Pet Health Insurance Takes Off

by Judy Warner, Oct 30, 2006, 7:31 AM

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The market potential is enormous: 62 percent of all American households have at least one pet, and yet only 2 percent of these animals have health insurance. Direct Pet Health Holdings, Inc. projects a 45 percent growth rate for the industry to sell coverage for the 68 million dogs, 73 million cats and 5 million horses currently not protected.

A national epidemic? Not really, but the opportunity to sell insurance to pet owners is fueling new competition. At least two companies and the American Society for the Prevention of Cruelty to Animals have made moves to begin marketing pet insurance more aggressively to consumers.

"Pet insurance finally seems to be taking off in the U.S. People are becoming better educated and more discerning," says Linda Bell, vice president of marketing for PetPartners, Inc., in Raleigh, N.C., and the licensed provider of insurance for the American Kennel Club and the Cat Fanciers Association.

Given the proclivity of some American pet owners to pamper their pets, it's surprising to some that the number of pet insurance policies in the U.S. lags those in other countries. PetPartners' parent company is based in the U.K., where an estimated 15-20 percent of dog owners have some form of health insurance for their canine friends.

"It foxes me, really," says the British-born Bell. "Given Americans' propensity for human health insurance, it would seem that greater numbers here would opt to insure their pets."

Even with increased competition, PetPartners has no immediate plan to change the way it markets, which is primarily through the AKC and CFA member publications and Web sites. In the three years that PetPartners has been the licensed dog insurance agent for the AKC, Bell said, "we have seen our business grow steadily."

The ASPCA recently chose a division of Hartville Group to implement its first pet insurance product. Says ASPCA spokesperson Shonali Burke, "We are pro-actively promoting this new offering to our members via our Web site and news alerts, and are also investigating reaching the veterinary and shelter communities through viral [marketing] and other means."

The price of a pet policy varies depending on the breadth of coverage and deductibles. Are basic wellness visits such as vaccinations and annual checkups covered? Is there cancer coverage? What is the maximum amount paid per incident or in a 12-month period? A review of pet insurance shows a range of pricing from as low as $250 a year to more than $600. Like human health insurance, policies and terms vary dramatically and better coverage is predictably more expensive.

Just last week, Veterinary Pet Insurance Co. (VPI), the No. 1 pet insurance provider, named insurance industry veteran Lorin Young, vice president of marketing and sales. Young joined VPI in 2006 shortly after Dennis Drent was named president and CEO. Drent said in a statement that he expects Young to take "VPI to the next level in sales and marketing." Prior to joining VPI, Young was at Nationwide Insurance, where he served on the corporate brand management team.

VPI claims to be the oldest pet insurer in this country and is one of the few direct-to-consumer advertisers using mostly print and Web-based ads.

"We advertise a strongly branded VPI ad campaign in over 15 national consumer and pet enthusiast publications such as Better Homes & Gardens, Good Housekeeping, Cosmopolitan, AARP, Woman's Day, All You, Dog and Cat Fancy, and Healthy Pet," says VPI Marketing Director Bobbie Cooper.

VPI's "Family Redefined" ads focus on the bond between people and their pets and urge readers to call, visit the pet insurance Web site or ask their veterinarians, many of whom will recommend VPI.

Internet marketing also is vital. VPI advertises or has an affiliation with sites such as Dogster and Catster.com, PetPlace.com, and Dog/Cat Channel.com.

"These are sites where people who are passionate about their pets go to get information," Cooper says.

Dallas-based Direct Pet Health plans to more aggressively market its brand to Fortune 500 companies and HR professionals who might consider offering pet insurance as an elective benefit. The company¹s tagline "Your companion. Your life." will run throughout a multi-channel campaign to include targeted opt-in email, TV and radio ads, and a transactional Web site where discounts, information and other member services will be available, the company has said.

"By marketing benefits to Fortune 500 Companies and HR Professionals, Direct Pet Health plans to expand brand and consumer awareness," said CEO Michael Scaccia. DPHI research values the pet insurance market today at $100 million with projected annual growth of 45 percent a year.

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