A study of the pet insurance sector accuses insurers of numerous exclusions, little scope to switch policies, a growing number of complaints and cases of premiums being charged for dead pets.

Consumer magazine Choice says the Financial Ombudsman Service recorded a “significant increase in disputes” concerning pet insurance last financial year, partly due to an increased take-up of the product.

There were 117.8 disputes per 100,000 customers for Medibank Private’s PetSure, issued by Hollard, and 19.8 per 100,000 for Petplan, which is underwritten by Allianz.

In 2012 a PetSure software glitch caused claims delays and errors, Choice says.

Three Petplan policies appear in Choice’s top six after the consumer group studied 50 accident and illness offerings. Four Hollard policies – via the RSPCA, Medibank, Bow Wow Meow and Woolworths – are in the bottom 11.

“Choice has heard several complaints from distraught pet owners who have… been forced to pay premiums for the remainder of the policy period, in cases where they had made a claim but their pet had passed away,” Choice says.

One PetSure policyholder complained, and the insurer says it will cease the practice from July 1.

Petplan director Doug Ford told insuranceNEWS.com.au that many UK insurers have stopped charging policyholders after pets’ deaths due to adverse publicity.

Under its arrangement with Allianz, Petplan is required to keep charging premiums, but it may have some discretion not to.

“People get confused with pay-by-the-month plans and are under the illusion they are on a monthly contract, when it lasts for a year,” Mr Ford said.

He says Petplan products are underwritten at the point of sale – which is not the case with other insurers – and there is no excess, because this results in better treatment.

Choice says pre-existing conditions are generally excluded for pets’ lifetimes, meaning there is little scope to switch policies.