Insurance for pets: Business booms

One study indicates that almost half of pet owners would spend any amount of money to save their animal’s life.



When it was just 3 years old, Newton Township resident Don Baker’s cairn terrier, Dickens, developed an infection that wreaked havoc on his pancreas.

Fortunately, there was a prescription remedy — but the cost was $100 a month.

Though the treatment put a dent in Baker’s wallet, it was a setback he was willing to absorb in order to save Dickens’ life.

“It’s really hard to put a dog down [because] you don’t want to pay for the medication,” said Baker, 60.

Thanks to his owner’s affection — and wherewithal — the dog lived more than a decade, dying at the ripe old age of 14. But Baker’s not taking any chances on medical costs with his new best friend, Clancey. He bought pet health insurance for the Boston terrier in late 2006.

Play-it-safe pet owners such as Baker are fueling growth in a relatively obscure sector of the insurance industry devoted to pets, according to analysts. As recently as 2005, veterinary pet health insurance was a $160 million industry, according to market research firm Packaged Facts. The firm reports that between 2000 and 2005, the market for doggie-inspired insurance had grown an average of 27 percent each year.

“We started noticing it around 1999 or 2000,” said Ohio Department of Insurance spokesman Jerrett Dunbar.

The Ohio Department of Insurance has licensed about 20 companies to carry pet insurance in the Buckeye State, said Dunbar. But the agency doesn’t keep figures on individual policies, he said.

About 10,000 Ohio cats, dogs and other pets are insured through the pet insurance industry’s oldest and largest insurance provider, California-based Veterinary Pet Insurance, said company spokesman Brian Iannessa. Since the VPI began underwriting companion animals in 1982, their coverage has reached consumers on both coasts and in all 50 states. The company claims about 450,000 policies nationwide, or about 75 percent of the pet insurance market share, analysts say.

Pet insurance is most popular on the East and West coasts and in major metropolitan areas, said Iannessa. Ohioans represented about 21⁄2 percent of the company’s new enrollments last year, he said. The state ranks among the top 20 in customer growth. About 80 Mahoning Valley-area pet owners do business with the company, he said.

Among those clients is Baker. Baker opted for VPI’s “superior plan.” At $220 per year, the plan provides for Clancey’s shots and routine medical treatment as well as emergencies.

“We got it, to protect us from those sudden, expensive things that take care,” said Baker. “We’re insuring for the same reasons people get insurance — for the dramatic accidents.”

Dunbar said it’s important pet health insurance consumers realize that most policies over only cover unplanned veterinary office visits, not routine care.

“I guess if you really love your pet, and money’s not an object to extend the life of your pet, then you might want to look into this product,” he said.

He said pet insurance probably isn’t right for pet owners who would consider euthanizing a pet with an expensive ailment.

“You have some people who might say $4,000 is a lot of money,” he said.

Pet industry analysts have a name for the dog-versus-dollar dilemma Baker experienced with Dickens. They call it economic euthanasia. The price U.S. residents are willing to pay to save their furry friends is rising every year, according to the American Animal Hospital Association. A 2003 survey by group found that nearly three-quarters of pet owners would go into debt to provide for their pet’s well-being. An earlier study indicated that almost half would spend any amount to save their pet’s life.

Advances in veterinary medicine are also contributing to a rise in pet insurance enrollment, said Iannessa.

“Years ago ... the local vet clinic was limited in terms of the treatment that now exists,” Iannessa said. “There’s different treatments like ultrasound and CAT scans that were once only used on humans that are now being used on pet.”

According to Consumer Reports, every year about 400 U.S. pets have pacemakers implanted to regulate their heartbeats, a $3,000 procedure. And a kidney transplant is an option for cats experiencing a common ailment, renal failure, provided its owner can afford the $8,000 to $10,000 price-tag.

Brothers Bob and Dave Thompson, owners of Vienna-based Gibson Governor Insurance, have been watching the trend for years.

“The dollars spent on pets has just skyrocketed,” said Dave Thompson. “The cost of taking care of an animal has skyrocketed, too.”

The company, which sells health, car and life insurance, has long specialized in pet-based businesses. Now, the Thompson brothers are poised to enter the individual pet health insurance industry, as well. In three weeks, the company will unroll pet insurance plans, ranging from $18 to $40 per month, said Bob Thompson. The brothers plan to offer up to $10,000 of coverage for dogs, $2,500 for horses, he said.

Pet insurance is “definitely becoming more of an item,” said Bob Thompson.

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