I received an email recently from Dr. Jules Benson at Petplan in response to a question I’d asked him. Included in the email was a bit of information that I’d certainly not thought of before and perhaps you haven’t either.
We normally think of pet insurance premiums increasing due to several factors e.g. changing underwriters, a pet’s age, adjustments due to actuarial data and “veterinary inflation.”
Veterinary inflation is generally defined as the amount a practice raises it’s fees from one year to the next to cover increases in overhead whether that be the cost of drugs, staff salaries, equipment, utilities, etc.
Dr. Benson pointed out that another reason pet insurance premiums rise is due to increased veterinary spending. I guess this could include simply pet owners being willing to spend more on their pets than in past years. Dr. Jack Stephens, Founder and President of Pets Bests pet insurance company, touched on this in a recent podcast when he compared 1982 (the year he started pet insurance in the U.S. at VPI) and the increasing human - animal bond that pet pet owners have with their pets today.
Dr. Benson reveiled another aspect of this by using the example of a claim filed for a dog that is vomiting. I’ve included a table that compares a practice’s fees from 2009 vs. 2010 for an out-patient visit for non-specific vomiting in a dog.
The practice raised it’s fees 5% from 2009 to 2010 due to veterinary inflation, but the over-all cost to diagnose and treat a case of non-specific vomiting from one year to the next rose almost 30%. Why? The practice started using a new in-house test (cPLI) to rule in/out pancreatitis which is a potential cause of signifcant vomiting in dogs. They also started using a new anti-nausea medication (Cerenia) that seems to be more effective than Reglan which the practice had been using for years as its treatment of choice for nausea.
So, claims may be higher from one year to the next because of new treatments, diagnostic procedures or even surgeries that a practice may choose to use for specific problems. If most practices nationwide start doing the same, you can easily see how pet insurance premiums would rise as a result.
The bottom line is that pet insurance premiums will increase as the human-animal bond becomes even stronger and new and better ways of diagnosing and treating diseases become available and widely used.
