Hollard-owned PetSure has defended its underwriting dominance in pet insurance and says Productivity Commission draft recommendations to improve competition could have the opposite effect and disadvantage consumers.

The commission’s draft report says a proliferation of brands from a few underwriters gives an illusion of competition in the insurance market, with the issue most apparent in pet cover, where Hollard is dominant.

It proposes a brand’s website should clearly name the underwriting company and list other brands in the same space that are covered by the same underwriter.

PetSure warns including “major household names” on the websites of smaller providers may undermine competition.

“We are concerned about the likely impact of programmed or routine consumer behaviour, whereby consumers are subconsciously drawn to the name brands,” it says. “As such, an unintended consequence may be a lessening of competition in the area if the smaller and more specialist brand partners become less viable.”

The Insurance Council of Australia and National Insurance Brokers Association (NIBA) also oppose the recommendation.

NIBA says it would be overkill for website branding requirements to be imposed on independently owned distributors or third parties so they are effectively promoting competitor products.

“This would be akin to asking Coles to place a link on its website to Woolworths and IGA, and vice versa,” it says.

PetSure says only two of 23 brands issued by Hollard are also owned by the group, with the remainder belonging to various partners.

“Each [has] a distinct market presence and works hard to innovate product benefits and features to appeal to their specific markets,” PetSure says. “In essence, this means they are in competition with each other.”

The submission says product specifics, such as cover for older pets and indoor cats, could be obscured in a list of other brands, diverting consumers to providers that may not offer the right cover for their needs.

The result could be inconsistent with new draft product design and distribution obligation legislation, which requires issuers to correctly deliver products to targeted markets.