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New York Times

February 10, 2008

For Your Pet, a Policy All Its Own

By JULIE BICK

SERIOUS illness can take a financial toll on families without health insurance - even when the patient is the family pet.

"My bulldog has been treated for skin infections, paw problems and now she's on antibiotics for a cold," said Kelly Fennelly, a personal trainer in Kirkland, Wash., who spends about $350 a year on veterinary care. Now she is planning to buy pet health insurance, in case her dog, Maggie, becomes really sick or is hurt in an accident.

Enter the pet insurance sales agent, who tries to find a health policy that fits an animal’s — and its owner's — needs.

The specialty is small: there are less than 600,000 insured pets. That is less than 1 percent of the more than 160 million cats and dogs in the United States, according to Chris Ashton, who recently studied the market on his way to starting Petplan USA, a pet insurance company based in Philadelphia.

Fewer than 20 companies now sell pet insurance in the United States, he said, and there are fewer than 500 pet insurance agents. Mr. Ashton’s venture has only 11 employees, but he plans to expand to 100 in the next three years.

The field has been small because products have been too restrictive, too expensive or have not met consumers' needs, according to John Volk, who studies pet-related spending for Brakke Consulting of Dallas. He said that many people “have never heard of pet health insurance."

But that is likely to change. "The industry is poised for rapid growth," Mr. Volk said. Veterinary technology is becoming more advanced, more available and more expensive, he said, leading to a greater need for insurance, especially in emergencies. At the same time, many pets are being treated more like members of the family.

A typical pet insurance policy costs $300 a year, but can vary based on the age of the pet, species, level of coverage and other factors.

Both large companies and smaller start-ups are beginning to experiment with different offerings to customers, according to Mr. Volk. For example, Trupanion, based in Seattle, sells lifetime pet health insurance only for puppies and kittens, so pre-existing conditions are not a factor. The company plans to increase the number of employees who can sell insurance policies to 110 from 22 over the next three years. Nestlé Purina began offering pet health insurance in Canada last summer, and plans to enter the United States market this spring.

Veterinary Pet Insurance, based in Brea, Calif., is the largest company in the business, with 400 employees and $150 million in sales of insurance premiums each year.

Like other types of insurance, pet health insurance is state-regulated, and only licensed agents can sell policies. Licensing requirements vary among states, and employers typically pay for training. National companies serving customers via the Web have agents who are licensed in all 50 states.

Insurers look for various qualities in a potential sales agent. Lorin Young, vice president for sales and marketing at Veterinary Pet Insurance, says he seeks employees who can communicate clearly and build rapport over the phone.

At Trupanion, the same agents who write the policies also process the claims, so they are expected to have two to five years of experience in a veterinary clinic, along with some animal health training. "They need to talk to policyholders about their pet’s medical conditions and understand doctors' reports," said Darryl Rawlings, Trupanion’s founder and chief executive.

Kevin Patcheak, a salesman for Veterinary Pet Insurance, says he likes providing help when people call seeking a way to avoid the big medical costs that can occur over the lifetime of their pets.

On the other hand, he said, "the hardest part of the job is when someone calls and the pet already has an illness or a broken leg, and they want help paying the bill." As with many insurance policies, pre-existing conditions are not covered by pet health insurance.

Pet insurance sales agents make $30,000 to $100,000 a year, according to company representatives. Pay is a mix of base salary and commission, depending on the employer. "I was surprised, but you can actually support a family on the salary," said Mr. Patcheak, who has a master’s degree in education.

Potential customers have usually done some research on the Web, or received a recommendation or brochure from their veterinarian, and are calling for more information. Pet insurance agents typically work in these call centers.

THERE are other options for those who are interested in the business. Field representatives visit trade shows, conferences, veterinary offices and pet stores to raise awareness of product offerings.

Adam Cooney, 22, joined Petplan USA to become a pet insurance agent last year when he graduated from the Wharton School’s undergraduate business program at the University of Pennsylvania. He said he chose the job in order to join an entrepreneurial company in a growing industry.

"We just came back from a convention and there was so much energy and growth," he said. "You don't always have to go to Wall Street to find an exciting job."

Nashville Business Journal

Trupanion pet insurance rolls out in Tennessee

As a part of a national roll out, pet insurance provider Trupanion is available starting March 18 in Tennessee.

The Seattle-based company is new to the United States. The company started as Vetinsurance in Canada in 2000, where it still does business under the brand.

Backers of Trupanion include Maveron, venture capitalists behind Starbucks and eBay, and Renaissance RE, a $4 billion dollar insurance company.

Trupanion enrolls puppies and kittens under a year old, offering $20,000 of lifetime coverage. Pet owners lock in their coverage.

The annual US pet market totals more than $41 billion, larger than the movie, music and video game industries combined, according to a press release from Trupanion.

Pet insurance is a trend in Europe, but still in its inception the United States, where about 1 percent of owners insure their pets.

Eighteen percent insure pets in the United Kingdom, while 58 percent use pet insurance in Sweden.

Trupanion features a policy with a fixed price that doesn't increase as a pet ages. Ninety-percent of all approved claims are covered and nine out of 10 claims are processed within 24 hours, according to the company's Web site.

Fox News

Pet insurance can be a smart choice

FOX21 Morning News anchor Mike Brookbank talks with Andy Orander of Trupanion about the importance of pet insurance.

Because animals are usually an important part of one's family, having pet insurance--particularly in cases of unexpected accidents or illness--can save money in the long-run when emergencies arise.

Coverage is available in different cost levels, just as health insurance plans for people offer different options.

Watch Interview

Seattle Post Intelligencer

Grand pet project: Insure all those puppies, kittens

By JOHN COOK
P-I REPORTER

Americans love their pets. They just don't like insuring them.

Trupanion, a Mountlake Terrace pet insurance company that is launching service Friday in five states and announcing a major venture capital round, wants to reverse that trend with a consumer-friendly approach for insuring Max, Duke or Ginger.

The 24-person startup, an offshoot of Vancouver-based Vetinsurance, a fast-growing and profitable nine-year-old Canadian pet insurer, plans to offer $20,000 lifetime policies for dogs and cats. Ninety percent of the cost of surgeries, diagnostic tests and treatment for conditions not previously diagnosed by a veterinarian will be covered, though initial examinations are not included.

Pet owners will have their choice of veterinarians and the fees will not change based on the age of the pet or its medical conditions. The average monthly cost is $20 for a cat and $34 for a dog, though some breeds such as bulldogs, bull mastiffs and Shar-Peis have higher rates.

The big catch is that Trupanion enrolls only puppies and kittens under the age of one, though it will continue to provide coverage as those animals grow older.

Some big backers have joined the pack to help make the idea a reality. Maveron, the Seattle venture capital firm co-founded by Starbucks Chief Executive Howard Schultz, led a $22 million financing round in the company.

"We saw this very, very large market, and we were asking ourselves for a while, 'How do we attack it?' " said Dan Levitan, a co-founder of Maveron who has joined Trupanion's board.

The capital infusion, which closed last year as a mix of equity and debt, was used to buy a New York insurance company that provided licensing in about 27 states. The rest of the money will be used to build the service in the U.S., a big opportunity since only about 2 percent of pets in the U.S. are insured, according to The Associated Press.

Currently licensed in Oregon, Illinois, Pennsylvania, Colorado and Utah, Trupanion hopes to be operating in Washington in the next two months. By early next year, it plans to be in all 50 states.

In addition to facing more established competitors, Trupanion must overcome many pet owners' negative perceptions of the industry.

An informal survey of 15 dog owners at Green Lake earlier this week found just two people who had bought insurance. Several said they had considered it, but were turned off by the cost or the loopholes.

"It just seems a little too much and going a little too far for your dog," said Barb Weismantel, owner of a 2 1/2-year-old Scottish terrier named Finney.

But with veterinarian bills rising and pets playing a larger role in the family unit, Trupanion is hoping that it can make inroads in the $40 billion pet industry.

Darryl Rawlings, the 38-year-old founder and chief executive, has big ambitions. By 2010, he expects to employ 100 people and generate revenue of $50 million to $80 million. If all goes as planned this year, Rawlings -- who founded Canada's Vetinsurance after running a cigar business and working in high-tech sales -- plans to have 50,000 to 100,000 pets signed up in the U.S.

To reach those goals, Rawlings said he is taking a different approach from larger competitors such as VPI Pet Insurance. Founded in 1982, Brea, Calif.-based VPI offers pet insurance policies in 50 states covering more than 450,000 animals.

The big differentiator is the exclusive focus on puppies and kittens, a strategy that at first blush would appear to exclude a large percentage of the market. But Rawlings said there are more than 15 million puppies and kittens born in the U.S. each year. Furthermore, he learned from the business in Canada -- which accepts pets until the age of 13 -- that about 80 percent of new enrollees were less than a year old.

By focusing on young pets, Rawlings also said that the company can pay out a higher percentage of claims. Typically, he said, pet insurance companies deny 25 percent of claims because of pre-existing conditions. At Trupanion, the goal is to cover 19 of 20 claims, including hereditary problems that were not previously diagnosed by a veterinarian.

"One of the biggest reasons that I think pet insurance has not taken off in the U.S. is that the value proposition to the pet owner has not been there," Rawlings said. "Veterinarians have not been able to recommend or endorse a product with such a high denial rate."

Since younger pets are less likely to have a pre-existing condition, Rawlings said, the economic model is more attractive. Trupanion also could benefit by signing up pets early in their lives, collecting a steady stream of monthly revenue.

In order to attract pet owners, Trupanion plans to sign up more than 100 "territory partners" to develop relationships with veterinarian offices across the country. Though not employees, the "partners" will ensure that claims are processed on time and will address any problems that arise. They will collect a small percentage of the revenue from each pet that is signed up in their respective regions.

Trupanion also is in discussions with retailers about reselling the product and is working with corporations who want to add pet insurance as a perk.

But the big marketing effort will be forming relationships with veterinarians, who Rawlings calls the "biggest influencers" in making sure that pets are properly covered.

John Kelly, who has operated Elliott Bay Animal Hospital in Seattle since 1975, said he encourages clients to consider insurance in order to "soften the blow" associated with medical costs.

"We want people to be realistic and understand it is not a complete silver bullet, but it will help," said Kelly, who estimates that 5 percent to 7 percent of his clients have insurance.

Kelly called Trupanion's puppy and kitten approach unique, adding that it is to a person's benefit "to get on board early" before skin conditions, injuries or other health problems arise with their pets.

In the past, Rawlings said, it has been difficult for veterinarians to recommend insurance because some policies have loopholes that lead to claims being denied. That creates upset pet owners, though Kelly said the policies his practice promotes are pretty straightforward. He was aware of only one service issue during his 35 years of practice.

But Rawlings, who moved to Seattle last fall to oversee the U.S. expansion, thinks some veterinarians are reluctant to recommend insurance because the policies might not end up covering procedures.

"We believe that we need to change that contract ... and we are going to do that the old-fashioned way by walking through the doors and meeting people."