At 553,000 subscribers (active policy holders) as of its third quarter earnings report on October 29, 2020, Trupanion is America’s second largest provider of medical insurance for pets. Only Nationwide (formerly Veterinary Pet Insurance, America’s first entity to underwrite medical insurance for pets) exceeds Trupanion’s share of the market. As of November 2020, Nationwide had about 880,000 pet insurance subscribers, spokeswoman for Nationwide Karen Davis told TCR.
Trupanion is a standout among pet insurance brands in that it arguably offers the clearest, simplest, most user-friendly insurance. There is only one plan option on Trupanion’s menu. The only choice a consumer must navigate is the deductible amount, which, unlike most plans, is paid per illness for the lifetime of the pet.
The customer service Trupanion offers is, by far, the gold standard in the industry. Trupanion is the only provider that does not outsource its customer support. More than that, founder and CEO Darryl Rawlings makes a point of spending time in the call center, immersing himself in the exchanges.
“I have sat in the call center for many years,” Rawlings wrote in the company’s 2017 shareholder letter, “and it gives me the opportunity to feel and hear the voices of our customers and it is the intersection of our wins and failures.”
Not only is Trupanion’s customer support in-house, but it’s also available by telephone 24/7/365.
But there is one recurring grievance that The Canine Review found across multiple online review sites and social media platforms: premium rate increases. However, Trupanion is not claiming to offer insurance that’s economical. Trupanion’s sell is, “You get what you pay for.”
In this video, Rawlings underscores the company’s value premise and how he views what they offer relative to the other providers:
In a wide-ranging interview in March 2020, Rawlings walked us through the company’s business model and exactly how a client’s rate is determined, why rates fluctuate, why one rate would be higher than another, and why one client’s rate would increase significantly in a brief timespan.
“Let’s say the average cost if a pet becomes sick or injured – I’m going to use easy math – is $100 a month. Then, what I charge to that pet owner is going to be about $128. And, of that $28 margin that I have, I spend about half of that on providing the 24/7 support. And then the other half is the money that I have to run, operate, and grow the business. So, now you have our pricing promise, which is that we understand the underlying cost, we target to pay out about 71-72 cents on the dollar, which, by the way, the average in the property/casualty insurance industry is 53 cents….”
One of the smartest advantages of Trupanion’s business may be its ability to integrate with veterinary practice management software. In addition to facilitating claims processing and then directly paying the veterinary practice within minutes as opposed to having the client pay out of pocket and wait weeks to be reimbursed, this also allows Trupanion to collect data, both insured and uninsured, according to Rawlings.
“We’re not like an HMO that’s trying to control the cost of care,” Rawlings continued. “We’re just saying, you can use any veterinarian that you want and we pay 90% of the invoice with no limits [it you choose the 10% coinsurance plan], and we don’t want to penalize the pet owner if [the pet] becomes sick or injured.” A 5-7 percent rate change per year is “normal” and to be expected, he says. However, if a client is seeing a rate change greater than 20%, one of two things is likely happening: either the zip code did not get a rate increase in the prior 12 months and that could be because the state insurance commissioner was slow to approve the rate change. “Or,” he added, “it could be because, in some circumstances, we are now getting our data more granularly.”
- Trupanion’s monthly premiums can increase substantially from one year to the next. However, customers can, at any time, lower their monthly premium by increasing the plan’s deductible, which is per incident for the lifetime of a pet.
- Trupanion Express is only available in about 5,000 veterinary practices, although the company has been able to grow this number substantially from one year to the next. There are between 28,000 and 32,000 total practices.
- Trupanion Express is proprietary software which facilitates point-of-sale claims processing within seconds. Trupanion is the only pet insurance provider in the market with the ability to process and pay claims at the point of sale, before the client pays his or her portion of the invoice.
Trupanion Express, a software product that facilitates rapid claims processes and enables Trupanion to pay a veterinarian on the spot, is the only software of its kind in the U.S. pet insurance market. In 2019, Trupanion sued competing pet insurance provider Embrace after it attempted to develop its own version of the software. Trupanion’s suit was successful, arguing that Embrace was infringing on its patent. To this day, Trupanion is the only pet insurance provider with the ability to process claims within minutes, often at the conclusion of a pet’s visit to its veterinarian and, importantly, before the owner is asked to pay the remaining balance. Reliable, seamless customer support and claims processing is the heart of Trupanion’s sell.
- Average monthly retention rate 2020 (percentage of policy holders who continued with the policy): 98.69