Mark Harrop Business Development Manager

Jan 14

Pet insurance technology improvements imperative to underpin booming US market

Bosses at Aquarium Software Inc., have welcomed the news that pet insurance growth in 2014 in the US was triple the pace of accident and health coverage, with a warning that the growth may not sustainable without the correct technology platforms underpinning it.

What is already a $600 million industry looks set to expand again in 2015, and there should be nothing to stop and even accelerate this premium growth, should enabling technology be seen as a driver - rather than a cost - says Aquarium.

The unprecedented expansion of the industry continues to confound the experts, but has come about in tandem with the rising cost of vets’ bills as new treatments are developed, which has coincided with pets gradually and definitely being moved from the doghouse to form a key part of the family unit. While such economic and social evolution is good for pets and business, the industry needs the tools to cope with this demand, and software is undoubtedly the key.

“Aquarium has been pointing out for some time that the pet insurance industry has untapped potential in the US due to the growth in pet parents need for protection from unexpected vets’ bills,” said Mark Colonnese, VP Sales and Marketing. “While the market is better established in Europe, the concept of pet insurance is now being taken more seriously around the world. The one thing that unites Europe and America is the need for providers to raise their game. Policy holders expect the same high standard from pet policies as from tradition insurance products and technology is the only way to deliver.”

It is clear that investors are starting to sniff out the potential of pet insurance. According to data compiled by the North American Pet Health Insurance Association (NAPHIA), gross written premiums jumped an average of 13% from 2009-13, compared to just a 3.5% rise in premiums for personal accident and health policies (data by Timetric) in the US in the same period and investors are getting in on the act. Last year Fairfax bought Pethealth for $88 million, starting a process of consolidation as big brands seek greater brand recognition and market share – a process likely to continue in 2015, as the market is conservatively estimated to be worth around $750million in the US in 2015.

To fulfil its potential, the pet insurance market has to maintain public trust and software is essential to address both the issues and opportunities facing the industry.
“Inflexible systems, unclear terminology and regulation can leave customers feeling confused, when clarity is needed in price and billing,” added Colonnese. “Consumers need to see they have been sold the right policy at the right price and should they need to call upon it, it will not let them down. But insurers also need to understand the approximate risk across the book. This can make the crucial difference between high claims costs and being able to deliver a profitable yet attractive premium to policyholders and a return for investors. Software and technology are essential to satisfy the needs of all parties concerned.”

Unexpectedly denying coverage or seeming to pay less than due helps neither the insurer nor insured. The right software can help by delivering greater operational efficiency via process automation and strategies such as electronic claims notification direct from the veterinary hospital to the insurer. All things the customer does not see, but serve to deliver them less of a ‘sale’ and much more a ‘service’ they can depend on.

When a claim comes through, the insurer needs to know they are paying out on the correct parameters and that the customer is aware of what these are, both when taking out the policy and from the moment a claim is generated. It is in everyone’s benefit to have effective underwriting and a fair claims assessment process. For this to happen, accuracy is needed across the board.

“Our aim for 2015 is to help create a pet insurance industry that is both sustainable and profitable for the insurer, but which also provides a more valued and at the same time affordable service for the pet parent,” added Colonnese. “By bringing pet insurance technology platforms in line with other markets we are providing the opportunity for more pets to be insured and their long term health to be well protected.”