Europe loves pet health insurance.
North America? Not so much.
Even though the North American Pet Health Insurance Association’s latest survey showed record growth in the number of insured pets—1.6 million as of 2015—that accounts for less than 1 percent of the total population of owned dogs and cats in the United States and Canada.1-3 “In Sweden, about 60 percent of cats and dogs have medical insurance,” said Darryl Rawlings, chief operating officer of Seattle-based Trupanion. “In the U.K., 27 to 28 percent of pets have medical insurance. And if I went to the U.K., about 80 percent of the revenue from referrals to specialty hospitals is from insured clients.”
Available in North America since the 1980s, pet health insurance doesn’t suffer from a lack of awareness. A 2009 survey found that 94 percent of pet owners knew about the availability of pet insurance. Experts said the main issue for most pet owners likely is they don’t understand how pet insurance works and are confused about the myriad policies, options and companies.
“They’re confused between wellness and medical insurance, and they don’t understand the value proposition [of insurance], but they’re aware of it,” Rawlings said. “Almost all of these people say the only people who they trust to understand it is the veterinarian.
“Veterinarians need to weigh in,” he added. “It is important for veterinarians to do the research and recommend [certain pet insurance products]. It’s not practical that pet owners are going to have the knowledge or the time to make their own choice.”
In recent years, many providers have tweaked their products to make pet insurance more valuable and less confusing.
“Several trends have emerged in the past few years,” said Mary Beth Leininger, DVM, assistant vice president of veterinary relations at ASPCA Pet Health Insurance, part of the Hartville Pet Insurance Group in Akron, Ohio. “First, adding preventive-care options to accident and illness insurance coverage has gained a tremendous following with pet owners. The ability to pay for annual or semiannual wellness visits in small monthly payments is valuable.
“Second,” she said, “pet owners are using alternative therapies for their pets more frequently, and several pet insurance companies are covering these procedures as routine care.
“Finally, there is an ongoing push by pet insurance companies to make their insurance plans easier to understand and easier to customize to fit pet owner needs and budgets,” she added.
Benefits for Pets, Vets
When veterinarians invest in learning about and recommending pet insurance, the result is a win-win-win—for pets, clients and the veterinary hospital.
“According to a recent major market survey by NAPHIA, a very large percentage of veterinarians wish all their clients had pet insurance,” Dr. Leininger said. “Yet few veterinarians do little more than display pet insurance brochures in the reception area.
“Increased use of pet health insurance provides benefits to all involved,” she continued. “More pets receive the care they need, pet owners feel they are doing the right thing by following the veterinarian’s recommendation for care, and veterinary practice income increases.
“NAPHIA research demonstrated a significant uptick in veterinary spending if clients had insurance for their pets—a 29 percent increase for dog owners and a whopping 81 percent increase for cat owners,” she said.
An insured client doesn’t have to worry about being able to afford the care, and, as a result, will probably bring the pet at the first sign of a problem rather than a few days or weeks later.
“[Uninsured] pet owners aren’t going to the vet because it’s nerve-wracking, and they don’t know if it’s going to be $3,000 or $5,000,” Rawlings said. “They are going to put their head in the sand and hope it resolves itself.”
Of course, this approach can backfire, leading to an even higher bill for the client.
Insured clients typically are more willing to approve whatever tests and treatments the veterinarian recommends, regardless of cost. This provides greater flexibility for the veterinarian to recommend the diagnostics and treatments she feels are right for the pet without worrying about the client’s balking at the cost.
“Veterinarians no longer have to adjust their treatment recommendations based on cost,” said
Elyse Donnarumma, CVT, veterinary manager at PetPlan Pet Insurance in Newtown Square, Pa. “Pet insurance allows everyone to focus primarily on quality of veterinary care and makes the cost of care secondary. Pet insurance drives owner compliance with diagnostic and treatment recommendations.”
Needed More Than Ever
Veterinary care costs more every year—no surprise there given inflation and medical advancements.
“If you look at the cost of services from 10 or 20 years ago compared to now, and the availability of specialty care, the medicine has evolved and the prices have gotten higher,” said Carol McConnell, DVM, MBA, chief veterinary officer at Brea, Calif.-based Nationwide pet health insurance. “We need the ability to help pet owners afford our care because it’s getting expensive.”
Clients frequently ask veterinarians if pet insurance is “worth it.” There is no one right answer. Owners of pets blessed with great health won’t get much from insurance beyond peace of mind.
“It’s fascinating the way we as Americans view the concept of insurance,” Dr. McConnell said. “We look at insurance as an investment, like money in, money out. If my premiums total $400 a year, I should at least go to the veterinarian enough that after invoices are submitted and reimbursement is received I clear at least $400 a year to have made it ‘worth it.’”
Of course, insurance is for the unexpected. Whether it’s for a pet or an iPhone, buying insurance is always a gamble. The client might never need it, but if they do, they will be glad they have it. With insurance, the client won’t need to choose between a lifesaving treatment and their bank account.
“Insurance is you pay a small amount month to month, and then when you are faced with that random unforeseen event that could have significant financial consequences, you don’t have to worry,” McConnell said. “You can say across that stainless-steel table in the exam room, ‘Sure, doc, do whatever you recommend.’
“A lot of financial advisers might say, ‘Don’t buy the insurance. Just open a savings account and put $40 in there every month,’” she said. “The problem is you run into two things. No. 1: timing. You don’t know when that unexpected event is going to come. If you’ve only saved two months of $40 a month, you have a whopping $80.
“The second thing is, can we as Americans truly save? And if we can save, do we leave it alone? When the water heater breaks, you’re probably going to take it out of your pet savings fund.”
Insurance as a Staff Benefit?
A growing number of companies offer pet health insurance as a group benefit. Although most veterinary hospitals offer employee discounts on pet medical care, you might consider offering pet insurance instead.
“Research conducted by the North American Pet Health Insurance Association among veterinarians determined that the majority of veterinarians wish all of their clients had pet health insurance,” said Brakke Consulting senior consultant John Volk, who is working with NAPHIA on its marketing research and veterinary outreach programs.
“Similar pet owner research showed that among those pet owners who would consider pet health insurance, 71 percent were more likely to purchase if their veterinary practice insured staff pets,” he said. “A practice that insures staff pets makes a pretty convincing argument that it considers pet insurance worthwhile.”
A practice can benefit from insuring staff pets in many ways.
“First, it’s a great way to educate staff about pet insurance,” Volk said. “If they use it themselves, they’ll certainly be familiar with it and able to answer questions and discuss it with clients.”
Insuring employees’ pets might save the practice money because discounts can be eliminated and full prices charged.
“Practice owners are business owners, and treating staff pets takes the same amount of resources as treating a client’s pet,” said Elyse Donnarumma, CVT, veterinary manager at PetPlan Pet Insurance. “Offering pet insurance as a benefit allows the veterinary hospital to continue to function as a business and generate revenue.
“The IRS has regulations regarding the percent of discount that can be provided,” she said. “Offering pet insurance to staff members offsets this discount and still provides the benefit of discounted pet care to employees.”
Offering pet insurance for employees’ pets is certainly an investment, but it doesn’t have to be all or nothing. For instance, the hospital owner could make it a perk for full-time employees only, or only for those who have been with the practice for a certain number of years.
“Veterinarians I’ve interviewed use different methods,” Volk said. “Some provide insurance for one pet for each employee. Others pay a certain amount per month toward pet insurance. The amount may increase with employee seniority.”
What Your Clients Need to Know
The topic of pet insurance is confusing for many pet owners, so they often ask their veterinarian for help. When clients ask for advice, here are key tips to convey:
Is It Worth It?
For a client with a healthy puppy or kitten, buying insurance may make financial sense. Puppies and kittens are generally the least expensive to insure, and they can get into costly trouble. One bowel-obstruction surgery or knee repair can make a policy worthwhile.
Older pets are more expensive to insure. It might not make financial sense to insure a senior dog because pre-existing conditions will be excluded. Some insurers “age out” pets at a certain point by not offering coverage.
What Is Covered?
Pet insurance reimburses for covered illnesses or injuries. Unless the client purchases a plan that includes wellness coverage, it does not reimburse for services such as vaccines, annual bloodwork, dental cleanings or flea medications. Some plans exclude or limit benefits for things like cancer or hip dysplasia, but they may offer add-ons for an additional fee.
Owners of purebred pets must be careful when buying insurance. Some policies exclude hereditary diseases and conditions genetically linked to certain breeds—for instance, hip dysplasia in a giant breed or cancer in a golden retriever.
How Much Does It Cost?
Annual premiums are based on several factors, including the pet’s breed and age, whether it is spayed or neutered, and where the pet owner lives. Some providers offer tiers of deductibles: low, midrange and high. The higher the deductible, the lower the annual premium will be.
Depending on the company, the deductible will either be annual, per condition or incident, or per visit.
The best option is annual—once the client reaches the deductible limit, they are set for the year, no matter how many times they return to the clinic.
Per condition or incident means the client pays the deductible once in a calendar year for the same problem. For instance, if the patient has allergies and comes in four times in a year for treatment, the client needs to reach the deductible only once and then all future care is covered within the policy year.
Per visit is the least desirable option. It means that every time the pet is seen, the client must reach the deductible before anything will be covered.
How Much Will I Get Back?
Some insurance providers offer different tiers of payout for claims after the deductible is met: low (80 percent), midrange (90 percent) and high (100 percent). The higher the payout percentage, the higher the annual premium.
Most companies cap payouts at a certain dollar amount annually, and some allow the client to choose the cap. A higher total annual payout will result in a higher annual premium.
Originally published in the March 2017 issue of Veterinary Practice News. Did you enjoy this article? Then subscribe today!