As pet health insurance companies make a lot of money from pet owners who take out insurance, there has to be a lot of ‘losers’. Many pet owners end up spending much more money insuring their pet than if they hadn’t. This is because their cat or dog was healthy and died suddenly. The winners are likely to be owners of cats and dogs with long term health problems requiring surgery who pay for the best policy with the least number of restrictions or limitations.
It is interesting to note that when making a decision whether to take out pet health insurance the owner is gambling. If he believes his cat will be healthy and avoid a chronic illness then he shouldn’t take out insurance unless he has the money and likes ‘peace of mind’.
If he believes his cat will become ill then he’ll take out insurance. It is still a gamble, though. Pet insurance is like a casino. The casino always makes money because the games are set up to favour the casino.
The premiums paid for pet health insurance are very carefully worked out to ensure that the dice is weighted to favour the insurance company. I am sure it is more expensive to insure a purebred cat because they are more likely to become ill.
Overall pet owners lose out. Overall, bundling all pet owners together, pet health insurance is a failure and a waste of time for pet owners because they pay out more in premiums than they get back in claim payments. The difference is the nice profit that the insurance companies receive from the business.
Insurance companies will always make a profit. It is almost like printing money. This is because if there is a spike in claims they simply put up the premium. So if a person makes a lot of claims they’ll up the premium.
In the worse case scenario, a cat owner will be uninsurable. They will be too big a ‘risk’ for the insurance company to insure. This tells us that the insurance companies don’t take risks or they absolutely minimise them whereas pet owners are gambling, pure and simple.
Pet insurance probably favors the person who cares for a number of cats. If a person is the caretaker for say five cats the gambling element of pet insurance is minimised. It does not mean the person won’t lose financially over the lifetime of the cats but the potential loss will be less and the outcome a fraction more predictable.
I have never insured my cats. I don’t believe in it. I don’t need the so called magical ‘peace of mind’ that it is meant to bring. Perhaps the whole business turns on the emotional state of the pet owner. Do they feel a little insecure and want more control and certainties in life? If so, then if they have the money, they’ll probably go for pet insurance.
I sense that most people don’t insure their cat or dog because they think like me. The Swedish are much more likely to take out insurance than Americans. Brits fall in between the two. This may be because the Swedish pay high taxes for high quality public services. They are used to the concept of communal payments which is what insurance is.