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Pet Insurance - is it really worthy of a Shonky?

Posted in Client Service @ Oct 17th 2019 - By Judy Gillespie, Vetanswers
Pet Insurance Is It Really Worthy Of A Shonky Red

Pet Insurance should be seen to be an essential part of pet ownership, yet it has recently been named in the Choice Shonky awards

Every year, the independent, consumer advocacy group Choice announce their Shonky Awards - their awards that name and shame the shonkiest products and companies taking advantage of Australian consumers.

This year Pet Insurance was named in the 14th Annual Choice Shonkys. And not just one brand or type but ALL pet insurance - For catch-22 pet insurance whose conditions make it worthless

How did ALL pet Insurance make it into the Shonkys?

Why? Well according to Choice "There's a reason we've never recommended a pet insurance product, even though we regularly review the sector. What's the issue? The pre-existing condition trap."

I agree that in theory, pet insurance is a great idea and really should be a necessity to cover unexpected and potentially costly veterinary care for our much-loved pets - however I can't say that my personal opinion of Pet Insurance has changed much over the last five years since I wrote a couple of blog posts on the topic. While it may be harsh to call all pet Insurance 'Shonky' I still don't have it for my pets.

Back in 2014 when I had pet insurance, I received a very unexpected surprise in my pet insurance renewal letter, and subsequently wrote the blog post A 52% price increase this year (or 119% over 5 years) is never going to be ok. This was followed up with a second post a month later after an online survey: The Perils of Pet Insurance - Online Survey Results. And it seems that in the subsequent 5 years, the only thing that's changed is an explosion in the number of pet insurance products that have since flooded the market, making the choice for pet owners even more confusing.

Although I have insurance for absolutely every other facet of my life (I'm a very risk-averse person) I have never taken up pet insurance again. And I don't plan on doing so until there are some major changes.

So why did Pet Insurance get named by Choice?

Choice recently reviewed 86 pet insurance policies (last updated May 2019) and didn't recommend any ".. due to their their many restrictions and the lack of competition in the market." (Choice Pet Insurance Reviews). You can read Choice's overall report here: How to find the best pet insurance policy. Will pet insurance give you peace of mind?

In nominating the Industry for a Shonky, Choice called out two main areas of concern:

1. The pre-existing condition trap which can make it impossible to switch providers

"While you're stuck with the product, pet insurers can make any changes they like when you renew your policy every 12 months, including increasing the premiums; reducing coverage, payment limits and sub-limits; and adding exclusions. Being able to shop around and change providers is the cornerstone of a fair and just financial market. That's why we've decided to confer a catch-all shonky on the entire pet insurance industry."

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2. Dodgy T and C's

"Some products have stepped premiums, meaning the cover keeps getting costlier as your pet gets older and is more likely to require the services of a vet. With others the benefits drop over time. Many won't pay much for vet consultations ($300 limits are not uncommon), and some won't pay anything at all. And if it's an emergency, some policies won't cover what the vet charges for out-of-hours situations, only what the costs would be during normal business hours."

So what does this mean for your clients?

It would make sense if both the veterinary and pet insurance industry had a mutually beneficial, symbiotic relationship. But I don't see much evidence of this.

It's also a no-brainer that it would make things much easier if the majority of your clients had pet insurance, but with now over 86 pet insurance policies (that's how many Choice reviewed in May 2019) all of which are underwritten by only 4 providers (as at October 2019), it appears that selecting the right pet insurance is still going to be a challenge for many of your clients.

There's always another side to the story

Dr Andrew Spanner (Walkerville Vet) has surveyed his clients and written a blog post on the topic: Is Pet Insurance Worth It? Here's Your Answer. In his post, he refutes many of the claims made by Choice and offers some valid arguements in support of Pet Insurance. 

I'm sure you could also find many clients with stories further supporting the importance of pet insurance, but overall, it does seem to have an image problem. And with seemingly more and more pet insurance products being released onto the market and now a Shonky Award - that image problem isn't improving.

So who's right? And what can be done to encourage more pet owners to take up pet insurance? Are there changes that need ot be made within the industry? Is it an image/branding/marketing problem, or something more serious?

I'm keen to know what you think....

Comments

Liz Walden @ Oct 18th 2019 1:50pm
Sadly I think that the Choice analysis is ill informed. To pull out a problem with pre-existing conditions really highlights the flaws in their analysis. If everyone with a PEC moved insurer to get the exclusion waived, what do they think would happen to the premiums? I can tell you it would not be affordable for anyone. Premiums that are stepped are effectively priced based on risk. If they are not stepped, then all that means is a younger pet would subsidise the older pets. Is that what Choice is suggesting? I think that would be unfair. Of course improvements can always be made, but unfortunately Choice does a dis-service by discouraging people to buy pet insurance. The more that are insured, the better for everyone. If you take a look on product review, you will see that there are many many people who sing the praises of pet insurance, because it has literally enabled them to save their pet's lives. Not everyone has a handy $5,000 saved up to pay for a bill if it unexpectedly comes along. This can mean very difficult decisions for people who love their pets like their family.
Judy @ Oct 18th 2019 5:09pm
Thanks for your comments Liz and you've raised some good points. I agree that it would be great if everyone had pet insurance but I also believe there are issues within the industry that makes it challenging for pet owners. The sheer number of products on the market for one (especially as there are only 4 (?) underwriters) makes me think there must be easy money to be made as why else would there be so many products? I also think the PEC issue is also a challenge. I have private health cover and just because I need glasses doesn't mean I can only claim for them once. I'm absolutely not anti-pet insurance as I recognise the benefits for pet owners and the veterinary industry but I think there are lots of red flags. My hope is that this will encourage the industry to review what's on offer and maybe partner with the veterinary industry and pet owners to develop products that are fair for all. So pet owners have the security of knowing their pets is covered when they need it, veterinarians can provide the best care possible and insurance companies can make a fair profit. I'd love to hear some suggestions or advice as to how this could take place :) Regards, Judy
Liz Walden @ Oct 25th 2019 11:12am
Hi Judy - I thought you might find this interesting as it provides data on pet insurance claims which demonstrates the importance of having pet insurance fir many pet owners. ?. Liz https://www.insurancenews.com.au/local/wrong-choice-pet-insurance-attack-doesnt-match-the-facts
Judy @ Oct 25th 2019 12:45pm
Hi Liz, thanks for the link and I'll definitely share it on all of our social media. I think the data supports the importance of pet insurance for pet owners and the veterinary industry but I also believe there is some room to improve what's on offer. And that's what I'm hoping will happen so that even more people will take up pet insurance.
Harvey Green @ Oct 27th 2019 5:27pm
I decided to not renew our pet's insurance this year directly as a result of this choice survey. When you get into the fine print - the maximum claim amount, etc. I decided it wasn't worth it. I think we'll be better off taking that same amount and putting it into a savings account for our dog instead.
Judy @ Oct 27th 2019 5:46pm
Thanks for your comments Harvey. I think Choice is very well regarded by consumers and so we tend to listen to what they say. I'm really hoping the insurance industry will talk to people like you to see how they can either modify the products on offer to better suit your needs or possibly even communicate current offerings in a way that makes them easier to understand.

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