Only a tiny percentage of pet owners in the United States have insurance for their pet, but according to the American Pet Products Association, about 62% of U.S. households have a pet. Clearly, the pet insurance is a market ripe for growth. "The message there is in the opportunity to increase participation for consumers and for groups," says JoAnne Novak, VP, business development with Hartville Group, Inc., and its flagship brand ASPCA Pet Health Insurance.
As more and more people continue to treat their pets as a member of the family, there's an "ever increasing interest in pet insurance from the consumer," adds Bill Gorman, national director, group sales for Purina Care Pet Health Insurance.
In the last six months or so Rob Hall, VP, business development with Hartville, has seen a spike in interest from brokers looking to give their employer clients the opportunity to offer pet insurance to employees. It's likely a combination of the economic times and the fact that brokers are hearing about their clients going directly to pet insurance providers or Googling the product on their own, he says.
Offering pet insurance is a way for brokers to show clients they're able to meet all of their benefits needs. "They like to round out their portfolios," says Hall. "They understand that this is a nice value added [way] of rounding out their product portfolio to have all insurance offerings out there."
Deana Lycotte, director of group accounts for Veterinary Pet Insurance, agrees. "It's a way to round out their benefit package," she says. "It allows them to help pitch to HR directors that we care about all members of the family - two-legged or four-legged."
The work is done
The nice thing about adding the product to a broker's portfolio is that it involves little or no work for the commission - assuming the broker has a property and casualty license.
At Hartville, for example, participating organizations can position the product either as a direct-bill program where employees sign up on their own through the Internet or over the phone, or for groups with more than 500 employees through payroll deduction, according to Novak. "That's really where the broker comes in," she says.
Hartville will give them a kit to get started with the program that includes a producer agreement and everything needed to make the product available to clients - links, reports, collateral, "all the tools to help them implement the program," says Novak.
The reports enable a broker to track participation rates, which are tied to commission statements. Additionally, because clients sign up directly with Hartville, "they're not taking applications in the field, which makes it very user-friendly for the broker," says Novak. "We're fielding all the questions for them and they're signing up directly with us, yet the broker gets the credit for bringing it into the organization and having it tied to them."
Hartville also works directly with employers, and brokers with no intent to get a P&C license can still help their client do due diligence by making referrals. "They can still be involved," says Novak. "We will frequently speak to brokers that don't have the licenses to be appointed with us for distribution purposes but they still like the idea and they're helping their clients make a decision."
Even with the ease of offering the product, of course there has to be a reason why only about 2% of pet owners actually have pet insurance. One reason Purina Care's Gorman finds for the lack of participation is the fact the people have a tendency to look at pet insurance as an investment, rather than an actual insurance program.
"People say, 'I spent $400 on my pet insurance premium but I didn't have any claims.' And you say, 'Well, congratulations! You're the lucky one,'" he says. "If it were 'human insurance' you'd be thrilled to death you didn't have any claims. But some of them say, 'That's not a good buy because I didn't have any claims.'"
In some ways it reminds Gorman of long-term care insurance, where "everybody knows they need it but it's so expensive they hesitate to buy it," he says. "With pet insurance they hesitate because their pet is healthy. They don't think it's going to get sick."
To help their product fit all clients' financial expectations, Hartville offers a choice of coverages depending on the policy holder's budget and needs, assuming that the pet is qualified. The plans go as low as an accident and injury policy for around $110 a year that just covers catastrophic events, Novak explains.
At Purina Care, one policy holder submitted a claim for $14,000 this year. "It does get expensive," says Gorman.
Frequently, Gorman hears stories about people who've had something happen to their pet and paid thousands of dollars in vet bills because they didn't have insurance. "A lot of times the people who buy pet insurance do so because they have lost a pet to a costly illness and decide to purchase pet insurance and avoid that financial risk with their new pet," he says.
Through past focus groups Gorman knows most people don't think their pet will get sick, but they often want well-care benefits that cover things such as vaccines and heartworm medicines.
VPI encourages policy holders to use their policies on a regular basis, "because that helps them see the value in it," says Lycotte, and submit claims for all office visits. If a client hasn't used their wellness benefits, VPI sends reminder cards twice a year for shots, teeth cleaning, or whatever the pet needs "to ensure optimum health."
Although not all employees have a pet, most will respond positively when an employer adds pet insurance to its voluntary benefit offerings, says Hartville's Novak. "Because this is such a morale-boosting, goodwill benefit, even employees that don't have a pet are happy to see it as a benefit," she says. "They get good feedback, good comments saying it's so nice that we get pet insurance. It's considered to be more progressive. It's a nice add-on."
From the broker perspective, many love the ability that pet insurance gives them to offer something "fun and exciting" to clients, adds Hartville's Hall. He recently heard a story from a broker about how his client asked for "something fun, exciting and sexy." After giving that client three different benefit options, the client chose pet insurance.
VPI adds levity to the benefit by sending birthday cards on pets' birthdays. The carrier even created its own holiday, "Pet Parent's Day," that falls at the end of April.
At shows, employers are attracted to Hartville's booth once they hear the perks of the program. "No administrative hassles, no minimum participation, it doesn't cost you a thing," says Hall. "They love to hear what we have to say."
Adds Purina Care's Gorman: "You really have nothing to lose. There's no cost to the employer to offer it and the employee's going to get a discount, so it's a win-win for everybody."
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