Pet Insurance: What is Pet Insurance?


Pets give people love, friendship and company. In return, they need a home, food, and care. But often the owner, by the care, means only the basic needs of his pet, not thinking about his health in the long run. An animal, like a person, can unexpectedly overtake health problems, an accident or illness can happen to the animal. Pet insurance owners don’t have to worry about unexpected costs. The insurance reimburses the costs associated with the health of the animal, so you can always offer your pet the best available medical care when you need it.

Pet Insurance

Surely every owner experienced a moment in his life when he had to fork out for the treatment of his sick friend. And sometimes the amount named by the veterinarian threw in a shiver, after which a feverish search for funds for the treatment of the younger family member began.

In 2001, a couple of British bachelors who moved to America to study, Chris and Natasha Ashton, faced a similar problem of finding money. These M.B.A students were forced to pay $ 5,000 to treat their beloved cat, Bodie. But in order to raise this amount, they had to take out a loan.

If for others such an unplanned waste of funds would cause discouragement or anger, then these Oxford graduates approached the problem creatively – they decided to create their own health insurance for pets.

“It’s even hard for me to imagine how our life would have turned out if Bodie hadn’t gotten sick,” recalls Natasha. – When we had to look for money for his treatment, we suddenly realized that there is practically no insurance for animals in the USA. If in Britain almost 30% of pets have health insurance, then in the United States the number of insured animals at that time did not exceed 2%. Then my husband and I realized that this is exactly the niche in the business that we could occupy. “

It took almost 5 years to prepare and launch the new company; it was only in 2006 that the Ashtons issued their first pet insurance policy. But their aggressive and creative approach helped to promote this difficult business quickly enough. Since 2006, the company has already sold 120,000 policies. And, remarkably, 90% of clients renew their pet insurance annually.

“We started off very hard,” continues Natasha, “but at the very beginning we managed to conclude several successful agreements, which led to the fact that in the first year we had almost 5 thousand clients”.

Then the Ashtons entered into agreements with several clubs of dog and cat owners, which provided their members with a substantial discount on insurance. In addition, the Ashton company deducted funds for their development from each insurance purchased by club members.

They were actively looking for partners and investors, and they succeeded. Petplan sold $ 53 million in pet insurance on 2014. And this is not the limit. Because today this market segment is actively developing, and, according to experts, in the next decade it will only grow. This is not surprising when you consider that Americans spend about $ 14 billion annually on veterinary services.

The first insurance for pets appeared in Sweden in 1890, when Claes Virgin, the founder of the insurance company Lansforsakrings, issued the first insurance policy for a neighbor’s dog. However, if in Europe, especially in post-war, medical insurance for animals found their place on the market, in the USA this curiosity did not take root immediately.

It took almost a hundred years for the first such insurance for animals to appear overseas, and to be sold. At the same time, its very existence was questioned by experts. “There were good reasons for such rejection of insurance by the Americans,” says Natasha.

American insurers behaved in an ugly manner towards clients. They refused to sell policies to animals with chronic or hereditary diseases. But, even worse, the insurance company could refuse to pay for the treatment of a seriously ill animal, arguing that such treatment is not included in the contract. It was this approach that led Americans to conclude that buying insurance for animals is a waste of money. “

This changed at the start of the new millennium with the arrival of new players, such as the Ashton team, who drastically changed the approach to animal insurance. New companies offer consumers a wide range of different policies to provide a sick pet with maximum medical care. This approach forced the old players to reconsider their attitude, and this led to a noticeable revival in the market.

What is animal health insurance?

Pet Insurance

Petplan offers a choice of three categories of policies: from $ 10,000 (bronze plan) to $ 22,000 per year (gold). Deductible ranges from $ 50 to $ 200, and coverage, depending on the plan, ranges from 80% to 100%. Routine visits to the veterinarian and chronic illnesses are not covered by this insurance, but if your pet gets sick during the validity of the policy, the insurance will never refuse treatment, no matter how expensive it is.

The cost of insurance increases annually by 15%, due to the fact that animals age much faster. But, unlike medical insurance for people, going to the veterinarian does not affect the cost of the policy in any way when you renew it.

But even such a package of services does not suit the specialists too, who until recently called the purchase of insurance for animals one of the most unsuccessful ways to invest money.

 “It’s much more profitable,” wrote Consumer Report, “instead of buying insurance, put money in the bank, and when you need it, pull it out and give it to the veterinarian.”

But experts forget that insurance for pets is primarily focused on those owners who are experiencing financial difficulties and are afraid that in the event of a serious illness they will not be able to pay off the veterinarian. And such a shortage (or lack) of money can lead to lethal consequences.

An example of such a tragic outcome is the recent case in Oregon, where veterinarians refused to perform an urgent operation on a German shepherd because the owners did not have enough money to do it. They also failed to get a loan on time. As a result, the dog died, and animal lovers from all over the country, after reading this story on Facebook, threaten these veterinarians with all kinds of punishment.

Basically, purchasing insurance for animals for most of their owners is really a waste of money. But about 20% of policyholders believe they cannot do without it. For the majority of consumers, animal insurance does not bring savings, but the confidence that, if necessary, his friend will be provided with all the necessary medical care. And these insurances bring material benefits to the owners of the company, who guessed correctly with the choice of business, and now can be proud of their achievements.

Petplan’s profit margins are extremely high. And in a few years it will grow even more, unless, of course, the president decides to put things in order in this industry. But before that happened, Petplan was able to get Blue Choice to cooperate, which offered clients in several states to include a pet service plan in their family health insurance. They are also family members.

Several thousand of these policies have already been sold, and more will be sold. Because for the sake of his smaller brother, a person is ready for much.