And, according to JoAnne Novak, vice president of new business development and employee benefits for Hartville Group, another pet insurance provider, 70 million households own either a dog or a cat.

A Growing Market
“Pet insurance as a whole is growing as a market,” says Chris Ashton, president of Petplan. “Not every employee will be eligible for it, but statistics show that more than 60 percent of households have at least one pet, so it's a good market for brokers.”

The increased demand has led to an increased number of providers, according to Chris Middleton, director of sales and marketing for Pets Best Insurance. “There have been a lot of new entrants into the market, both in terms of new companies, as well as licensing arrangements of insurance companies that have been in business for awhile that are now partnering with animal welfare groups,” he reports.

Still, there seems to be enough business for everyone. “We recently had an informational review with one of our brokers,” Middleton adds. “During the conversation, she said she's received almost as many calls for pet insurance over the last three weeks as she had received for the whole past year.” Another provider enjoying growth is VPI.

“We're finding that, in the voluntary benefits space, the popularity is increasing significantly,” reports Deana Lycett, director, group accounts. “We experienced double-digit growth last year, year over year. Brokers are becoming much more interested in it, both the large houses and the independent brokers. They are reaching out not only to their groups, but to personal lines.”

Reasons for Growth
So why is pet insurance booming? Providers and brokers see six major reasons:

1. More pets: These days, there's an increasing number of pet owners. One reason for this is that a lot of couples are making the decision not to have children at all, with pets ending up taking their place.

“A lot of couples who do decide to have children may also wait longer to have them,” adds Jackson. “In the meantime, they may get pets.” Still another reason is that a lot of empty-nesters maintain their need to nurture after the kids leave home. “So, when the kids leave home, they want a pet,” notes Jackson.

But empty-nesters have been around forever. What's different now? The number of empty-nesters is growing because of the baby boomer generation. “They are a huge group these days,” he explains.

2. Stronger bonds: According to Middleton, the way people feel about, and interact with, their pets is changing. “The dedicated pet owner is growing as a percentage of all pet owners,” he states.

Jackson agrees, “Pets are becoming so much more a part of our families. In the past, a pet was a nice thing to have in the family, but it wasn't regarded as part of the family. These days, a lot of people who call us can tell us their pet's date of birth immediately. As such, the last thing they want is for economics to stand in the way of being able to provide medical care for their pets.”

Jackson says there's also been a trend in recent years for people to want to do something meaningful in their lives, and one thing they realize they can do is save the lives of pets that are homeless. “There is a much greater awareness of the animal rescue movement these days,” he says. “Statistics show that, each year, 8 million dogs and cats go into shelters, but only half come out.

In fact, rescue is almost the 'green' movement of animal acquisition.” Years ago, he points out, the only people who got rescued pets were those who couldn't afford purebreeds. “These days, even very well-to-do people are choosing rescued pets,” he says.

3. Increased awareness: The general awareness of the availability of pet insurance is growing, according to Middleton. “People are realizing that it is a valuable product. They also realize it is valid, in that a lot of well-known names have become involved in the industry.”

According to Geromy Bertrand, a client consultant with Gallagher Benefit Services in Bellevue, Wash., which is affiliated with Pets Best Insurance, one challenge has been a lack of familiarity in general among the public, who may not realize that it does offer some value.

However, this is slowly changing. When Bertrand sets up at benefits fairs, he generally encounters three different groups of people. “Some people will be really interested, and they jump on it,” he says. There are others who have no pets and pay no attention. “There is also a third group that may chuckle and walk off,” he adds. “However, sooner or later, a lot of these people come back, start asking questions, and then sign up.”

4. Increased vet costs: Veterinary costs are rising substantially faster than inflation, so people are realizing that paying for pet healthcare can be very expensive, Middleton says. And, according to Hartville's Novak, citing data from the American Pet Products Association, $13 billion was spent on vet care in 2010. “Pet owners are starting to realize that a major procedure for their pet can be $3,000 to $4,000,” says Jackson. “If they haven't experienced this directly, they usually know someone who has had the experience.”

Costs can be even higher, according to Ashton. “Vet bills can reach $10,000 these days,” he says. “One reason is that there are treatments and procedures available today that weren't available even 10 years ago, including cancer treatment, hip replacement surgery, and even kidney transplants.”

5. Better reputation: While a lot of people are becoming familiar with pet insurance for the first time, a lot of others who have been familiar with it and were driven away in the early days are coming back because of an improved reputation.

Bob Isacsen, Managing Director, Risk and Insurance Services, for UNFCU Financial Services in New York, who is affiliated with Petplan, traces this history. “When pet insurance was first created, they had little experience with underwriting, and ended up with some very onerous exclusions,” he says. “One related to pre-existing conditions.

For example, if a pet ended up with a condition near the end of a policy's year, the policy would be renewed with that condition being considered a pre-existing condition.” Another problem was the definition of “reasonable and customary.” “What a plan would pay might be half of what a veterinarian would charge,” he states. “As a result of these types of problem, a lot of people got excited about pet insurance in the early days but ended up becoming infuriated and figured that it was just a gimmick.

That gave pet insurance a bad name for quite awhile.” According to Isacsen, some of these companies and their old practices are still in existence. However, there are other companies around these days that have a better reputation.

6. More employer interest: Another reason for the increasing popularity of pet insurance is that employers are more open to making it available to employees.

“One reason for this relates to the traditional human health care insurance challenges,” explains VPI's Lycett. “Employers are looking for ways to add benefits that don't cost the company anything, but meets the needs of employees.” Ashton agrees. “A lot of employers are looking for low-cost and no-cost benefits to offer their employees while they potentially cut back some of the more expensive benefits,” he states.

“And since it is such a 'warm and fuzzy' benefit, it shows the employees that the employer does care about them.” “Purchasing it as a workplace benefit allows employees to save on premiums, in addition to the savings they can get by having the policy itself,” Novak adds.

Strategies
So what are the best ways to make pet insurance available to groups and individuals? The first step is to select the best plan. “The market is crowded, and some of the plans can be confusing,” notes Middleton. “Being able to offer a simple plan is important.”

“You need a plan that is comprehensive with very few exclusions, but also very simple to understand with no fine print,” adds Jackson. “In the past, pet insurance in general suffered, because many of the plans had a lot of fine print and restrictive language.”

This circles back to the earlier comments of Bob Isacsen: Be sure to offer a plan with which people will ultimately be happy — one without a lot of hidden exclusions. When discussing the plan with employers, Novak recommends emphasizing that it is a good morale booster. “It provides a lot of goodwill,” she says. “We have even found that employees who don't have pets appreciate that the employer offers it.”

And when discussing the plan with employees, the most important step is simply to make them aware of the product, just as you would any other insurance, according to Bertrand. “I just focus on communication and education,” he says. “If they don't know what it is and what it does, they won't sign up.” And a final recommendation: “Because so many people are so passionate about their pets, one of the best door openers is simply to get employees talking about their pets,” Lycett concludes.

Instant Insights /

Pet Insurance: Growing in Popularity

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