Trupanion sues Maine insurance regulator
The suit hints at a larger, core challenge to Trupanion’s survival.

More reporting to follow.

The Canine Review has exclusively obtained a complaint that pet insurer Trupanion, Inc. filed against Maine’s Superintendent of Insurance Timothy Schott on June 20, 2023. TCR obtained the complaint through a public records request from Maine’s Bureau of Insurance.

According to the complaint, Trupanion is now using its Exam Day Offer certificates as its sole method of sale in Maine. An Exam Day Offer (EDO) is available through what’s called the “vet channel.” Trupanion frequently reports that 70% of its referrals which lead to selling new policies come through referrals by vet hospital staff/the vet channel.  Territory Partners talk to vet hospital staff about Trupanion, but only the staff are left to discuss Trupanion directly with pet owners. To reiterate, the hospital staff, not Trupanion contractors, are the individuals who introduce Trupanion to pet owners. And, of course, vet hospital staff are not licensed to sell insurance.

Trupanion’s complaint asserts:

“As of January 1, 2023-the effective date of the Maine Pet Insurance Act-the Bureau of Insurance has prohibited Trupanion and other pet insurance companies from deferring the effective date of policies issued in Maine. As a result, to avoid the anti-selection effect of certain consumers using the prohibition on waiting periods to obtain coverage for accidents that already occurred, Trupanion is requiring that consumers must have their pet examined by a veterinarian before the policy takes effect. Other insurers have largely pulled out of the market in Maine altogether including Nationwide, which along with Trupanion constitutes half the market share of the industry.”

With many more states set to enact similar laws starting January 1, 2024, this will inevitably draw attention to EDO’s. And, so, Maine seems to be the tip of an iceberg, with a larger battle looming for Trupanion, which would challenge the entire business model itself as more states pass similar legislation banning waiting periods and put Trupanion into an EDO-only revenue model, thereby putting the spotlight on the EDO and — its legality.

If territory partners (independently contracted local sales agents critical to Trupanion’s vet-centric business model) need to be licensed just to visit vet hospitals and educate vet professionals about pet insurance, how does Trupanion explain a system of relying upon vet hospital staff to introduce Trupanion and educate consumers about the EDO without being licensed?

The Canine Review asked Trupanion’s Darryl Rawlings exactly this question by text and email. He has not responded.

But we already know how state insurance regulators interpret the law with respect to licensing because Trupanion has been dinged for this exact issue in the past by state departments of insurance for using unlicensed sales agents.  Now, those agents are licensed but the they’re one step removed from the people directly conversing with pet owners.

Moreover, now, a new regulatory environment looms, with Maine as the first state to pass legislation drawing on the NAIC’s Model Pet Insurance Law.

The lawsuit has big implications because other states are now passing similar laws, in Washington, New Jersey, and Delaware. In Nebraska, Michigan, New York – much more on the state of play in our forthcoming story.

More reporting to follow.