Purina is getting out of the pet insurance business. Last week, Pethealth (24PetWatch) announced that they are buying the 12,000 PurinaCare policyholders (or more specifically, they are buying the right to administer the current PurinaCare policies and the right to any subsequent policy renewals.)
The main question for PurinaCare customers revolves around renewals. When it comes time to renew, will the PurinaCare policyholder have to switch to a Pethealth policy or do they get to keep their existing policy? This could have real effects on customers due to the different types of coverage offered by the two companies (e.g, Pethealth has per incident limits, while PurinaCare does not.)
Interesting article in the NY Times about a 13-year old bichon frise who needed a $6,000 gallbladder surgery. The piece highlights two trends in pet healthcare: 1) advances in veterinary medicine allow for all sorts of life-extending options for sick pets that simply were not possible a couple of decades ago and 2) the treatment of pets as family members, deserving of pricey medical care.
Even better are the reader comments after the article. While there are many people who complain that spending $6,000 to save a dog is a clear example of misguided priorities, the majority of the readers feel that people should spend their money on things that bring them happiness.
I have to agree with the majority. Nobody complains when a family spends several thousand dollars to take a trip to Disney World. So why does spending the same amount on a beloved pet cause such consternation?
This years VPI award for the most unusual claim goes to Peanut, a dachshund-terrier mix, who somehow was buried alive after a tussle with a skunk. Peanut suffered from hypothermia and spent two days under a vet’s care. More info on the Hambone website.
Demonstrating that the pet insurance market continues to grow in the down economy, two US based pet insurers were named to the 2011 Inc 500 list of fastest growing companies.
PetPlan listed 2010 revenue of $18.7 million with 40 employees. PetFirst Healthcare listed revenue of $3.3 million and 32 employees.
We are assuming that PetFirst is using its commission amount as revenue, while PetPlan is using its gross premium amount as revenue. For an apples to apples comparison, PetFirst should have about $11 million in gross premiums (using a 30% commission rate.)
If we further assume an average annual premium of $300 for each company, we would estimate that PetPlan has approximately 62,000 active policies, while PetFirst has approximately 37,000 active policies.
A new study by Bayer Animal Health trying to find out why pet owners are reducing the number of trips to the vet has found six main causes:
- the recession
- fragmentation of vet services
- availability of pet health info online
- feline resistance (kitty hates going to the vet)
- don’t feel need for annual checkup
- cost of vet care
I can certainly believe the last reason. This site allows pet owners to post reviews of their vets and while most people are very happy with the treatment they receive, they consistently gripe about the costs.
PetSafe, the manufacturer of pet items such as wireless fences, kennels, dog doors and about a thousand other items has recently entered the US pet insurance industry. The company is based in Knoxville and is underwritten by the American Pet Insurance company (the folks behind Trupanion.) Brett Johnson, formerly of Pets Best, will be running the new operation.
Pethealth Inc, commonly known as 24PetWatch, announced net income of $343,000 on revenue of $8.2 million for the 3rd quarter of 2010.
- they intend to acquire other pet insurance businesses in the US & the UK
- over 60% of new policy sales came from the shelter channel
- they are selling a lot of microchips; almost $2 million worth in the quarter
Every week I get at least one email from someone looking for pet insurance that covers pre-existing conditions. I tell them that no insurance company covers pre-existing conditions and explain it this way: if you got into a car accident and then tried to buy auto insurance the next day, would you expect the insurance company to pay for your accident? Of course not. Well, a pre-existing condition is basically an uninsured car accident.
The reason the insurers don’t cover pets with pre-existing conditions is simple: pet owners would simply wait until their pet got sick and then buy pet insurance. And this would put every pet insurance company out of business within a year.
So it makes perfect sense that insurance companies do not cover pre-existing conditions.
There are a couple of additional details worth noting: 1) you can still get pet insurance if your pet has a pre-existing condition – your pet will still be covered for everything unrelated to the existing illness/condition; and 2) some insurance companies consider a pre-existing conditioned cured after a period of time (and will reinstate coverage for that condition.)
An author from New Zealand claims that “pet insurance [is] not worthwhile for healthy pets.” He notes that “if pets are healthy and do not require any major treatment or operation, then it is not worth going for an insurance plan.”
Hard to argue with that logic. Similarly, if you are never going to get into a car accident, auto insurance is not worth it. Same goes with human health insurance: if you are healthy and won’t be requiring any serious medical treatment during your life, you may want to just skip on insurance altogether.
Not sure why many people don’t grasp that insurance is primarily a hedge against an unexpected occurrence. And pet insurance is best used by owners to avoid economic euthanasia – putting down a beloved pet because they can’t afford the vet costs.
But the author is certainly correct – pet insurance is not worth it if your pet is never going to get sick.