The rise and rise of pet insurance

There are many people who scoff at the idea of pet insurance, because it's relatively new. It's another insurance cover along the lines of funeral cover - pricey, not well-understood by consumers, and with only a small range of policies to choose from. 

Pet insurance is specialty property and casualty policy to cover unintended costs in caring for a pet - vet services like surgery, injuries, medicine. It is simply a reimbursement program, much like travel insurance: your pet gets sick, you pay the vet bills, then you make a claim that must be assessed and accepted or denied. 

The market is ripe for the picking

Globally, pet insurance is considered an untapped market, which holds a great deal of potential considering the sheer number of doting pet owners globally. Penetration rates are less than one per cent, simply due to a complete lack of awareness and a pretty negative view by the few folks who actually bought these policies after a poor start in the early days. 

The major markets right now are the United Kingdom, United States, and Japan, but other areas are ready for a good marketing campaign and improved policies. Pitfalls in selling these policies tends to centre around their cost, lack of awareness, a lack of competition, and sometimes, government regulations. 

Pet insurance in Australia

There are 19 pet insurance policy providers in Australia, but just two pet insurers - Petplan and PetSure (underwritten by Allianz Australia and Hollard respectively). The policies vary, sometimes significantly, for the same sort of cover so as usual, it's important to read the fine print. One of the major issues in obtaining pet insurance is the lack of advice available on which policies offer the best coverage, value for money, and actually cover your breed for what you need. 

There are three forms of pet insurance: accident-only, comprehensive accident and illness, and illness-only. 

Structure of products

An annual benefit limit generally applies, set out as a maximum dollar amount. Then, there are sub-limits for specific conditions, like tick paralysis, dentistry, and emergency boarding. 

Definitions vary but mostly it's the same sort of thing. Some policies don't pay if your pet swallows something they shouldn't have, or your pet is only covered once per year, per event. So they may only be allowed to swallow one foreign object per year. Anything more, you're on your own. 

Allergic reactions, bone fractures, tick paralysis, elbow dysplasia, euthanasia, dentistry and specific breed illness are all areas that differ per policy, with most policies having some illnesses that are still not covered even if the animal is vaccinated against it. 

Pre-existing conditions and waiting periods are the sorts of things that policies can be quite strict on, for example whether a pre-existing condition can be covered, what hereditary conditions are excluded, and breed-specific illness exclusion. 

Other policy considerations are the age an animal can be covered from, the increases in co-payments or premiums as the animal ages, excess amounts, discounts for more than one pet, and considerations based on the pet's address. 

What the policies do - and don't - cover

There is the standard-issue problems: surgery, hospitalisation, medicine, which then branches into less dramatic treatments and care such as dental work, vaccinations, and preventative treatments. 

You are charged as a co-payment or using excess, or in some cases, both. Co-payments may be around 35 per cent of the vet bill, split between you and the insurer. 

How to compare policies

Sometimes the difference in policies between companies are simply in the name - the whole product disclosure statement (PDS) is exactly the same as another company's. There isn't a whole lot of variety for pet owners when it comes to policies. Petplan has been doing some branching out into specifics, for example offering cat cover without accident cover for pets who don't ever go outside, where most pet accidents happen. 

Paying premiums after your pet has died

This practice was actually common not that long ago, despite it seeming cruel and unusual punishment. It is now almost entirely ruled out, but not entirely, so check with your potential insurer. 

Pet policies are confusing, and nobody can help you

If you thought your own insurance was hard enough to decipher, try getting through a pet insurance policy document. These policies are more difficult to figure out, because for most people, it's their first time insuring a pet, and until you get burnt, you think the policies are simple, and that you'll be covered for any eventuality. This is not true, and even less true than for human insurance policies. The fine print is very fine indeed. 

Exclusions are evolving, so pre-existing conditions can now be considered more often, which is also a recent and welcome development. Older animals cost more, with senior animals (over age nine) almost impossible to cover except for accident. 

Choosing a policy can be a nightmare, so first understand what you want to be covered for, and find a policy that suits. There are routine care policy add-ons too, which while they don't save you a terribly large sum, can take the edge off check-ups. 

CHOICE has done a great job of reviewing policies, with BUPA coming out well on top, and the lowest-ranked consistently falling to 

Research into pet policy markets

An Australian study, Pet Ownership in Australia 2013, provided interesting statistics on home ground. According to the study, there are an estimated 25 million pets in Australia, with five million households having pets: 63 per cent, to be exact. That makes us more likely to have pets than most other countries. 

Dogs are most common (39 per cent), with cats coming in second (29 per cent), with the next most popular pet being fish, then birds, and then other small mammals and reptiles. About half of all Australian households want to get their first pet, or to get another pet. Over one million households planned to get a companion animal in 2013. 

Over 90 per cent of cats and 76 per cent of dogs are kept exclusively or partly inside, with pet insurance policies on the rise - Gen Y pet owners have a 20 per cent coverage rate for cats and 27 per cent for their dogs, while Baby Boomers are less interested, with only 12 per cent having insurance for their dogs and nine per cent for their cats. 

Pet Ownership in Australia 2013