This is a complicated subject but there are definitely pros and cons to pet health insurance. I’ll start with the pros i.e. the things that are good about it. But I discuss things as they occur in a flow of consciousness! If I’ve missed something please comment – thanks. The first thing that is good about it is that it gives peace of mind to cat and dog owners. They might be worried if they are good pet caregivers about a possible serious or chronic illness developing in their companion animal which they cannot afford to treat by a veterinarian. Pet health insurance totally removes this background anxiety.
So, peace of mind is the first pro and the second would be that a decision to euthanise a pet because they’ve developed a serious illness can be avoided. Pet insurance can prolong life but there is a potential downside there: it may lead to over-treatment or unnecessary treatment when a gentle, humane death might be better.
The third reason would be that when a veterinarian is paid by an insurance company or the owner pays and is reimbursed by the insurance company, they know that they can perform much stronger diagnostics and use their best equipment and time to provide the highest quality healthcare.
Pet owners who have insurance can follow the advice of their veterinarian without trying to reduce or minimise the cost. They can follow the advice wholeheartedly but the veterinarian may drum up the costs because they know the pet is insured. This, of course, is a factor against pet insurance; it helps to drive up costs.
The fact that pet owners who have taken out insurance can allow their veterinarian to provide the best healthcare is important today because veterinary healthcare is constantly improving in using much higher quality procedures and diagnostics. These are expensive.
Also, nowadays, compared to say 20 or 30 years ago, people are more likely to treat their companion animal as a family member and therefore they are much more emotionally connected to providing the highest possible healthcare. This can lead to a higher possibility of anxiety when they can’t afford it. Therefore, the benefit of pet insurance in terms of peace of mind is heightened.
A study cited in the Journal of the American Veterinary Medical Association found that 76% of pet owners indicated that they would spend any amount to keep their pet alive. This reflects the evolving relationship between human caregiver and companion animal. This kind of finding would not have been in place a hundred years ago and probably explains in part the growing interest in pet insurance in the US.
However, a con to pet insurance is that it can force up costs. Veterinarians in any case are trying to attain the salaries of human doctors because that they feel they deserve it. Perhaps they do in certain parts of America or in Western countries, and indeed in developing countries, but often they receive a salary below that of human doctors.
Veterinarians are investing in their practices and provide better management of their businesses with the objective of increasing revenue. That’s a good thing but all these objectives increase veterinary care costs to the paying public. Enhanced treatment and better veterinary practices are good for the pet i.e. the patient but it needs paying for which should drive people towards taking out a pet insurance health policy.
A current problem, however, is that pet insurance policies are becoming financially prohibitive in my view which is putting off people going down this route. There has to be a limit to how much an insurance policy costs in terms of premiums.
This is because pet owners can take out their ‘own insurance policy’ (self-insurance); not through a third party like a big business but in saving money for that rainy day. Provided they have the self-discipline they can build up a healthy savings account dedicated to their pet’s health. That too provides peace of mind and you aren’t paying money into the pocket of administrators of a big company. One issue with this sensible approach is that it takes time to save and so what happens if something goes wrong in the near future? However, I strongly favour this approach. It provides more control and there are no policy weasel words which allow insurers to avoid paying up.
Here are 2 more important topics:
- Pet savings account to pay for self-insurance;
- The three Rs of pet insurance: “how can we refuse, recoup or reduce this claim”.
Another downside to pet insurance is that the policies are often very complicated. A lot of people don’t have the wherewithal to read them fully or they aren’t bothered. They might be tripped up by the policy. Insurance policies are created to make money for the businesses and therefore they have to be weighed against the customer. Customers are often gullible and are unaware of the limitations and restrictions on policy. This can lead to disappointment. Taking out your own policy by saving money avoids these hazards. The problem is that it takes self-discipline as mentioned. This is a quality which a lot of people don’t have sufficient quantities of.
The pros for pet insurance are numerous, the most important of which is that the health of companion animals is improved. Of course, pet insurance spreads the risk but each individual person does not know how they will fare in that risk-taking process. Will their cat or dog become seriously ill in which case health insurance pays off or will they pay premiums for many, many years without any benefit because they have a very healthy cat or dog? Pet health insurance benefits some more than others. There is a risk element.
The major downside of pet insurance is that it becomes too expensive and as it is about risk-taking the customer has to weigh up the pros and cons and many people don’t take our pet insurance because of the cost. They decide that they would take the risk of their cat or dog becoming seriously ill and pay the cost themselves. They take charge of the matter because once you hand over money to an insurance company you are engaging in a business which has a licence to print money, in effect, because when they start losing money, they simply pull up the premiums.
When you pay premiums, you don’t only pay money into a pot for your animal’s medical treatment. You are paying into that pot to pay the salaries of the insurance company employees and their directors. That is money down the drain in terms of pet health. And these guys like to be well paid. The real winners in pet insurance are the businesses providing it.
Pet owning Americans spent $2.174 billion in 2020 on pet insurance. The pet insurance market is up over 26% from $1.717 billion USD in 2019 and over 3.45 million pets insured across North America, up 22.5% from over 2.81 million pets insured in 2019. Eighty-one percent of policies cover dogs for accident and health. Premiums for dogs are about $50 less than for cats in the US. Pet insurance is a rapidly growing market but this is from a very low base. There are around 95 million domestic cats in the US and similar number of dogs. So, 2.81 million pets insured represents a tiny percentage.
In general, I sense that cat and dog owners shy away from pet insurance because the cost does not justify the benefits. This attitude is changing slowly perhaps because of increased disposable income.
There are some more articles on pet insurance below.