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Growth of the Pet Insurance Industry

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Pet health insurance is just one sector of the pet market. Given Americans’ love of their pets, it’s no surprise that spending on pets has reached astronomical levels. The American Pet Products Association – an industry trade organization – estimates that in 2009, Americans will spend $45.4 billion on their pets. Veterinary care will account for almost $12.2 billion of that figure, an increase of 10.9 percent over 2008.

Sophisticated – and expensive – medical procedures and technologies that were previously reserved for people are now widely available for the treatment of pets, which is why people are turning to pet health insurance.  According to the National Canine Cancer Foundation (wearethecure.org), chemotherapy for canine cancer may cost several thousand dollars, and the cost of radiation therapy ranges from approximately $2,000 to $4,000. Major surgical procedures for cancer treatment can range from $1,500 upward.

In order to offset the rising cost of quality pet healthcare, pet owners have been turning, in increasing numbers, to pet health insurance. According to the Wall Street Journal, more than two million Americans currently carry pet insurance. Although that is only about 3 percent of pet owners, the figure is expected to grow to between 5-7 percent by 2010.

As the demand for pet insurance has grown, so also has the number of companies offering this product. Although this has increased consumer choice, it has also increased confusion. Consumers may find themselves bewildered by the different pet insurance products available. The options include illness-only policies, comprehensive policies, high- and low- deductible policies, etc. With 160 million cats and dogs in the United States, most of whom are not covered by pet insurance, there is enormous growth potential for the pet insurance industry.

Veterinarians respond

The reaction of the veterinary profession to this growing industry has been generally favorable. The “Guidelines On Companion Animal Health Insurance and Other Third Party Animal Health Plans,” issued by the American Veterinary Medical Association (AVMA) in 1994 (and revised in 2003), states: “The AVMA endorses the concept of companion animal health insurance that provides coverage to help defray the cost of veterinary medical care.” The guidelines list nine criteria the Association believes animal health insurance programs should meet, and reflect the Association’s concern both for the interests of the consumer and the integrity of the veterinarian/client/patient relationship.

What next?

As the pet health insurance industry has grown, some new and interesting trends have appeared.

Mirroring the history of human medical insurance, “Managed Care” programs for pets have recently come on the market. The March 2007 Journal of the AVMA ran a feature on this development (“Managed Care For Companion Animals”), citing the announcement by Pethealth, Inc. of its intention to offer a form of managed care for cats and dogs through its new USA Pet Health Network. Pet owners pay for an annual membership card and participating veterinarians charge for their services according to network rates. By tapping into a membership base, the program is intended to appeal to veterinarians, who will likely increase their revenues without the expense of marketing their services. Pet owners are said to benefit because of reduced rates charged for veterinary services.

Another recent development in pet insurance is that more and more companies have begun to offer pet insurance as an employee benefit. According to a recent article in the Seattle Times, Veterinary Pet Insurance (VPI), the nation’s largest pet insurer, has seen its corporate accounts increase from 15 to 1,600 in the past six years. Such programs now account for about 15 percent of its policies.

But it is not only the corporate side that has gotten on the pet insurance bandwagon. Union Plus, an organization that provides consumer benefits for union members, now offers a number of “traditional” pet insurance plans, as well as a network-only plan with coverage as low as $5.99 per month.

Be informed

Whether pet insurance is right for you is a question that only you can answer, in light of your particular needs and resources. Do your homework. Read the fine print. Then, if illness or injury strikes, unpleasant surprises and financial concerns won’t interfere with getting your pet the best possible care. And isn’t that what it’s all about?

Credit: Reviewed by Amy I. Attas, V.M.D.
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