A guy who worked in the pet insurance business as a loss adjuster knew the drill of the pet insurance businesses he says. The first thing that an insurance company does when it gets a claim is to use the three Rs: “How can we refuse, recoup or reduce this claim”. You can’t blame a pet insurance company for trying to minimise their payments. It just depends how far they want to go and whether they cross the line from ethical to unethical.
The public tends to distrust pet insurance companies. That’s not to say there are not some good companies around and I’m sure that there are some good experiences with insurance companies paying out without argument and on an ethical basis. However, there is no doubt that there is, in general, a lack of underlying trust from the public and it could be argued a lack of ethical behaviour on occasions from pet insurance companies who unreasonably try to avoid payments when a claim is made under their policies.
A couple of examples serve to illustrate the point. These two stories concern a pet insurance company doing business in the UK: Animal Friends. Alan Patterson had to put his boxer dog down. She was 12 years of age and the veterinarian had decided that she had come to the end of her life. She was euthanised and her body disposed of by the veterinarian. The bill came to £342.21 p. He made a claim against Animal Friends and received a reimbursement of 80p. Under the terms of the policy (the small print) claims for euthanasia were limited to a hundred pounds. In addition they deducted £99 to cover his excess and then deducted a further 20% because poppy was older than eight years of age. This left him with the miserly 80p reimbursement which he felt was an insult. He thought it would have been better if he’d received nothing.
Comment: you can see how the small print comes into effect. Arguably Mr Patterson should have read the policy carefully before we made the claim. If he had he would have known that his claim would have been a waste of time. I’m not criticising him. I’m simply saying that a lot of cats and dog owners don’t fully understand their pet insurance policies and the restrictions that are written into them.
Mo Large’s claim against the same company was entirely rejected. His Bichon Frise had to have fluid drained from her heart. He made his claim for £1,030. They turned him down because the dog’s medical records indicated that she had a heart murmur diagnosed during a checkup in 2016. I’m sure that this is a very typical rejected claim.
Low premiums – poor payouts
I don’t want to be overly negative about pet insurance because it does serve a useful purpose sometimes but the companies can do better. It seems to me that they do their utmost to keep the premiums down to make their policies more attractive and thereby attract new customers but then fail to make payouts under overly restrictive policies.
It would probably be better and more honest if they ramped up the premium payments and paid out in a way which met the expectations of their customers. There is no doubt that customers feel let down and that their expectations are not met. The policies do not square up with the public’s expectation of what the policies should be doing. There is a disconnect. It appears to the public that insurance companies wriggle out of their obligations. That is the kind of impression they get and the comments on the website thisismoney.co.uk supports that. I’ve mentioned one comment already at the beginning of this article.
One person said that pet insurance is a racket and a scam. It’s not that. This is too harsh a criticism. But these businesses walk a very fine line between ethical and unethical behaviour. They can do better and be more competitive. Their objective is to beat self-insurance (saving money to pay vet bills). Most of the time they don’t.
The hidden advantage to pet insurance is that it spreads the risk amongst pet owners. It’s quite socialist in it’s workings. A person who has bad luck as does their cat who is ill a lot will be lucky enough to receive top quality treatment under their policy and the treatment is paid for in effect by a person who has been luckier than them in that their companion animal has been healthy. Pet insurance shares the risk and rebalance his unfairness.