Pulse - October 2024 - 12

densome " to pet insurers.
Trupanion operates on a 71% value propQuestions
to Prep for a
Pet Insurance Purchase
The California Department of Insurance
has a list of questions that consumers can
ask when considering purchasing pet insurance.
The questions, which are posted on
the CDI website, could also be used by
veterinary clinics advising clients. The questions
include:
+ Does the coverage offered have exclusion
for preexisting conditions?
+ Is there a waiting or affiliation period,
which means the period of time specified
in a pet insurance policy which must pass
before some or all of the coverage in the
policy can begin?
+ Does the coverage exclude costs for treatment
of a hereditary disorder, which
means an abnormality that is genetically
transmitted from parent to offspring and
may cause illness or disease?
+ Does the coverage exclude costs for a
congenital anomaly or disorder, which
means a condition that is present from
birth, whether inherited or caused by the
environment, and which may cause or
otherwise contribute to illness or disease
+ Is there a deductible or coinsurance
clause that causes any claim reimbursement
to be reduced by a set amount?
+ Is there an annual or lifetime policy limit
that will cap the amount that will be paid
for veterinary services?
+ Will the renewal premium be increased if
a claim is made?
+ Is there a basis for reimbursement or formula
for payment for veterinary services
other than the actual amount of the billed
services?
osition. That means 71% of the premiums
are to pay for claims and utilization, according
to Worra.
" I think there's a couple of compounding
factors that have seen us experience more
utilization of policies, and I think part of
that is inflation that we've seen across the
board, " Worra said. " It's the cost of goods
going in. The cost of latex gloves in the last
three years have gone up more than 100%,
and things like that, so we've certainly seen
the cost of goods go up in the last few years. "
The COVID-19 pandemic saw a rise in
increasing the number of
pet adoptions,
insureds and insurance use, he added.
" We've seen a spike in utilization as
well as our rate of growth during the
start of COVID was immense, " he said.
" I mean, when you talk about the rate of
growth, typically we average about 15 to
20% growth year-over-year. The first year
or two years of COVID saw us growing at
about 30, 40, 50% year-over-year in terms
of gaining new pets. "
With more pets enrolled,
the impact
from claims rises, and so do premiums, he
explained.
The rise in the volume of claims isn't so
much what's affecting premiums at Trupanion,
it's the cost of the claims, according
to Worra.
" We've been forecasting that it's the severity
that's gone up a lot, which what that tells
us is the cost of goods at veterinary hospitals
has gone up, and that doesn't mean anything
against the vet hospital as much as what the
cost of goods that hospitals are also incurring, "
he said.
Communication and
Understanding
Lemonade's Baker believes one of the most
important things insurers can communicate
to policyholders is how premiums are calculated--that
multiple factors contribute to
the cost of an individual pet's premium (age,
breed, coverage).
" By taking a multi-factored approach specific
to the insured pet, most carriers work
to ensure that the premiums are priced fairly
for the coverage purchased by the pet parent
while balancing the potential risk exposure, "
Baker said.
" Most pet insurance customers can expect
their premiums to go up as their pet ages.
Depending on the type of options offered,
the customer could consider changing some
of their coverage parameters, like the copay
and deductible, to continue their pet's coverage
but at a premium that works for them
and their aging pet. "
Worra thinks that helping more pet owners
understand the cost of keeping a pet fed,
healthy and happy is the type of communicating
that the industry should be doing
more of-it's all a bit costly.
" Most people don't understand what the
overall cost is, " he said. " What is the cost of
feeding your dog or cat every month? What
is the cost of annual wellness exams and
dental cleanings? Everything? "
Worra and Baker agree that more needs
to be done to educate consumers about pet
insurance: what it does and does not provide-and
its value to pets and pet owners.
" While pet insurance in general is becoming
more widely known today, some of the
core functions of most policies aren't general
knowledge yet, which could result in an
unexpected outcome for the customer at the
time of their claim, " Baker said.
" For example, most insurance companies
don't cover preexisting health conditions,
which is often very different from how human
health insurance works. This could come as
a surprise to the customer who thought the
two types of insurance work similarly. " P
Don Jergler is editor of Claims Journal and
West editor of Insurance Journal. He has
covered insurance, real estate and other
business topics for newspapers and trade
magazines for over 20 years.
'I now have to pay for all her medications,
vitamins, specialists. I have to do what is
necessary to keep my girl healthy and
happy, even it means to go into debt.'
12
OCTOBER 2024
PULSE
Pulse - October 2024

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