When Jeff Foose welcomed Lucy, a Boston terrier, into his family in 2014, protecting her health was a big concern. His veterinarian recommended pet health insurance from a company called Trupanion, and Foose bought in. He appreciated that the company\u2019s policy promised it would never raise his premiums by more than 20% a year.
That pledge didn\u2019t last long. Trupanion has raised Lucy\u2019s premiums by well over that limit in some years, his documents show, and Trupanion just told him that he and other pet owners in New Jersey could see their premiums rise 33.6% this year. Making matters worse, Foose said he can\u2019t change insurance carriers because Lucy has a skin condition that a new insurer would likely not cover.
Seattle-based Trupanion, the leader in the pet insurance field, says it must raise premiums because vet costs are rising. Foose is unhappy. \u201cIt makes me crazy when someone sells me something and they make an embedded promise they don\u2019t keep,\u201d he told NBC News.
Some 5.4 million pet insurance policies were in force across the U.S. in 2022, up over 21% from a year earlier, according to the North American Pet Health Insurance Association. Trupanion insured 1.5 million pets as of December 2022, its financial filings state, roughly triple the number it did in 2018.
Since 2018, the number of insured pets in the U.S. has risen almost 23% a year, on average. Roughly 80% of insured pets are dogs, with cats making up the rest. As pet insurance has increased in popularity, consumer criticisms have risen as well. They fall into three main categories, veterinarians say \u2014 long waits for claims reimbursement, denial of claims for pre-existing conditions and premium increases.
Costs of goods and services are up everywhere and pet care is no exception. Government data shows the costs of veterinary services rose 10.6% in July, year over year.
Trupanion\u2019s recent increases well exceed that rate, regulatory and customer documents show. Victoria Boyd, for example, shares her Las Vegas home with two cockapoos, one Shih Tzu and a Labrador retriever, and said the cost of covering their veterinary care with Trupanion is becoming a financial burden \u2014 approaching $400 a month. Like Foose, Boyd says she would have a hard time getting coverage on one of her dogs from a new insurer because of a pre-existing condition.
In just two years, the cost of insuring one of her cockapoos has risen 57%, from $77.94 to $122.11, Boyd\u2019s documents show. In June, her monthly premium covering her Lab, Chance, rose 38% from 2022. Boyd said she has never filed an insurance claim on Chance.
A customer of Trupanion since 2017, Boyd said she was a fan of the insurer at first. \u201cTheir rates were great before and the positives of Trupanion are direct pay to vets and no payout limits for condition or ailment,\u201d Boyd told NBC News. But now, she said, \u201cit feels like a bait and switch \u2014 you got me in at these great rates and I\u2019m almost trapped.\u201d
Margi Tooth, Trupanion\u2019s president, said she was disappointed by Boyd\u2019s view. \u201cI think we work very hard to ensure that we\u2019re explaining our value proposition,\u201d she said. The company\u2019s price hikes are the result of vet cost inflation, Tooth said, and the rising costs of care in a customer\u2019s specific region.
Tooth did not say why Trupanion had raised Foose\u2019s premiums above the cap stated in his policy. She did say, \u201cIf there were ever any changes to a customer\u2019s policy, the coverage, the benefits, the pricing, everything is always detailed in an annual summary and will provide information related to the changes in our coverage.\u201d
Companies offering pet insurance are overseen by state regulators, and some of the rate increases recently requested by Trupanion are far higher than the overall inflation rate. In June, the company asked the Florida insurance regulator for a 48.9% price increase on top of a 14% hike that the regulator approved in February. Earlier this year in California, Trupanion asked for a 28% rate increase; the regulator approved only a 12% rise.
In its SEC filings, Trupanion says if state regulators delay its price increases, the company\u2019s financial condition could be adversely affected. Bradley Safalow, an analyst who covers Trupanion at PAA Research, said he believes Trupanion will continue to face regulatory opposition to its price increases and he is betting its stock price will decline. Policyholders in California account for almost 20% of the company\u2019s revenues, Safalow noted.
NBC News compared prices among five big pet insurance providers \u2014 Embrace, Figo, MetLife, Pets Best and Trupanion. The same dog breed, age and size was used for each quote, aiming for 90% coverage and a low deductible of $200 to $500. Trupanion\u2019s rate came in three to four times the costs of the other four providers on both a 3-year-old and a 6-year-old male Jack Russell terrier mix.
Asked what accounted for the price differences, Laura Bainbridge, Trupanion\u2019s head of corporate communications, said, \u201cProducts are not comparable across pet insurance. Trupanion is going to generally offer the fewest exclusions \u2014 covering conditions that a pet may be predisposed to.\u201d
Tooth said the company\u2019s product is a good value because it does not have limits or caps on coverage as other offerings do and it pays the vet directly. \u201cYou\u2019ve got lifetime coverage that covers the unexpected,\u201d Tooth said. \u201cIt\u2019s built for the life of your pet.\u201d
Still, Kevin Brasler, executive editor of Consumers\u2019 Checkbook, an independent organization that helps consumers shop for the best prices on goods and services, said, \u201cPet insurance is a really expensive product. It seems inexpensive at first when you\u2019re only paying $40 a month. But a lot of things have to go wrong with your pet to make pet insurance a good deal.\u201d
Trupanion has generated losses since its inception and last December reported an accumulated deficit of $172 million. It has funded its operations by issuing shares and borrowing.
The company\u2019s stock has been volatile; soaring to $122 in 2021, it recently traded around $30.
New customers come to Trupanion from its website and referrals, but much of its business comes from veterinarians who recommend its products to their customers, as Foose\u2019s vet did.
Frances Wilkerson is a longtime veterinarian who reviews pet insurance offerings on her website Pet Insurance University. Unlike other review sites, Wilkerson is an independent assessor who says she receives no commissions or other pay for her research. She said more regulation, especially on pricing, is needed to protect buyers of pet insurance.
\u201cI would really like consumers to have some clarity on what\u2019s the maximum their premium can increase every year,\u201d she said.
Darryl Rawlings, Trupanion\u2019s founder and CEO, said his company doesn\u2019t project how much premiums will rise because it\u2019s an unknown. \u201cWe\u2019re not trying to predict what\u2019s going to happen in veterinary medicine 5 to 10 years down the road,\u201d he said. \u201cWhat we\u2019re trying to do is understand the cost and project it out over 12 to 18 months so we can price our members appropriately.\u201d
Until recently, industry regulations have been sparse. Last year, the National Association of Insurance Commissioners, a group of state overseers, drafted a \u201cPet Insurance Model Law\u201d to \u201cpromote the public welfare by creating a comprehensive legal framework\u201d covering sales of the product. Now, some states are implementing new rules.
One is Maine, whose insurance department recently advised pet insurers that they can no longer defer the effective date of a new policy for days or weeks. Such delays were designed to prevent customers from submitting a claim for an accident that has already occurred, for example. In July, Trupanion sued the Maine insurance superintendent seeking a so-called declaratory judgment that would allow the company to continue deferring new policies\u2019 effective dates.
Emily Brill, founder and publisher of The Canine Review, an independent news service covering the pet industry, said other states are likely to follow Maine\u2019s lead on so-called waiting periods, a source of considerable consumer complaints. \u201cAs more states want to get rid of waiting periods on accidents and put huge restrictions on all kinds of waiting periods, it\u2019s sending insurers into panic mode,\u201d Brill said. Trupanion is more vulnerable than other insurers, she added, because the company\u2019s premise is to provide coverage that has no limits or exclusions. \u201cIf they start not covering everything, that\u2019s a problem because it messes with their formula.\u201d
Trupanion\u2019s pricing has come under scrutiny in California. Last year, the state\u2019s insurance regulator alleged Trupanion\u2019s underwriting unit, American Pet Insurance, had violated state laws by charging different premiums to customers based on the sales method the customer used to buy the policy. The notice said the company had violated California law requiring that an insurer charge an insured \u201cthe lowest premium for which the insured qualifies.\u201d Trupanion settled without admitting to any wrongdoing.
Regarding Trupanion\u2019s price increases, Brasler, of Consumers\u2019 Checkbook, said, \u201cIt\u2019s hard to know whether they\u2019re doing it because it\u2019s a money grab or if their risk has gone up. The feedback is at least they pay claims \u2014 it\u2019s not like they\u2019re rejecting tons of claims. Still, I wouldn\u2019t buy pet insurance,\u201d he added.<\/p>\n\n\n\n