risk should be legislated against.
A lifetime of taking out insurance for many different needs has taught us one lesson. Shopping around is essential, but the best deal is not necessarily obvious or easy to find.
How prior claim history is treated varies with the type of insurance. Some types of policies EG Travel, Removals treat each and every policy on circumstances of the day. Prior history of a client does not deliver a discount. The carriers, providers etc are not considered. The insurance risk is considered as a pooled risk. Insurers will look for factors that increase risk and charge more or reject if required. There is a benefit to the insurer in doing so.
For pet insurance, it would take an experienced actuary to explain the issues and how providers approach assessing risk. Is there any business benefit in identifying reduced risk? Only if there is reliable data and the market is applying competitive pressure.
One view on the market and approach of insurers from a market much larger than Australia.
Unfortunately the past good health of an individual pet is no assurance it will be so in the near future. Our personal pet experiences and of the extended family attest to that. All breeds of dogs have their age related problems. Good health in a younger dog does not assure the loved pet will age gracefully without the onset of serious breed issues or disease. It may explain why a particular breed has a significant jump in premium at a particular age. The pool data for that breed may also have been adjusted recently. Something only an actuary with the industry and underwriters will have access to?
Only part of an answer, the Caviller King Charles Spaniel is both cute and near match for one of our prior family. Near zero costs until …
You assume that the increase in risk cannot be real but show no numbers to prove it. You assume that there is no other possible explanation for the price rise but give no evidence that is so. You are entitled to your opinion but convincing others will take evidence.
Price control of some goods or services is brought up from time to time here. I have not seen any explanation yet of how it would work, who would determine what was an appropriate price or the broader economic consequences of it. Price control has been adopted with limits on what goods and services it covers in Oz and overseas briefly on and off. It never lasts very long. Of course if the vendors don’t like the official premiums they will do what they do with flood insurance in flood zones - refuse coverage. In that case older Australians would no longer have policies whether they can afford it or not. Price control does not sound such a good idea to me.
If you really think the premiums are way over the real risk you could self insure. Put the equivalent of the premiums in an account and use that account to pay for your vet’s bills. The more over the statistical cost of payout the premiums are the more you will have left in the account. But that’s a gamble! Yes it is but if you are right it is a good bet in the long run and you have just told us how betting the other way (buying insurance) is not value for money.
I believe that in the case of humans it is legislated that
the insurer can’t refuse you at all
the premium has to be community rated i.e. does not reflect the risk that you personally and individually represent but instead represents the risk that on average the insured community member represents i.e. no increase at all on account solely of your getting older (so not what you are suggesting).
Whether you agree that that should be the case largely comes down to ideology. I’m sure some people, in this forum and outside it, will argue that private health insurance should instead be banned. ???
Private health insurance for humans is heavily regulated.
I certainly wouldn’t tolerate the above approach to pricing risk for, say, car insurance i.e. some irresponsible flapwit 20-year-old male in his muscle car pays the same as a 65-year-old retiree careful lady driver who only does 5,000 km a year in her sensible vehicle.
Life insurance of course does work the way you say health insurance should not i.e. the premium eventually becomes utterly unaffordable because your risk of dying becomes so high. As they say, nothing is as certain as death and taxes.
All insurance ultimately works the same way (pricing risk and pooled resources) but the politics is quite different.
Hi PJ, Unfortunately and based upon what I have seen on Choice, over the years I’ve been a member, Pet Insurance is robbing us blind'. Put that money away into a separate fund for your fur baby. It's better making $ there with such a caring and wonderful career such as yourself. You have already reduced the risk! And let's face it, Insurance is always about risk and the unlikelihood’ of something happening - hence the premiums:)
Insurance for pets is based on a lot of things.
Breed (some breeds are more prone to injuries than others ie Jack Russells, working dogs etc.)
Age (more chance of issues as any animal ages - not just injury but heart, joints etc.)
And it would also be based on how many claims have been made for say that particular breed or aged animal.
Consider the past year or so, how many ‘covid puppies’ people acquired and how many may not have been quite as healthy as they should have been and people who purchased pet insurance making more claims.
Consider during lockdowns people were allowed to walk their dogs and Vets saw an increase in dogs with muscle or join injuries because people were walking their dogs too much.
I know you’ve asked about your cats, but factor in all that regarding Breed and age and payouts in the past year, premiums are going to go up and likely spread out across the board to all policies, regardless of past claims or no claims.
As already stated, Insurance companies want to make a profit, sadly that means they’re gambling on people NOT making claims and their premiums are a way of ‘hedging their bets’ I guess.
I have some sympathy for your complaint. The origin of insurance was in the concept of mutual protection rather than maximising profit. Perhaps the change which has taken place explains why my home has to be insured for 92% of its likely resale value, despite its being in good condition and being situated on land valued at about 35% of resale value. While I understand the need to insure for demolition and council permissions and changed building codes, the principal of insuring such a high percentage of the property’s value compared to the risk seems to leave a handsome margin for the insurer.
I take it that we are talking about insurance of the building here. How do you arrive at the resale value of the building alone? Normally this applies to the house and land. Do you mean the cost to rebuild?
Why is it 92%? Was that all that was offered or your choice? My house is insured for replacement. That is if it is destroyed by an event that is covered, eg fire, it is rebuilt fully and all costs are met by the insurer.
For the land to be only 35% of the total value would be uncommon especially in big cities where land values are very high. Typically the house replacement value is a minority of the package value.
I don’t understand this, could you explain a bit more. The insurer accepts certain risks and their profit comes from the amount that premiums received exceed the payout for claims against that risk. I don’t see how what you describe fits with that.
You seem to be comparing the two situations where you are both saying your insurance is poor value and/or the insurer’s profit is excessive. Now that may well be true but in neither case can I see the evidence for it.