Rapid Growth Seen For Pet Health Insurance
Post-recession consumer optimism, greater competition and rising support from veterinarians are reasons for increase.
The rising cost of veterinary services and Walmart’s likely entry into the market should help push U.S. sales of pet health insurance toward the $1 billion mark by 2020, the market research firm Packaged Facts stated in a new report.
The Rockville, Md., firm predicted enormous potential for an industry that started in 1980 with Veterinary Pet Insurance (VPI) of Brea, Calif., a company that today is fighting to maintain an estimated 47 percent market share amid growing competition.
U.S. sales of pet health insurance were expected to reach $536 million in 2013, which would represent a 16 percent jump in one year, Packaged Facts reported.
Among the reasons for the spike, and a 12 percent increase the previous year, are post-recession consumer optimism, greater competition and rising support from veterinarians, Packaged Facts added. Pet owners learn about insurance most often from a veterinarian or clinic staff, who reveal to clients a means to help pay for a growing menu of costly procedures such as pacemaker implantations, radiation therapy and CAT scans, according to the report.
Younger veterinarians tend to be more enthusiastic about pet health insurance, the report’s authors, George Puro and David Lummis, stated.
"Resistance to pet insurance on the part of veterinarians will likely diminish due to the greater receptiveness of younger generations of veterinarians intent on providing the best health care possible, combined with the direct economic pressure pet owners will increasingly feel when it comes to footing the bill,” they wrote.
Growing awareness of pet insurance can only help sales, Packaged Facts found.
One likely promoter is Walmart, which in October 2012 began selling policies at more than 300 stores across Canada. The report called the entry of the world’s largest retailer into the U.S. pet insurance market "only a matter of time.”
Such a move "should rapidly increase pet insurance penetration at the value end of the market while driving North American consumer awareness of pet insurance even higher,” according to the report.
The report found a 2 percent insurance penetration rate among U.S. dog and cat owners, a number that pales in comparison to 25 percent in the United Kingdom and 50 percent in Sweden.
The report may underestimate the market’s potential growth, said industry veteran Jack Stephens, DVM, who started VPI before leaving to launch Pets Best Insurance of Boise, Idaho.
"I actually think it will be larger by 2020,” Dr. Stephens said. "All indications are that increased competition is opening up new channels and greater exposure.”
VPI President Scott Liles pointed to two reasons for the low insurance penetration rate.
"First, many pet owners either don’t believe anything bad is going to happen to their pets, or they don’t fully understand the costs associated with comprehensive veterinary care,” Liles said. "Second, I believe we as an industry need to do a better job of listening to what the customers and veterinarians want, and then providing solutions to those needs. That’s what we’ve done with [preventive and wellness services].”
Liles questioned VPI’s standing in the report, saying the company has a higher market share, 53 percent, followed by Hartville Group’s ASPCA at 10 percent and Trupanion at 9 percent.
Packaged Facts, which compiled statistics from sources both inside and outside of the industry, pegged the numbers at 47 percent for VPI and 9 percent each for ASPCA, Trupanion and Fetch Inc.’s Petplan.
Kristen Lynch, executive director of the North American Pet Health Insurance Association, an industry trade group, said veterinarians play a key role in the industry’s future and could do more to promote coverage.
"We understand that they have many competing priorities … and ethical considerations in promoting products in their clinics,” Lynch said. "We maintain that this obstacle can be overcome if veterinary clinics provide their clients with information on multiple pet insurance companies and feature a range of products.”
Among other findings in the Packaged Facts report:
* About 1.86 million pets in the United States and Canada are insured.
* Four of the oldest companies—VPI, Hartville, Pethealth and Canada’s Western Financial—have a combined 64 percent share in North America, down from 94 percent in 2005.
* PetPremium, which was launched in October, is the 13th company marketing pet insurance in North America. The Durham, N.C., insurer gained instant attention by amassing 325,000 Facebook fans, a number that easily surpasses VPI’s 190,000 and those of all other competitors.
* 23 percent of dog owners who did not have pet health insurance were not even familiar with the policies. Twenty-eight percent of uninsured cat owners had the same response.
12/30/2013 4:11 PM