The Evolution of Pet Insurance

As it turns out, September is Pet Health Insurance Month, so there is no greater time to discuss the Evolution of Pet Insurance. I first learned about pet insurance back in 2010, when I started working at the veterinary hospital. When I mentioned the concept to people I knew, they often gave me this look like a) your crazy, and b) I hear pet insurance is a rip off.

Typically, people thought I was crazy because they didn’t realize that pet insurance even existed, and who could blame them? As of 2012 less than 1% of pets were covered by pet insurance in the U.S (Embrace).

People who felt that pet insurance was a rip off had either experienced or encountered people who felt duped by the pet insurance industry. Somehow, pet insurance got a really bad rap with pet parents, and I wasn’t totally sure why. I began asking the veterinary staff I worked with, “What’s up with people hating pet insurance?”. As it turns out, there are several factors that helped form notions of pet insurance; history of mistakes, differences in regions, and lack of information.

History of Mistakes:

Pet insurance in the U.S. is only a little over 30 years old. When the concept was new, many pet parents were still trying to figure out what was covered and what wasn’t. Still to this day, many insurances don’t cover wellness exams, preventative treatments, or preexisting conditions. Unfortunately, in its early years, the pet insurance industry simply did not live up to clients expectations.

When speaking with clients who felt they were duped by pet insurance, they would often say that their insurance never covered them when they needed it, OR that they were dropped from their coverage when their pet became sick.

Although I couldn’t find any evidence online that people were wronged by pet insurance companies in the past, it’s possible that there were simply misunderstandings about what the companies COULD cover and to what extent.

I have not had this experience first hand, nor have I seen this happen to a client. However, it is possible that in the early years of pet insurance there simply wasn’t enough money being invested into the industry to provide comprehensive coverage. Basically, the more people invest in pet insurance, the more claims insurance can cover.

What I can tell you is that as of today, I have had several patients who have significantly benefited from pet insurance.

Lack of Information:

Many people still assume that pet insurance works the same way human insurance does. Which is inaccurate. Pet insurance allows you to make small monthly payments which go toward paying for any claims you might have in the future.

When you are faced with a large veterinary bill, you will pay that bill up front, and you will then be reimbursed by the insurance company if they decide to cover your claim. Recently, however, some pet insurance companies have added on express claims that allow the insurance company to pay the covered portion of the bill directly to the hospital.

Additionally, many people don’t believe they will use pet insurance. However, according petinsurancequotes.com, 75% of pet owners will make a claim within their first 3 years of having pet insurance, and 35% of those claims will be for chronic conditions. In the 3.5 years that Rooney has been insured, we have made at least 8 or 9 claims, many of which were for his allergies, which are chronic.

The important thing to remember is that as we continue to use pet insurance, the industry will continue to improve, and the companies will cover more and more.

Differences by Region:

As it turns out, the history of pet insurance outside of the U.S. is much longer than you would image. The first pet insurance claim was filed in 1890, but was primarily focused on livestock and horses. Additionally, the first dog received coverage in 1924. However, despite many policies and companies being in place, the North American Pet Health Insurance Association wasn’t established until 2007. Perhaps its because the industry is more established outside the U.S., but 25% of dogs and cats in the UK are insured and 45% of dogs and cats in Sweden. This is compared to the 1% that are insured here in the U.S..

I have always wondered why pet insurance was more popular in the UK, and my own personal opinion is that there are two main reasons for the increased coverage in the UK:

1) History: As stated above pet insurance is a more established industry in Europe.

2) Health Insurance Mentality: The human health insurance industry is much more comprehensive in Europe, where as here in the U.S. we pay extensive amounts of money for our own insurance. Therefore, the disparity might make pet insurance seem more plausible and affordable to UK residents.

Employee Coverage:

I live very close to Silicon Valley which is the epitome of employee competition. Companies like Google and Facebook offer everything under the sun to their employees so that they can hire the best of the best. Some companies even offer pet insurance coverage these days. Companies that offer pet insurance to their employees include:

Deloitte

Walgreens

Caterpillar Inc

Amazon.com

Google, Inc

American Express

and the list goes on…(Yahoo)

I am hopeful that as more companies provide pet insurance for their employees, the industry will continue to grow, and more animal lives will be saved.

How does a vet choose who to recommend?

Often times, your veterinary office has an established relationship with one type of pet insurance. I have worked for hospitals with relationships with VPI and Trupanion. Just because your veterinarian has a pamphlet in their office doesn’t necessarily mean its the best pet insurance for you and your pet.

A great way to determine what would work best for you and your pet is to ask the veterinary staff who they use as their pet insurance provider. For example, I have Trupanion and I have had an excellent experience with that company, and have shared my experience with many of our clients.

How will I know what is right for my pet?

The North American Pet Health Insurance Association has a buying guide that is very comprehensive and I recommend reviewing that document before making a pet insurance purchase.

Now, jump over to Carol’s blog Fidose of Reality to read her Mom perspective on the Evolution of Pet Insurance.