Pets Need Health Insurance, Too

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America's 160 million dogs and cats, long ignored or treated as property by insurance companies, soon will be eligible for health insurance through a direct marketing effort by the Petshealth Insurance Agency.


Policies from Petshealth, Canton, OH, are available in 13 states and are expected to gain regulatory approval in the rest of the continental United States by September. Pending approval, a national campaign is planned for the fall that will include direct mail, telemarketing and direct response television.


Veterinary Pet Insurance (VPI), Anaheim, CA, is the only other carrier offering health insurance for pets but it commands less than 1 percent of the market.


One of every seven households owns at least one pet. Following the lead of consumer marketing campaigns, Petshealth president and CEO Michael Dunlap intends to establish a database for each of the five demographic niches the program will reach: empty nesters, "around-the-table" families, young professionals, childless couples and those over 70.


Pet owners are being targeted through their veterinarians and lists segmented by demographic criteria and co-op mailings. Response to test mailings have generated responses of more than 20 percent from veterinarians who wish to participate in the marketing campaign and more than 10 percent from pet owners. An insert in a 700,000-piece Val Pak mailing to markets in Indianapolis, St. Louis and Dallas generated a surge in calls for more information.


The mail piece for the program's official roll-out is being modified with feedback from test mailings. Past mailings to clients have included a letter of recommendation from their veterinarian. Future ones will contain answers to the most frequently asked questions about pet insurance, a policy application card and references to the Petshealth Web site (www.petshealthinsurance.com) and toll-free number. Pet owners are able to enroll at the Web site. Owners who enroll in unlicensed states will be placed on waiting lists until approval is granted. VPI also maintains a Web site (www.petinsurance.com) that offers online enrollment.


Dunlap and co-founder Russell Lewis also are drawing on research and direct mail samples from pet insurers in Europe. In Sweden, 49 percent of dogs and cats are covered by health insurance while in England seven carriers have insured 19 percent of the pet population. American International Group, which underwrites Petshealth through its subsidiary American Home Assurance Co., is one of those carriers.


"One of our big issues is credibility,'' said Petshealth communications manager Ginger Biss. "Not many people have heard of this. The fact that AIG is behind us helps."


Dunlap attributes the high enrollment rates in Europe to consumer-oriented marketing approaches and he intends to follow a similar path with Petshealth. Special offers will be included in mail pieces, and there are plans for extensive marketing tie-ins with mortgage companies, alumni groups and credit-card holders.


Jack Hunn, president of Insurance Marketing Associates, Laguna Niguel, CA, who is assisting Petshealth with its campaign, said insurance is a tremendous continuity product because of the high retention rate. Prudential Life Insurance in the UK has been successful for many years using pet insurance as a vehicle to make an initial call to potential client and it has led the way to other policies.


"This is a great offering for third-party endorsements, where member loyalty is important, and this will help solidify relationships they already have with the customers,'' Hunn said.


Dunlap and Lewis, who is executive vice president, founded the company after swapping stories of huge veterinary expenses they incurred to save the lives of their dogs. A 1997 study by trade journal Veterinary Economics determined that pet owners pay an average of $173.20 in veterinary bills annually while another study by DVM Magazine found that bills over $576 forced pet owners to consider euthanasia.


"Money should never become an issue when a pet's life is at risk and saving that life is a possibility,'' Dunlap said.


Petshealth policies will work similar to most medical plans, paying 80 percent of medical expenses above a $100 deductible. Policy holders pay a monthly premium based on three levels of coverage: basic, value and choice.
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