Thursday, November 12, 2009

Even as the human health care debate rages in Congress, businesses are showing support for the animal kingdom by providing heath insurance for their employees’ four-legged friends.

Hundreds of companies including Google Inc. and Blockbuster Inc. offer pet health insurance as a supplementary benefit to attract and retain employees, said David Lummis, a senior pet market analyst for Packaged Facts, a market research firm.

An “overwhelming wave” of interest has seen the size of the pet insurance industry more than double since 2002, Mr. Lummis said. More than 1 million pet owners across the country are spending about $400 a year to insure their pets.

It’s a smart positioning strategy for companies that want to compete for top employees, Mr. Lummis said.

“Good companies listen to their people and adapt to them,” said John Challenger, chief executive of Challenger, Gray & Christmas, a human resources consulting firm in Chicago.

Many companies are afraid their best employees will leave when the economy recovers, but offering competitive benefit packages is one way to retain them, he said.

In fact, pet insurance is one of the three most requested voluntary employee benefits, according to a 2007 survey by Vsurance of Canton, Ohio.

Companies can help employees purchase the insurance at discounted rates by offering it as a voluntary benefit, which can generate “tremendous good will,” Mr. Lummis said.

Concerto Networks is one of those companies. The D.C. company, which provides information technology support to small businesses, makes an effort to appeal to “pet-loving employees” by offering pet insurance to its small staff and allowing them to bring their pets to work, owner John Videna said.

Other companies are slowly catching on. Just 3 percent of U.S. companies offer pet insurance as a benefit, according to a 2009 survey by the Society for Human Resource Management.

While it costs employers nothing to offer pet insurance to employees, many bosses simply don’t know about it. Others are afraid they will confuse employees if they load up their benefit packages with too many options, said Ken Stallings, sales director at Veterinary Pet Insurance of Brea, Calif.

“McDonald’s can’t have everything on their menu,” Mr. Stallings said. “You have to pick and choose what’s the best for your customers.”

Several factors are pushing people to insure their pets.

First, the average dog today lives about three years longer than it did a decade ago, and some live longer than 15 years, said Margaret Hollis, a veterinarian at Dupont Veterinary Clinic in Northwest Washington.

That raises the cost of owning a pet and makes animal insurance a smart option for many owners, said Loran Hickton, executive director of the North American Pet Health Insurance Association. Unlike human heath insurance, pet insurance offers no tax benefit to buyers, but Mr. Hickton said he is lobbying Congress on that issue and expects pet insurance to be a pre-tax benefit eventually.

As pets live longer, owners are paying for more visits to the veterinarian and costly prescription diets.

Even routine care has become more expensive, said Rolan Tripp, a La Mirada, Calif., founder of, a Web site devoted to helping people resolve animal behavior problems. He remembers when it used to cost $100 to get a dog spayed. That simple procedure can cost as much as $700 today.

But one of the biggest reasons for the demand for pet insurance is a spate of medical breakthroughs that can save pets’ lives but take big bites out of owners’ bank accounts. For instance, it is now common to treat animal cancer with chemotherapy, but the cost can make a pet owner howl.

Hollis Younger of Bethesda has racked up $40,000 in pet medical expenses over the past two decades. For owners like her, paying a fraction of that for insurance might make sense.

“People’s pets are kind of like their kids,” said Ms. Younger, who said she has owned six dogs since 1990. “They’re going to pay, whatever needs to be done.”

Ms. Younger remembered her “miracle” dog with tears in her eyes as she recalled all the good times they had together. She would have done anything to save her pet, but she couldn’t afford the $8,000 price tag to cure Alice’s encephalitis, which left the Airedale terrier blind and paralyzed.

Her pet insurance covered the bulk of the medical bills so Ms. Younger could focus on Alice, who lived four more years.

“I would’ve borrowed the money. I would’ve given them my credit card - whatever,” she said. “I think that’s how it works for a lot of people.”

Michelle Katz isn’t one of those people. The Montgomery County health care savings specialist, who hosts a public-access cable show called “Today’s Health,” said insurers use “scare tactics” to market pet policies.

Insurance might make sense for high-risk animals that are prone to illness, but not for the vast majority of healthy pets, she said. Many people, including herself, can’t afford an extra insurance payment right now, she said.

Others say animal insurance offers a safety net so owners can treat their pets for medical problems without going broke. Some owners panic when their pets get sick, and the last thing they should worry about is the price of a kidney transplant or an MRI, Mr. Stallings said.

“What pet insurance does is it allows the owner and vet to focus on care and not cost,” he said.

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