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Here, Kitty, Kitty: Pet Insurance Benefit Picking Up

July 1, 2011
Lassie has it. So does Morris the Cat.
More than 1 million American cats, dogs and other pets are covered by health insurance policies that help take the bite out of their owners' trips to the veterinarian. About 1 percent of the estimated 171 million cats and dogs in the U.S. are insured and 20 percent of the household pets in Great Britain are covered, according to the website Pet Insurance Review.
The number of companies offering pet insurance as a benefit is growing in popularity as owners spend an average of $215 annually on cats or dogs for routine care but far more for emergency care or illness. That correlates with the U.S. Bureau of Labor Statistics' figures that veterinary inflation has averaged 6.8 percent annually for the past five years. According to the American Pet Products Manufacturers Association, the cost of veterinary care is estimated to be $14.1 billion in 2011.
According to Deana Single, director of group accounts at Veterinary Pet Insurance Co., or VPI, one-quarter of Fortune 500 companies offer their pet insurance as an employee benefit. Companies that offer pet insurance through VPI or other insurers and discounters, includes the Boeing Co., Chipotle Mexican Grill Inc., Delta Air Lines Inc., Kohl's Corp., Morgan Stanley, Home Depot Inc.—which has offered pet insurance since 2004—and McDonald's, which offers discounts on pet insurance premiums.
Employees typically pay 100 percent of a group rate for the insurance, sometimes through post-tax payroll deductions, with participation ranging from 1 to 5 percent of the employee population. Or, they may access a discount program such as one offered by Lakewood, New Jersey-based Pet Assure Corp., which has a nationwide veterinary network.
Based in Brea, California, VPI was founded in part by 750 veterinarians in 1980, with plans ranging from low-cost catastrophic to comprehensive plans with a wellness component. Single says 2,400 employers offer VPI, which insures about 100,000 pets through employer group policies and 385,000 more individually.
The company issued its first policy in 1982 to the collie that played Lassie in the 1980s version of the long-running television series. Single says there are many reasons employers add pet insurance to their benefits roster.
“They may want to augment an already robust benefits package, add a no-cost benefit to soften the blow of changes in their health care plan [for people], or differentiate themselves from their competition,” she says.
Pet insurance “is a no-cost benefit for an employer, and our employees love it, so it's a no-brainer,” says Crystal McDermott, a benefits manager with strategic consulting firm Monitor, based in Cambridge, Massachusetts.
McDermott says that less than 1 percent of Monitor's 560 U.S.-based employees take advantage of the pet insurance, which was introduced about a year ago, but believes interest will grow.
Like many pet insurance providers, VPI has partnered with brokers and benefits aggregators to market its products after being approached about 10 years ago by a Metropolitan Life Insurance Co. broker who was receiving requests from clients for pet insurance. In 2007, CNBC reported that pet insurance benefits were employees' third-most requested voluntary benefit.
“We find these benefits are highly requested because people know how expensive veterinary care is,” says Pet Assure project manager Rachel Ostreicher. “Forty-six percent of Americans have children but 65 percent have pets.”
Ostreicher says employee participation in Pet Assure's veterinary discount program is about 5 percent, which surveys show favors dogs.
“Our members typically save up to 400 percent of the cost of their coverage, which is less than $10 a month through their employer,” she says.
“I make a point of speaking to each employee individually to explain” Pet Assure's program, says benefit/human resources specialist Vickie Ulrich of ServiceMagic Inc., a website matching consumers with approved service providers based in Golden, Colorado. Ulrich, who uses the insurance for her two dogs, says a small percentage of the company's 1,100 employees are enrolled, but those who use it say they appreciate it.
“It doesn't require any administrative work for me, and it's easy for the employees to access online,” Ulrich says.
Similar to VPI's plans, the Hartville Group, a strategic partner of the American Society for the Prevention of Cruelty to Animals offers four levels of pet insurance under the ASPCA Pet Health Insurance, Hartville Group Inc. pet insurance and Petshealth Care Plan brands.
“We have a wonderful opportunity to help pet parents provide needed health care for their pets,” says JoAnne Novak, vice president of new business development and employee benefits of the Hartville Group. “It's a worthwhile benefit for organizations who want to offer valuable voluntary benefits with no associated cost. You can't expect the high participation levels; it's a morale-boosting program that people like, and if we can help 25 or 35 pets within an organization, we're delighted.”
Michael Albo, director of sales and marketing for Purina, which offers PurinaCare Pet Health Insurance to more than 1 million employees, said pet insurance allows employers to offer a worthwhile benefit at virtually no cost to the organization.
“We have found that more and more companies are offering pet insurance as a means to provide as many benefits as possible to their employees while still controlling costs,” he said.
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