Pet insurers pay more than 85% of the 500,000 pet insurance claims made each year, illustrating customers do receive value from their policies.

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, the Insurance Council of Australia (ICA) says.

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

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

Industry members hit back, saying the criticisms are overly simplistic and don’t match the facts.

ICA President Richard Enthoven, who is also CEO of major pet insurer Hollard Insurance Company, says 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,” Mr Enthoven said.

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 about $140 million in claims benefits, and has grown from 40,000 policies in 2009 to more than 468,000 today.

About two-thirds of Australian households have pets. Choice estimates 16% of cat and dog owners have pet insurance.

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

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

However, Choice did concede 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”.