Simply put, the value of any insurance is the percentage of premiums that are paid back in claims. Trupanion currently pays out more than 70% in premiums, with a goal to pay out more than 80% in the next ten years. The company is way above industry average, which sits at 52-55%. This means that for an average pet, 70 cents on every dollar the pet owner pays in premiums is paid back to the pet owner.
Over the last 10 years, Trupanion has introduced seven rate increases in order to adjust premiums across the board to share the risk equally and fairly among all policyholders. Not one penny of those rate changes has been used to pay administration costs or overhead. In fact, Trupanion’s administrative costs and overhead have decreased as a percentage of premiums year over year, allowing the company to be more efficient and able to offer the lowest cost of premium based on 90% coverage with no limit.
Trupanion’s goal is to price all policyholders appropriately in like groups, ensuring that pet owners with average pets will have at least 70% of their premiums returned to them in the way of claims over the life of their pets.
One thing that distinguishes Trupanion from other pet insurance companies is cost containment. Trupanion is not in the business of cost containment. Trupanion policies allow pet owners to see any vet they choose with no benefit fee schedules or ‘usual and customary’ payouts. Instead of operating off of a set schedule or payout amount, the company chooses to price insurance premiums to be able to cover 90% with no limit no matter where the pet goes for care or how much the total bill costs.
“We understand that as veterinary medicine advances, there will be newer and more expensive ways to treat pets so pet owners are able to keep their pets happy and healthy longer,” said Darryl Rawlings, Chief Executive Officer at Trupanion. “We do not want to tell a policyholder that they have to treat their pet with outdated medicine because we don’t want to pay for the new, better way of doing things.”
When Trupanion started over 10 years ago, and pet insurance was new to North America, the company had two categories by which it priced – species (cat vs. dog) and age at enrollment. As veterinary medicine advances and more information is known about the cost of care, adjustments are consistently made to ensure all premiums are fair. Today, Trupanion not only prices based on species and age, but also location, breed, and deductible amount.
There are two values Trupanion has always operated under. First, there are no penalties to the pet owner for making claims. Other types of insurance such as car insurance do charge more for having claims. However, since pet owners have no control whether their pets get sick or injured, Trupanion does not believe in penalizing pet owners if they do.
Second, Trupanion will not increase premiums due to the pet aging. As anyone enrolling a puppy is a “like risk,” Trupanion spreads that risk over all policyholders enrolling puppies for an average of 13 years. Spreading risk over this longer time period, compared to an older pet, allows the company to keep premiums lower. So rates are lower for puppies, despite younger pets having the highest frequency of claims. Also, even with veterinary inflation, pet owners who enroll their pets as puppies or kittens will always pay significantly less than if they originally enrolled their pet at an older age.
Instead of dictating what is best for pet owners, Trupanion allows pet owners to determine with their veterinarian what is the best option for their pet.
The cost of insurance is directly related to the cost of providing the best policy on the market. As the cost of care increases, the cost of insurance will, too. The company’s goal is to price its product fairly so that the average pet has 70% + of premium paid out in claims. “The price may change, but the value is the same,” said Rawlings.