Pricing and Value Proposition
Over the last 10 years, Trupanion's insurer, American Pet Insurance Company (APIC), has introduced seven rate increases in order to adjust premiums 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 for eligible expenses with no limit.
Trupanion’s insurer, APIC'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.
How does this impact you as a customer?
For the average pet, if you put 70 cents of every dollar spent on your insurance premium in a cookie jar, at the end of your pet’s life, your cookie jar would be empty. Insurance offers financial security that a savings account can’t match. As a pet owner you don’t know when your pet will get sick and you may not have a full cookie jar to work with when that time comes. We’re here for 90% coverage for eligible expenses with no limit regardless of how much you have paid in premiums.
How Trupanion’s insurance product is different from the competition
Trupanion allows policyholders to be liberal with veterinary care since our insurance reimburses 90% of the actual costs of covered veterinary care with no limits on payout. 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, Trupanion's insurer APIC chooses to price insurance premiums to be able to cover 90% of covered costs 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. 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to treat their pet with outdated medicine because we don’t want to pay for the new,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.”
-Darryl Rawlings, Chief Executive Officer
How we price
When Trupanion started over 10 years ago in Canada, and pet health insurance was new to North America, American Pet Insurance 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's insurer, American Pet Insurance Company, not only prices based on species and age, but also location, breed, gender and deductible amount.
Trupanion Company Values
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 make claims.
Second, Trupanion's insurer, APIC, will not increase premiums due to the pet aging. As anyone enrolling a puppy is a “like risk.” APIC spreads that risk over all policyholders enrolling puppies for an average of 14 years. Spreading risk over this longer time period, compared to an older pet, allows APIC 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. APIC'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.