Embrace Pet Insurance Blog

Should I buy pet health insurance?

Pet insurance is not for everyone. I know that's a bit odd coming from someone who will be selling pet insurance by the end of 2005 (we hope!) but even in the UK, where pet insurance is very popular, nearly 9 out of 10 pet owners don't have pet insurance and that's because for many people, it's not what they need.

Here’s the test we put to people: What would you do if you were faced with the choice of paying an unexpected, expensive vet bill or putting your dog or cat down? Some people would just put the dog down and so pet insurance would probably not be a benefit (although I always follow up with the question: What would your spouse and kids think about that? and people often rethink their answer.)

If you are like many pet lovers though, you will do whatever it takes to make your pet well or comfortable, even to the point of financial difficulty. We all know of stories of people who have spent thousands of dollars on their pet’s health, even when they didn’t have the money to spare.

Another option we hear is to budget a few dollars every week in a separate account and pay the vet bill when something pops up. This is certainly a possibility but how many of us would actually put that money aside? If you're like me, there are always other places to spend those saved dollars and it's hard to be disciplined. In addition, what happens once that pot of money has been used up? Fixing a broken leg for a dog can cost in the range of $1,000 so it’s not inconceivable that you could use up all the money on one accident or illness, only to be faced with another one sooner than the pot can grow again.

For most people, pet insurance is for the unexpected large vet bills that could put a large dent in your personal finances.

You do need to think carefully about buying pet insurance but don't wait too long if you are going to get it. You are better off to insure your cat or dog before he/she gets sick so you don't get any pre-existing conditions excluded. As always, it's always better to buy health insurance when you are well than when you are not.

Make sense?

Take Your Dog to Work Day

No, it's not today, although it could be. Pet Sitter International promote this day.

The idea behind Take Your Dog To Work Day® is simple—encourage businesses to devote one special day to dogs and their owners as a means of spreading the word about what great companions dogs truly make.
http://www.petsit.com/dogday/

So, persuade your work to pick a day every year and people bring in their dogs. I have visited workplaces where people can bring their dogs and it changes the whole work environment, as you can imagine. Not so much work gets done when you do it the first time but morale is great!

Of course, you need to plan out a number of logistical items such as where poop and scoop is allowed, drinking stations if it's summer, and what to do if your cubicle neighbor is allergic to dogs, but I'm sure all that can be worked out if you want it badly enough.

Let me know if you set up one of these days - pictures are great too!

Thanks to my friend, The Infoman, for the tip.

2004 Pet Insurance Market in the US is 0.3%

Far from being 2-3% as found in the APPMA survey I mentioned in my prior post, less than 0.5% of cats and dogs in the US are insured.

It just goes to show you how biased a survey can be - passionate pet lovers are much more likely to fill out a survey and they are the ones more likely to have pet insurance, skewing the results too high. Makes you wonder about the other results too, doesn't it?

Here is how I came up with the numbers:

Company	2004
VPI	360,000
Pethealth	61,755
Hartville	20,126
Pet Protect	6,000
Pet Partners	2,000
Total	449,881
Number of cats & dogs	163,000,000
Percent insured	0.28%

How did I get those numbers?

• I used the number of cats and dogs from the APPMA survey for 2004
• Pethealth and Hartville policy numbers came directly from their annual reports so we can assume they are accurate.
• VPI do not report their policy number and haven't filed anything since early 2004 so we have nothing directly from the company. The number I used was reported by a VPI insider in an article published by THE PRESS-ENTERPRISE on April 11, 2005. Unfortunately, the publisher only keeps their articles available for 4 days so I can't link to it but the relevant excerpt says:

At Veterinary Pet Insurance, the oldest and largest U.S. pet insurer, the number of policies has increased almost 1,000 percent since 1998, said Brian Iannessa, spokesman for the Brea-based company that was created in 1980. More than 360,000 pet owners have active policies today.

• Pet Protect and Pet Partners are just guesses on my part. Pet Protect has been around the longest so they got the most policies. Both companies have a low profile online and even though Pet Partners sells through the AKC and CFA, we don't believe they have sold very many policies.

This next section is just for number junkies - don't bother reading it if you don't want to wade through some analysis of these numbers. It's not that exciting, honest :)

I'm not sure I believe the VPI number - it looks too low to me based on past reported numbers. Even thought VPI don't report their policy numbers directly, we can back them out from the 2002 results found on Edgar by using the following facts (2003/2004 not reported yet - tut tut):

• gross written premium (standard measure of premium in the insurance industry) = $64.2 million
• average premium per policy = $254
• implied number of policies = $64.2 million/$254 = 252,770

The growth rate implied by going from 253,000 to 360,000 in 2 years is about 20%, which is much less than prior years' rates of about 40%. It's possible that the article was quoting an older number, perhaps for 2003 and just didn't follow up with VPI directly.

Just to see if it makes much difference, if I assume an annual 40% growth rate for VPI from 2002-2004, the 2004 VPI policy number becomes 495,000. If I also assume that the Pet Protect and Pet Partners numbers are double what I assumed above, the new market share is:

Company	2004
VPI	495,430
Pethealth	61,755
Hartville	20,126
Pet Protect	12,000
Pet Partners	4,000
Total	593,311
Number of cats & dogs	163,000,000
Percent insured	0.36%

versus 0.28% above

As you can see, it really doesn't make much difference in the grand scheme of things. Both confirm that less than 0.5% of the US cat and dog population is insured.

Pet ownership, spending on the rise

Link: Pet ownership, spending on the rise.

There's an interesting article in the Palm Beach Post that is based on the latest American Pet Products Manufacturers Association (APPMA) National Pet Owners Survey. If you are a dog or cat lover, the overall theme is obvious - more and more people are experiencing the joys of a household pet and they are spending more and more money on their pets.

Some interesting facts from the article:

• pet ownership is at an all-time high with about 63 percent of all U.S. households owning a pet. That means more than 69 million households own 73 million dogs and 90 million cats (plus fish, guinnea pigs, etc.). Compare that to 64 million households in 2002 and 51 million in 1988
• Three-quarters of dog owners consider their dog like a child or family member and more than half of cat owners say the same.
• Obesity is a concern among pet owners. The National Research Council of the National Academy of Sciences estimates at least 25 percent of dogs and cats are obese, making reduced calorie foods an important new market.

• Alternative health care, especially homeopathic remedies, is on the rise, up to 3 percent from 2 for dogs and up to 9 percent from 2 percent for cats.

• The number of dog and cat owners who have health insurance for their pets has increased from 2 percent to 3 percent of dog owners and to over one percent of cat owners, up from less than one percent in 2002.

This last statement does not fit with the number of pet insurance policies that have been sold and looks to me overly optimistic; however, I'll see what I can do to put some numbers together on it to check where the US market actually is.

Routine Care Coverage - should you get it or should you not?

Routine care includes all those treatments and vet visits that you do every year for the benefit of your cat or dog's health. Most definitions include annual checkups and vaccinations, and sometime spaying/neutering as well.

The question is, are these expenses something you would want covered by pet insurance? I'm sure you have a definitive answer, which should be clear to anyone. In fact, some of you are saying yes, it's obvious you would get this covered, and the rest are saying absolutely not. Strange but true!

What we have found at Embrace Pet Insurance is that there is no right answer here. Our research finds pet lovers on both sides of the fence.

Argument for no routine care coverage:

Insurance is for expenses that are unexpected and I don't want my insurance to pay for routine vet visit costs I know I am going to have.

Why? Because not only do insurers charge premiums to cover the cost of claims, they also have to cover their other expenses such as commission on the sale, and other administration expenses. Plus they make a profit. So, if insurance covers routine care, I pay more for the routine care than I would if I just paid it out of my own pocket.

Argument for routine care coverage:

This is not about money, this is about a hassle-free life. I don't have to worry about what is or is not covered, I just send in my bills. That way I pay a regular premium and in exchange, everything is covered. What's not to like about that?

So, it's up to you what you want. Here is what the current pet insurance companies offer:

Veterinary Pet Insurance does not offer routine care in its core policy but you can get an add-on that costs $99 per year that pays dollar amounts for specified routine care procedures.

Hartville Group does offer routine care as part of its basic coverage; however, in their recent investor conference call, they announced they are considering making changes to their routine care coverage.

Pet Partners offers routine care in its Wellness Plans.

Pethealth Inc. and Pet Protect do not offer routine care, offering some version of the argument against coverage above.

Website: Urbanhound - pet health insurance

Urbanhound is a great online resource for city dogs across the US. They even have a pet insurance section with the following tips:

Look for a health insurer that has been in business for at least a couple of years;

Ask your vet and other pet owners for recommendations;

Search the Internet (including urbanhound.com’s message boards) for complaints against or praise for the company;

Read policies carefully for conditions and exclusions before enrolling. Many policies don't cover hereditary or congenital defects. Others will cover pre-existing problems only if the dog has not needed treatment in at least six months;

Consider the specific health needs of your dog. If you're getting a new puppy you'll want a policy that covers vaccinations, spaying or neutering, de-worming, and ID microchips, as well as injuries and illnesses. A policy for an older dog should cover routine dental cleaning, prescription medications, and diagnostic tests such as blood work, EKGs, and x-rays.

I can't say I agree with all of the above. For example, you may not necessarily want routine care covered by your pet insurance, whether or not you are getting a puppy. I'll explain why in another entry later today but you should decide what coverage you need. Every pet lover's needs are different.

Overall, I'd say Urbanhound is on the right track and a good resource to bookmark.

Link: urbanhound - the city dog's ultimate survival guide - health.

Article: Pet Insurance May Not Cover Fido's Needs

Here is a pet insurance story that didn't go so well. We don't know all the facts in the case but it seems to me that Pethealth didn't do a very good job at managing expectations on the policyholder's part, no matter what actually happened.

Link: Click2Houston.com - Family - Pet Insurance May Not Cover Fido's Needs.

Home happenings

Things in our house have been very stressful over the last week. Our neighbor (who is a young married professional with a new baby) has taken a very extreme and negative view of our cat, Barnes, visiting her property and going to the toilet in her soil. She is now setting traps to catch him and any other cat or animals that go onto her property to be shipped off to the city pound. By rights, she can do that as the city ordinances actually state that:

"Cats should be kept indoors and provided toys, companionship and a clean litter box. Stray cats may fight noisily and become a nuisance to neighbors."

John and I have tried to talk reasonably with her (there are many cats on our street that come and go through everyone's yard) but she is a very angry person and will not see the cat's side of things at all. In her eyes, we are the irresponsible pet owners that lets our cat outside and whatever happens to it is our fault. She has also said some other more mean and worrisome things, which I won't go into, but it's got us all very upset. Now, Barnes has to stay inside, which is painful for us all. All day, he comes up to me meowing pitifully and all I can say is I'm sorry Barnes :(

After our neighbor showed her true colors, John and I decided we can't live in an area where Barnes cannot go outside so we're planning to take Barnes on a trip to Canada and leave him with John's parents until we can move away from here. Our house doesn't feel like a home any more when Barnes is basically a prisoner here. Now our landlord is furious with the neighbor (he lives next to us so she's his neighbor too) and he hates to lose good tenants like us. What a sad mess it has become.

Has anyone else had an experience like this before?

2002 Pet Insurance Market in the UK is 12%

Some more pet insurance numbers, this time for the UK. Again, you might be surprised at how popular pet insurance is across the pond.

Pet population in the UK 2002

source: UK Pet Food Manufacturers Pet Ownership Report

6.1 million dogs: 59% are pedigree, giving 3.6 million pedigree, 2.5 million mixed breed dogs

7.5 million cats: 8% are pedigree, giving 0.6 million pedigree, 6.9 million mixed breed cats

Add all of that up to get a total of 13.6 million cats and dogs.

UK Insured Pet Population

source: Data Monitor UK Personal Niche Lines Insurance 2002

Dogs:

13% of mixed breed dogs are insured, which gives (using the numbers above) 325,000 dogs

25% of pedigree dogs are insured, which gives 775,000 dogs

Adding this up, the total insured dog population is 1,100,000.

Cats:

6% of mixed breed cats are insured, which gives 414,000

12% of pedigree cats are insured, which gives 72,000 cats

This gives a total insured cat population of 486,000

Total insured cats and dogs is 1,586,000.

Finally, the percent of cats and dogs insured in the UK is 1,586,000 insured / 13,600,000 population * 100 = 11.7%

2002 Pet Insurance Market in Sweden is 29%

Bet you didn't know pet insurance is very popular in Sweden!

Here's how I estimated the size of the 2002 pet insurance market in Sweden. I'll try to see if I can update any of this later for 2004.

Pet population of Sweden

Source report: Euromonitor International Feb 2003 "Pet Food and Pet Care Products in Sweden"

800,000 dogs and 1,300,000 cats total = 2,100,000 cats and dogs

Insured population of Sweden

(source: Agria Annual Report 2002 - note you'll need to find someone who speaks Swedish to read anything here)

50% all dogs and 16% all cats are insured

So taking these numbers together, you get 400,000 dogs insured and 208,000 cats insured, which totals 608,000 insured cats and dogs. 

So, 608,000 insured pets out of a total of 2,100,000 is 29%