Pet Premiums

Only 10 percent of pets in Hawaii have medical-care insurance. However, industry leaders anticipate growth over the next few years

February, 2003

Jeanell Bowman decided to take out pet insurance for her pet Chihuahua, Lilii, after he had knee surgery. She is thankful she did. Within a year, Lilii’s other knee required surgery. Then he needed allergy testing, followed by long-term treatments. The co-payments, however, amounted to only one-fourth of total medical expenses. But Bowman didn’t mind. “When something happens to an animal you love, with pet insurance, your decisions are not based on what you can afford,” Bowman says.

Pet health policies mirror insurance plans for humans: annual premiums, deductibles, family plans (for more than one pet) and options based on degree of coverage desired. Most policies take effect when the pet is between 6 weeks to 8 weeks. The policies also put certain limits on age, pre-existing conditions, well care, and hereditary or breed-specific ailments, such as liver shunt typically found in smaller dogs. Some policies even apply to rabbits, birds, pocket pets (hamsters, mice, etc.), reptiles and other exotic pets. Annual premiums vary widely, from about $99 for an HMO-type plan to more than $500 for a superior plan.

But unlike medical plans for humans, veterinarians are paid by pet owners, who then are reimbursed by their pet insurance company, after file claims are reported by the vets.

Pet insurance, however, is rare in Hawaii. Dr. Gleason Hirata, Lilii’s veterinarian at Kapalama Pet Hospital, estimates that fewer than 10 percent of his clients have pet insurance. California-based Veterinary Pet Insurance (VPI), the nation’s largest pet insurer with more than 250,000 policies nationwide, has only 1,087 active policies in Hawaii. That’s a drop in the bucket compared with the estimated 120,500 dog and 115,800 cat owners on Oahu, based on a 1996 Hawaiian Humane Society survey.

That may soon change. Nationwide, pet insurance is on the rise. VPI’s gross revenue grew from $15 million in 1998 to $70 million in 2002. Its founder and chief executive officer, Dr. Jack Stephens, estimates the number of U.S. pet owners (130 million alone own cats and dogs) carrying pet insurance will increase fivefold by 2007. VPI also offers pet insurance through Met Life as a voluntary employee benefit, one of the fastest-growing employee perks, to some 675 companies.

Pet insurance will become more popular locally, says Hirata, in response to the rising costs of caring for pets. Advanced medical technology – such as lasers, ultrasound, CAT scans, hip replacements and kidney transplants – have ballooned veterinary medicine from an $11 billion industry in 1996 to $19 billion in 2001, according to the American Veterinary Medical Association.

While Hawaii has only one animal-medical specialist, an ophthalmologist, industry leaders anticipate the future will produce a new breed of animal specialists, such as Veterinary Board certified cardiologists, surgeons, dermatologists and even animal psychologists. And thanks to the Internet, increasing demand will come from owners who have grown savvier about what can be done for their ailing pets, Hirata says.

In her 33-year practice at University Pet Clinic, Dr. Arleene Skillman says she saw the “big change when pets came from outside the home to inside the home.” Today, pets are now part of “the family” for many pet owners – some childless and many single, says Skillman, who encourages her clients to apply for pet insurance, especially when they get a new puppy or kitten. It’s part of a preventative program.

For pet owners who believe that not being able to afford the treatment that can save a pet’s life is unthinkable, pet insurance may provide peace of mind without emptying the pocketbook.

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