Understanding Pet Insurance



According to the Insurance Information Institute, Pet Insurance got it’s start in North America in 1982, when Veterinary Pet Insurance Co. (VPI), sold its first policy to cover a dog playing Lassie on TV.

The Nationwide Subsidiary was including in the company’s re-branding in 2014, and is now just known as Nationwide pet insurance—but it’s not just VPI that’s changed. Pet insurance today looks very different than it did back then.

Growing up, my mother was practice manager for a vet clinic, and I recall the occasional conversation about pet insurance—namely, that it wasn’t really worth the cost. Plans were confusing for buyers; it often wasn’t clear cut what would be covered and what would not, leading pet owners to have claims denied regularly. 

Plans often offered little to no real benefits, charging more than they paid out and many would have been just as well served to stick the cost of their insurance plan in a interest-earning savings account each month instead. 

Today, the industry has evolved. According to the North American Pet Health Insurance Association (NAPHIA), more than 12 companies now offer pet insurance, and the industry has an estimated value of $774 million dollars. 

And pet owners? They’re much more satisfied—even if adoption rates are still fairly low (less than 1% of pet owners today are believed to have insurance according to NAPHIA). 

An informal survey of approximately 25 pet owners who compete in dog sports, most of whom have chosen to buy pet insurance, quickly unveiled some trends.

First, for most, the turning point came from their own personal experiences—they had an aging pet or a pet that had passed away whose care become exceptionally expensive, and they chose to insure future pets so that care decisions would be less influenced by finances. 

Second, those who have invested in pet insurance and responded to the survey have largely been fairly happy with their investment. Several shared stories of companies paying out for expensive claims that easily covered the money they’d invested in their plans. In one case, a pet owner purchased a plan in November for about $100/month and it paid out over $5K in February the next year; several others shared similar stories of how valuable their insurance plans have been for them. 

Third, they say the biggest shift since the early days is that today the plans are often clearer—it’s easier to understand what will be covered and what won’t be, and there are more choices on the market. That clarity is helpful when making a buying decision.

So, how does this impact pet store retailers?

Retailers often know a lot about what they sell—but a true expert has a broader view of the category and can talk knowledgeably about other topics related to pets too. 

It’s worth knowing what options are on the market for pet insurance and getting a sense of which companies are favored among pet owners (and why). Being able to share this type of information with your customers is invaluable precisely because it showcases you as an expert in the industry—not just in the products the industry provides. 

Who processes claims quickly? Who denies claims unexpectedly? Which company returned a shoppers value x10 when an unexpected emergency struck?

Having the answers to questions like these build trust and give you an opportunity to stand out. And if the insurance questions you answered for them eventually saves their pets life? Well, that’s priceless. 


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