Pet health insurance is a gamble. Are you are gambler?

Pet insurance is like gambling
Pet insurance is like gambling. Photo: Alan Cleaver
Until September 7th I will give 10 cents to an animal charity for every comment. It is a way to help animal welfare without much effort at no cost. Comments help this website too, which is about animal welfare.

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.

ASPCA Health Insurance

7 thoughts on “Pet health insurance is a gamble. Are you are gambler?”

  1. I fear it may be time for me to seek a new vet. My regular one is fantastic, but he was very ill himself last year with cancer. Thankfully he’s on the mend, but I’ve heard that he will be retiring. If the guy I saw is his replacement then I will look elsewhere for vet care.

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  2. I’ve never taken out pet insurance. I prefer to set aside money every month which I keep as an emergency fund should I ever need it to pay off a large, unexpected vet bill. I also keep a credit card solely as back-up in case the vet bill is more than I have saved up.

    I must admit that after Sophie had an overnight stay at an out of hours vet clinic, I did consider taking out insurance because I’d been shocked at the cost of emergency care. (£135 just for a consultation, compared to £25 at my regular vet and the diagnostic tests were equally over-priced.) Afterwards when I spoke with several insurers I was horrified to learn that even if Sophie had been insured, they wouldn’t necessarily have reimbursed me, because the suspected poisoning turned out to be a false alarm!(Never mind the fact that the emergency vet couldn’t diagnose what was ailing Sophie and she was discharged into the care of my regular vet.) If suspected poisoning doesn’t constitute an emergency, then what does? Many policies state treatment by “your vet” in their small print, which I guess is a get out clause for them regarding emergency out of hours vet bills. Yet these are just the kinds of bills which pet owners take out insurance cover for. Given that the average excess fee is around £75, owners end up paying for most basic treatments themselves anyway without ever being able to re-claim those expenses.

    As far as I’m aware, only one UK insurer has an agreement to pay vets direct. All others expect owners to pay the bill and then claim it back afterwards. This hardly gives the financial peace of mind most owners thought they’d be getting when they took out insurance.

    There are lots of other exemptions in the small print which make insurance not worth having, but one of my major concerns with having insurance is that an unscrupulous vet might be tempted to run additional/unnecessary tests or treatment to bump up the cost. This newspaper article isn’t new, but I’m sure things haven’t changed;

    http://www.dailymail.co.uk/news/article-1232217/Why-Im-ashamed-vet-shocking-expose-profession-puts-pets-painful-unnecessary-treatments-fleece-trusting-owners.html

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    • I prefer to set aside money every month which I keep as an emergency fund should I ever need it to pay off a large, unexpected vet bill.

      Very wise and that is effectively running your own insurance scheme without the need to pay men in BMWs to manage it for you.

      Exceptions are a sort of fiddle and a way for the ‘banker’ to make money.

      Insurance is just a money making exercise at the expense of the public. I think we can do without it entirely.

      Thanks for a useful comment Michele.

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      • I was very disappointed that the vet (not my regular one) asked me if I had insurance before we even discussed what tests/treatments were needed and how much they would cost. Perhaps the firm “no” response made him re-think what tests would actually be necessary.

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  3. Michael, in India we do not have health insurance for “Pets” but seems i have wasted a lot of money by paying insurance on my own “Health Premiums”! As a “GAMBLER” i have realized foolishly that “INSURANCE COMPANIES” are the biggest “BOOKIES” in the business of “HUMAN HEALTH INSURANCE” and seems the same would also apply for pet insurance.

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