Pet insurance beginning to catch on in Ozarks

As the field of human medicine advances so does veterinary medicine. Developments in medical technology intended for humans lead to analogous developments for pets. Pets may now benefit from MRIs, ultrasounds and advanced surgical techniques. However, as the quality level of care for companion animals rises, so does the cost.

To mitigate these costs, some pet owners are purchasing pet insurance plans. Commonly these are indemnity plans, and the client pays the vet at the time of services then files a claim to be reimbursed by the insurance company.

One company that offers this type of plan is Veterinary Pet Insurance. Located in Brea, Calif., VPI was founded in 1982 and has approximately 360,000 policies in effect nationwide, up from 250,000 in October 2002.

Dr. David Goodnight, executive vice president of business development at VPI said, "What we are seeing right now is an explosive growth in pet insurance. Demand is very high and as awareness grows, demand grows. We expect that trend to continue."

The company has grown 40 percent per year for the last seven years and holds 85 percent of the pet insurance market.

Despite nationwide enrollment increases, Springfield veterinarians report that few of their clients use veterinary pet insurance plans. Reported reasons for this vary. Dr. David Sifferman of Bradford Park Veterinary Hospital believes that pet insurance is a "non-factor in Southwest Missouri. Our normal fees are much lower than in other parts of the country, so the premiums are too high for it to be practical in this area." Sifferman recommends that his clients set aside a savings account for their pets to prepare for accident or illness.

However, some veterinarians in the area are beginning to promote the plans to their customers, and have seen a slight increase in clients' participation in VPI's programs.

Veterinarians believe that lack of awareness is the cause of the plans' unpopularity in the area. Dr. Ned Caldwell, a partner at Deerfield Veterinary Hospital, said, "My opinions on it have changed in the last few years. The plans have become much more realistic. Two things have happened in the last five to 10 years, really: The policies have gotten better and veterinary costs have crept up."

Monthly premiums for VPI's pet insurance plans start at $10 for a cat and $16 for a dog. VPI also carries plans for small exotics and pet birds. For VPI's most commonly sold plan, insurance for dogs, "The average cost is $250 a year. That truly is an average because the cost starts lower when the dog is a puppy and gets higher with age," Goodnight said. In order to be insured, pets must be at least six weeks old, and while there is no upper limit on age, the owner of an animal age 10 or older is required to submit veterinary records from the previous year for the animal to be insured.

VPI bases its premiums on statistics gathered from around the country. "We have one of the largest actuarial databases in the U.S. We take all of the fees from every veterinary hospital in the country every year and calculate the premiums against those fees. We then submit this to the Department of Insurance for their approval," said Goodnight. Plans cover a wide range of veterinary expenses, from minor illnesses and routine vaccinations to major surgeries.

VPI further seeks to make its insurance affordable by offering "Pet Buddy" discounts. "Basically, it's a group rate," said Goodnight. "If you enroll one pet with us, there is a basic premium. If you enroll two or three pets with us, there is a 5 percent discount. If you enroll four or more, there is a 10 percent discount."

Caldwell reports that less than 1 percent of his clientele uses pet insurance, but he expects that to change. "Right now, it's not that big here, but everything is telling us that it's going to become a bigger part of our profession. Not just the veterinary pet insurance industry, but economists and professional organizations, also. I think it is a wave we are going to see in the future," said Caldwell. He added, "I see more surgeries where the owners are spending $200 to $500. It's much more common than it was five or 10 years ago, and in an instance like that, policies do make a lot more sense." While the vets at Deerfield do not actively try to sell clients on veterinary insurance, they do include a pamphlet in care packets they disperse to clients with puppies or kittens.

Becky Uchtman, office manager and veterinary assistant at Parkcrest Veterinary Hospital, said that while Parkcrest also has very few clients who use pet insurance, those who do are pleased.

"Just in the last year we've seen it pick up a bit. All of the clients who do have it have had good reactions. We've had a few cases where people have had animals that became very sick or had an accident and had it not been for the insurance, they might not have been able to save them," said Uchtman. Parkcrest also includes VPI brochures in its puppy and kitten care packages.

As VPI offers an indemnity plan rather than a HMO or PPO style plan, its impact on the business of running a veterinary clinic is relatively low.

"Our agreement is between us and the pet owner," said Goodnight. "They pay the veterinarian directly and submit the expenses to us. We then reimburse them according to their plan details."

Caldwell said, "It's easier for us from a bookkeeping standpoint to have it handled that way. Insurance is a completely different business. I wear so many hats as a veterinarian already that I don't need that."