National Underwriter - April 18 2011

With ASPCA Brand, MGA Sees
Fourfold Growth Rate In Pet Niche

Past issues with transparency, profitability tackled through marketing partnership, data mining ■ FOUR-LEGGED COVERAGE

BY CAROLINE MCDONALD

ALTHOUGH PET INSURANCE used to be a line of coverage that did little for pet owners and proved difficult for insurers as well, one company believes it has found the recipe for success in the niche.

“It all comes down to the underwriting and being a fair deal to the customer,” says Dennis Rushovich, CEO for Hartville/ ASPCA Pet Insurance in Canton, Ohio.

As more people buy, pet insurers are
able to offer more benefits, he adds. “The
products have continuously improved, and
the industry as a whole has improved.”
The pet-insurance industry has “be-
come more transparent to the consumer,”
Rushovich says. “We try our best to explain
what is and what isn’t covered.”

E PET OWNERS FACING the choice of a $4,000 vet bill vs. euthanizing their pet have a tough decision—unless they have pet insurance.

“We have a good brand to
market under—and good mar-
keting,” Rushovich says, not-
ing that his firm has seen 300
percent growth in the last five
years, also attributing the spike
to continual product improvements.
From an underwriting profit perspective,
the success of the product hinges on the com-
pany’s claims data—about 12 years worth.
Pricing factors include the animal’s
breed and age, among other things, Rush-
ovich says. “For example, a bulldog is much
more prone to illness than a poodle.”
To deliver its pet-health policy offerings
covering dogs and cats, Hartville works with
Fairmont Specialty, part of the Crum &
Forster Group. Hartville, through a wholly
owned MGA subsidiary known as Petsmar-
keting Insurance.com Agency Inc., does the
marketing, pays claims and handles cus-
tomer service—“all the things a managing
general agent would do,” Rushovich says.

“We market pet-insurance products under our name, as endorsed by the ASPCA,” Rushovich says, noting that in March 2006, an exclusive strategic-partner agreement for pet insurance was signed with the ASPCA (The American Society for the Prevention of Cruelty to Animals).

SICK PUPPY

PET INSURANCE SELLING POINTS According to the ASPCA website, ASPCA Pet Health Insurance benefits include:

That meant marketing of the product migrated to the ASPCA

E Getting reimbursed 80 percent
of usual and customary cov-
ered charges.

Pet Health Insurance brand.

E Choosing from four available
levels of coverage: accident,
illness, wellness and wellness-
plus offering increasing levels of
protection, as well as optional
coverage for ongoing conditions.
E Saving 10 percent with a
multiple-pet discount,
excluding level-one and
continuing-care coverages.
E Meeting only a low $100
annual deductible per pet.
According to the website, the pet
insurance has a $100 deductible
per pet that needs to be met once
a year, rather than per incident.
More information is available at
www.hartvillegroup.com.

E Using any licensed veterinarian
in the U.S. or Canada.
E Tracking claims and updating
information online.

Photo by Getty

“a veterinarian in Manhattan obviously is
going to charge more for services than a
veterinarian in Idaho.”
Explaining the use of the pet’s age as
a pricing factor, he says that, just like hu-
mans, as the pet gets older, their medical
treatment costs rise.

In determining individual rates, a base premium has been established and surcharges based on the criteria are factored in. Policies are then closely monitored. Rates are assessed and set annually.

“We continually look at our breeds. Sometimes we bump up surcharges; sometimes we can reduce surcharges for certain breeds,” he says. ZIP codes are monitored as well—in case costs begin to rise in an area or the owner of the pet moves to a new location.

For mixed breeds, “we typically ask for the predominant breed,” he says. When this isn’t evident, there is a separate class labeled “mixed breed.” Typically, Rushovich explains that the mixed breeds perform better “because with pure breeds you get inbreeding,” which can lead to congenital and hereditary conditions.

In addition to being a revenue source for the ASPCA (through royalties for use of its trademarks), the coverage furthers the association’s mission, Rushovich says, noting that people who have pet insurance euthanize less.

People facing the choice of a $3,000-$4,000 vet bill vs. euthanizing have a tough decision, especially in the current economy, he says. “If they’ve got pet insurance, it obviously saves the animal,” which is the mission of the American Society for the Prevention of Cruelty to Animals—a nonprofit organization which gets most of its revenues from donations. NU