AAHA Awards First Seal in Its
The American Anial Hospital Assn. has awarded its first “Seal of Acceptance” to Trupanion’s the Trupanion Plan.
This past spring, AAHA launched a “seal of acceptance” program designed to encourage pet insurance companies to make high-deductible ($500 to $1,000) policies available. The seal would be awarded to a company’s policy, not the company itself.
Jason Merrihew, marketing communications coordinator for AAHA, says feedback from the pet insurance industry has been positive. “The AAHA Seal of Acceptance mandates that a company using the seal must be licensed to sell the high-deductible policies in all of the states or provinces in which it is licensed,” Merrihew says.
“For existing companies, the high-deductible policies must be approved for sale in at least 50 percent of the states in which the company is licensed, and the policies must have been filed in all other states where the company is licensed. Because of these stipulations, the association anticipates the first seal being awarded during the fall of 2008.”
AAHA President Anna Worth, VMD, says one of the main reasons AAHA started the program was to address some of the broader concerns that veterinarians have regarding insurance.
“Beyond just the high-deductible policy, the seal recommends several other important points,” Dr. Worth says. “The client is responsible for the paper work. The client is able to choose any veterinarian they want. It’s important for the client to understand their policy clearly so there are no surprises when they ask for an insurance reimbursement and find they aren’t covered.”
Brian Iannessa, public relations supervisor for Veterinary Pet Insurance in Brea, Calif., says VPI has worked closely with AAHA to develop the criteria for its seal of acceptance. “While we don’t currently market a high-deductible product, we are investigating a number of new products that would meet the high-deductible requirement,” he says.
Jack Stephens, DVM, founder and president of Pets Best in Boise, Idaho, says he understands AAHA’s desire to see the upfront cost of pet insurance fall to a point where more owners can afford coverage. But he also notes that current market demand for high-deductible policies is limited.
“We have a higher-deductible option of $300 and are more than willing to provide higher deductibles—but pet owners don’t want the high deductibles,” Stephens says. “They overwhelmingly choose the lowest deductible as a practical matter.”
Stephens says the provision of insurance requires a minimum expenditure in overhead and administration that can’t be overlooked.
“The best value is the lower deductible, where pet owners have help even with the small expenses, due to the basic cost to provide and administer a program,” Stephens says.
Regardless, Stephens says Pets Best will file for higher-deductible plans and be willing to provide them should pet owners seek them.
Alex Krooglik, co-founder of Embrace Pet Insurance in Mayfield Village, Ohio, says his company would have liked to participate in the seal of acceptance program, but the company’s policies will not qualify under current criteria.
“We are one of only two companies to offer high-deductible policies at the moment,” he says.
“Unfortunately, AAHA chose not to consult with all pet insurance companies on the requirements and, as a result, the licensing arrangement we have with our underwriters does not meet their criterion for use of the seal. So, sadly, we will not be participating.”
Chris Ashton, owner of Petplan USA in Philadelphia, says AAHA’s seal of acceptance program is flawed in that it focuses on a single criteria—the option of a high deductible.
“By that reasoning, a company could qualify for the seal, but that company may never pay out claims or even answer the phone,” he says. “We think that the overall reputation of a company needs to be taken into consideration.”
Ashton also notes that high deductibles mean pet owners get less money back when they file claims.
“That could actually create greater dissatisfaction with pet insurance,” he says. At press time, Ashton noted that his company had not yet been in touch with AAHA with regard to the new seal program. But he said he would like to establish a dialogue with the organization to voice his concerns.
Similarly, Linda Bell, chief marketing officer of PetPartners Inc., exclusive provider for the AKC Pet Healthcare Plan and the CFA Pet Healthcare Plan, says her company applauds the AAHA endorsement of pet insurance and the organization’s steps to raise awareness of it as a tool for responsible pet owners.
“Pet insurance is a personal choice; owners have to experience the benefits of claims’ reimbursements themselves or hear about friends’ claims in sufficient numbers for the product to achieve credibility.”
Although penetration of pet insurance in the North American market remains relatively low, it is an area that has seen considerable growth in recent years—growth that is expected to continue into the foreseeable future.
But the industry is still very much in its formative stage, and some veterinarians remain hesitant about how pet insurance will ultimately affect their practices.
A recent Packaged Facts report—published in May of this year—predicts that the North American market for pet insurance will grow from an estimated $248 million in 2007 to $1.1 billion by 2012.
Jack Stephens, DVM, founder and president of Pets Best in Boise, Idaho, expects that future developments in the pet insurance market will drive growth rates beyond this already robust forecast.
Multiple factors are driving current market growth, Dr. Stephens notes.
“It must always be remembered that insurance is foremost a business with stockholders. The aim is profits.”
—Ross Frazer, VMD
Today’s marketplace is populated by more companies offering a wider range of plans than were available just a year or two ago.
Stephens adds that the sophistication of veterinary care—as well as owners’ willingness to pay for it—is also driving the market for pet insurance.
The industry has seen more consumer, veterinarian and investor interest over the past few years, notes Chris Edgar, chief marketing officer of The Hartville Group in Canton, Ohio. Hartville provides insurance through brands such as ASPCA Pet Health Insurance, Hartville Pet Health Insurance and Petshealth Care Plans.
“The consumer mechanics have been especially well publicized,” Edgar says. “The increase in vet bills in general, the adaptation of human medicine to pets and the increasing attachment of people to pets are all drivers.”
Alex Krooglik, co-founder of Embrace Pet Insurance in Mayfield Village, Ohio, says the increased interest in pet insurance in the U.S. has manifested itself in a couple of ways: through money flowing into the industry and the establishment of successful partnerships.
“Several of the existing pet insurance companies have been able to attract millions of dollars of venture capital funding, indicating the investment community sees that pet insurance is about to bloom in the United States,” Krooglik says.
“And in terms of partnerships, the success of the ASPCA-branded product and the recent entry of Purina into the field show the attraction of well-known pet-related brands in growing awareness.”
Pet insurance industry growth is not viewed positively by all stakeholders.
Ross Frazer, VMD, MD, Dipl. ABFP, FAAFP, owns Frazer Medical Group in Homer City, Pa., which includes a section of veterinary medicine and a section of family medicine. Based on his experience with the human health insurance model, he strongly objects to the establishment of a similar model in veterinary medicine.
A veterinarian for 39 years and a physician for 24 years, Dr. Frazer says he initially evaluated and dismissed HMO and PPO insurance models when they emerged on the human medicine side.
“They drove too big a wedge between the doctor and patient,” he says. “The insurance companies made non-negotiable dictates, gag orders and set parameters in which a physician could practice. These items, in my opinion, encroach on the ethics of the physician.”
Frazer says insurance has not improved his family medicine practice—only encroached on it.
“It must always be remembered that insurance is foremost a business with stockholders,” he adds. “The aim is profits. The client-patient is the source of the money, while the health provider is the loss leader.”
Stephens says many veterinarians are concerned that insurance will become a controlling factor in their practices and that paperwork administration will become a costly component of their businesses.
“Pet insurance is here to stay and, as a profession, we need to direct it—even to the point of controlling it—so its value is not diminished by what happened in the medical profession,” Stephens says.
In a recent Pets Best white paper, Stephens lays out his argument against managed care principles in the pet insurance industry.
He urges veterinarians to help prevent managed care from taking root by refusing to join networks, not providing discounts to groups for increased business, avoiding fee and benefit schedules, rejecting third parties that dictate how veterinarians set fees and practice medicine, and not recommending insurance companies that restrict care because of a pet’s age.
At the annual American Veterinary Medical Assn. conference in July, the AVMA Group Health and Life Insurance Trust was expected to announce an important new industry partnership at a luncheon sponsored by Pets Best and Aetna.
Details were not available at press time. But Stephens, who is working with the association, says it is interested in a partnership that will formulate the direction of pet insurance and discourage the establishment of managed-care models.
Brian Iannessa, public relations supervisor for Veterinary Pet Insurance in Brea, Calif., agrees that many veterinarians are concerned about the negative implications associated with managed care on the human side.
“For example, they fear that insurers may try and dictate how a veterinarian practices medicine or charges rates, or that they’ll be burdened with discounting rates for insured clients or submitting claims to the different providers,” he says.
“But pet insurance is the furthest thing from managed care,” he says. “It’s an indemnity form of insurance that keeps the relationship predominantly between the client and insurer.
“We don’t recommend how a veterinarian should test or treat, we don’t expect them to deal with discounted fees and we rarely ask them for any type of involvement, with the exception of providing the insured client with a definitive diagnosis,” Iannessa says.
Although penetration of pet insurance in the North American market remains relatively low, it is an area that has seen considerable growth in recent years—growth that is expected to continue into the foreseeable future. Although penetration of pet insurance in the North American market remains relatively low, it is an area that has seen considerable growth in recent years—growth that is expected to continue into the foreseeable future. pet insurance, pets best