Digital pet insurers zero in on education

February 24, 2022 7:58 AM

Pet insurance in the U.S. has been available for decades, but only in the past few years has the market seen an increase in interest from consumers, insurtechs and traditional insurers. Digital strategy is at the center of the market’s rapid growth.

The number of insured pets in the U.S. was about 3.1 million in 2020, according to data from the North American Pet Health Insurance Association. But 82 million U.S. households own a pet, according to the 2024 American Pet Products Association’s National Pet Owners Survey.

Kristen Lynch, executive director of NAPHIA, believes that as people – not just consumers, but insurance professionals, veterinarians and insurance regulators – become more familiar with the product, the growth will continue.

“We have seen, as an industry, that the market has grown,” says Lynch. “You can’t talk about the last couple of years without mentioning the impact of COVID-19. Two significant things impacted this–our relationship with pets changed by living and working with them and people adopted more pets.”

About one in five or 23 million households have acquired a cat or a dog during the COVID-19 pandemic, according to data from the American Society for the Prevention of Cruelty to Animals.

Lynch says that one of the reasons it may be so hard to educate on pet insurance is because it is such an emotional product.

“You don’t love your car like you love your pet,” says Lynch. “It is [a P&C line], but you have added emotional factors. It has an added layer in education. People are coming to it from an emotional perspective, from a lens of emotion.”

Lynch says the pet insurance industry came up with the dot-com boom of the 90s, and because of that it is inherently a digital product. Many digital pilots in insurance started in pet, she explains.

“Pet has always been digital – it evolved alongside the internet in North America,” says Lynch. “It’s been on the same trajectory as internet itself. Pet insurance was seen as a tech play for a lot of companies and they’ve adopted what they’ve learned in pet insurance into other lines.”

Digital marketing takes off

People watching a screen of a mobile phone while sitting on sofa with a dog.

pressmaster - stock.adobe.com

Several digital pet insurance providers are working to educate consumers on pet insurance products.

Stephanie Dalwin, an advisor at Aite Novarica, says that while current pet insurance penetration in the U.S. is still low, efforts are being made.

“Marketing and reaching consumers will be a big part of increasing education,” says Dalwin. “The greater availability will increase consumer education. There seems to be a lot of opportunities for carriers and distributors.”

Heidi Sirota, chief pet officer at Nationwide, says pet insurance is a fast-growing and revolutionary category.

“There is something new every day, there is a lot of insurtech and investment in pet insurance. Innovations are coming our way,” says Sirota, adding that referrals are also a key part of Nationwide’s business.

“People see value in the product,” she says. “We are focusing efforts in direct-to-consumer including digital advertising, marketing and SEO to reach people who are looking for pet insurance.”

Trey Ferro, the CEO of Spot, a pet insurtech, said the company uses social media including paid advertisements, celebrity endorsements and dog park sponsorships to educate consumers.

“The industry as a whole will see a huge lift as we get better at marketing and Americans get better at understanding pet insurance,” says Ferro, adding that Spot is specifically focused on its social media strategy this year.

“We believe that Millennials are on their screens and we want to make sure we are hitting people multiple times a day to get pet insurance,” says Ferro. In the future he said conversations around artificial intelligence, mobile apps and automation will be big for the market.

Brian Macias, president at Embrace Pet Insurance, says Embrace uses an omnichannel approach to interact with customers including paid search and social. The company also partners with carriers like USAA, Geico and Allstate, which do marketing for the product too.

Model law on the way?

Pets Best Pet Health Insurance.

In addition to consumer education, another challenge to national pet insurance education efforts is that there is, as yet, no model law in place.

Model laws, which are crafted by the National Association of Insurance Commissioners help create uniformity for insurers. Currently, the NAIC Pet Insurance Working Group is making revisions to a model law and will present it at a parent committee meeting in the future.

“We can’t do a ‘Got Milk?’ campaign, if it is different everywhere,” says Lynch. “It is challenging for us to advertise what the product is if it is different everywhere.”

Lynch says NAPHIA is currently investing a lot of its time in working with and educating regulators but when a model law is passed the organization will be able to invest more into educating consumers, insurance agents and veterinary teams.

“That is on our radar and we are building those out now with a plan for where we are headed, but we have to get through this window, which includes talking to states about standardization once the model law passes,” says Lynch.

Melissa Gutierrez, the senior vice president and general manager of Pets Best, says that when a model law is passed it will help the consumer.

“If we can get a model law we will see more commonality, which could take the complexity out of the buying process,” says Gutierrez. “We try to keep our plans simple but insurance and simple don’t always go hand in hand.”

Gutierrez says she would like to see an increase in awareness around the cost of pet care too.

“When you adopt a pet you don’t think about something going wrong, the reality is most people are shocked by the cost of procedures when a pet gets sick,” says Gutierrez. We have been engaged around education for the consumer to help them understand while working with veterinarians, on how much the cost can be so they’re aware of the costs and how to manage them through insurance.”

Advocacy from veterinarians

Pumpkin Pet Insurance, a subsidiary of Zoetis, an animal health and drug company, in addition to direct-to-consumer channels on several online platforms, is also working directly with veterinarians to promote pet insurance.

Alex Douzet, chief executive officer of Pumpkin, says the company trains veterinary clinical teams on the value of pet insurance.

For example, veterinary care teams are able to educate pet owners about their adopted young pets and the potential health issues of certain breeds and the need to purchase pet insurance prior to the onset of a pre-existing condition.

“We train them to advocate for insurance,” says Douzet. “Pumpkin is recommended but not sold as they’re not licensed agents and they can’t talk about coverage or pricing. They can talk about the benefits of insurance.”

Veterinary clinical teams are interested in educating pet owners on pet insurance for various reasons including compassion fatigue, says Douzet. Typically, pet owners without insurance will debate care because of the cost while a pet owner with pet insurance will likely tell veterinarians to go ahead with various costly procedures because insurance will cover some of it.

Lynch expects the future of pet insurance to include more use of the Internet of Things and telematics. Like people, pets can be equipped with wearable tech to monitor their health and wellbeing. But, first, she suggests people read their pet insurance policies.

“You can do all the education you want but if people don’t read their policies and understand them, there’s nothing to do,” says Lynch. “We advocate for that. The onus is on the consumer to understand and read what they bought.”