A growing need for pet insurance

With more than 62% of American households owning a pet and just 0.3% of the cat and dog population insured in recent years, pet insurance is an industry that is constantly changing as veterinarian costs continue to rise.

According to Embrace Pet Insurance, pet insurance is a market that continues to grow too - written premiums grew at a compounded rate of 18% between 2003 and 2008. The American Pet Products Association projected pet owners would spend $12.2 billion for veterinary care in 2011. That number grew from $11 billion in 2010 and $8.2 billion in 2006. Part of it is just like human health care, vet prices continue to rise. For cats, owners spent an average of $423 on surgical veterinary visits in 2010 - up from an average of $278 in 2008.




Ten years ago, very few people even talked about pet insurance, explains Charles Nebenzahl, CEO of Lakewood, N.J.-based PetAssure, a discount veterinary program.

Back in 2003, "pet insurance was primarily a couple of players who didn't do it right and those who knew about pet insurance had a negative perception of it," Nebenzahl believes. "We've seen a lot more players in the market. Some of them are brand names [but] the perception [still exists] maybe it's too expensive, maybe [it's overpriced], but, 'Hey, this is something I want to look at.' ... People are looking at it."

Employers are also looking to offer pet insurance in new ways, including off-cycle, says JoAnne Novak, VP of new business development at Canton, Ohio-based The Hartville Group, Inc., which is a strategic partner of the ASPCA, and sells pet insurance under the ASPCA Pet Health Insurance brand. Employers are interested in offering it off-cycle and are interested in more off-cycle start dates than ever before, she says.

Further, requests for proposals are being grouped together with more ancillary benefits. "It used to be pet insurance was a one-off request. Now I'm seeing a trend where we are looking to add pet insurance along with" other plans, such as pre-paid legal and auto and home, Novak says.

That builds on a greater interest in ancillary voluntary benefits in the workplace and offering employees more of a choice of where they can spend their own money, she explains.

VPI Pet Insurance is also seeing a greater interest in the product, says Deana Single, director of group accounts at the Brea, Calif.-based company. "From a voluntary benefit standpoint, it's a huge growth area for us. There's "greater interest from employees as they take a targeted look at their benefits and looking at their coverage to make sure everyone" is covered.


Not going to the vet

According to the American Veterinary Medical Association's vital statistics report, at year end 2011, 44.9% of cat owners and 18.7% of dog owners did not take their pets to a vet [see chart].

Most purchasers of pet insurance have had a bad experience or know someone who did in relation to having high vet costs. Pet insurance is "word of mouth insurance," Single says. "Our calls spike after the family BBQ on Memorial Day and after family vacations. Like teenagers, they think nothing will happen to their pet, and when something does it's too late to get insurance so they vow that the next time they will get insurance."

While not every employee has a pet, precluding an entire population from purchasing the insurance, it is still a type of feel-good insurance for employees. "It shows the company cares about pet's health and pets are part of the family," says Novak.

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