Declarations by consumer group Choice that pet insurance is “shonky” and “worthless” are overly simplistic and don’t match the facts, the Insurance Council of Australia (ICA) says.

Pet insurers pay more than 85% of the 500,000 pet insurance claims made each year, showing customers are receiving value from their policies, the council said today.

While pet insurance policies make up only about 1% of total customers each year for common insurances like car, motor and home, they account for 12% of claims processed.

Pet insurance came to the fore today after it was named on Choice’s annual “shonky” list of the worst products and services for 2019, with the consumer group criticising the product as “riddled with exclusions and technicalities” and calling it one of the country’s worst-value insurance products.

Choice says insurance companies should not be exempt from laws against unfair contract terms, arguing that this is a “special loophole for insurers” that must be closed.

But ICA President Richard Enthoven, who is also CEO of major pet insurer Hollard Insurance Company, said today that Choice’s assessment “is not supported by the experiences of most customers, animal care experts or veterinary surgeons”.

“Choice failed to consider financial data, the history of the product and recent product developments,” says Mr Enthoven.

Hollard says more than 40% of its PetSure customers claim each year, submitting an average 5.6 claims a year. Over the past 12 months PetSure has paid almost $140 million in claims benefits, and has grown from 40,000 policies in 2009 to more than 468,000 today.

Petsure Chief Veterinary Officer Magdoline Awad says pet insurance “is an insurance that’s made to be used, and claims numbers demonstrate that”.

Almost two-thirds of Australian households have pets. Choice says 16% of cat and dog owners have pet insurance and half would pay up to $2500 for treatment if their pet had a life-threatening illness. Pet insurance premiums range widely from $180 up to $4500 a year, with most policies structured so that premiums increase as the pet ages.

After reviewing 86 pet policies, Choice did not recommend any pet insurance products due to what it says are their “many restrictions and the lack of competition”. Choice says it is much harder to shop around for a better pet insurance deal when compared with travel or health insurance.

“Pet insurance is the insurance a business sells when it wants to make money without providing any service at all,” Choice said. “It relies on emotionally manipulating your love of your pet to sell you worthless insurance.”

ICA says all exclusions in pet insurance policies are clearly disclosed, as required by law, and annual limits are explained to customers.

Mr Enthoven also rejects the suggestion that pet insurance customers are emotionally pressured, pointing out that most policies are proactively researched and bought online.

Choice also warned of sub-limits for certain items. For example, a policy with a $12,000 overall annual limit may have a sub-limit of $1000 for things such as treatment after a tick bite.

Most policies have a cap of around $300 on veterinary consultation fees, and Choice maintains insurers “make any changes they like” when the policy is renewed, including premium increases, reductions in coverage percentages, added exclusions, and reduced payment limits and sub-limits.

However, it concedes that the cost of pet insurance “may well be worth it if you consider the vet bills you may be liable for due to the breed of your pet, as long as the specific conditions are not excluded by the policy you select”.

It also notes most policies offer an optional add-on for “routine care” which covers things like vaccinations, worm and flea prevention and one-off costs such as desexing.

“It's not very expensive to add on (usually around $100) and if you make use of it, it can offer good value,” Choice says.