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[August 27, 2006]

Saving Fido: More pet owners are buying insurance for furry members of the family

(Times-News (Twin Falls, ID) (KRT) Via Thomson Dialog NewsEdge) Aug. 27--TWIN FALLS --For Tara Martens, having pet insurance isn't so much about saving money as it is about having peace of mind.

Sure, saving money on her pets' health care bills is a good thing. But never having to worry that she'll be forced to choose "economic euthanasia" for dogs Abby and Tiga and cats Humphrey and Spencer is even better.

"Economic euthanasia" is a term coined by veterinarian Jack Stephens and it's the reason he decided to first look into the idea of pet health insurance some 25 years ago. A small animal veterinarian at the time, it broke Stephens' heart to see a client make the difficult decision to put their pet to sleep because they simply couldn't afford the expensive treatment for a serious injury or chronic health problem.

"Many people made decisions they didn't want to because they didn't have the money," said Stephens, founder of Pets Best Insurance. Martens went out and got pet insurance last October, the day after her Labrador-hound mix, Tiga, suffered a puncture wound in her head and a crushed canine tooth after being caught in a badger trap along Billingsley Creek near Hagerman. Martens rushed Tiga to her veterinarian, who stitched up her head and did a root canal on the tooth. The bill was close to $700.

"The next day, I got pet insurance," Martens said. "It was a peace of mind thing more than anything. No matter how good we take care of our animals, unexpected things do happen."

Today, Martens has the Pets Best First Plan, one of four plans the company offers, on all four of her pets.

Had Martens had the plan when Tiga was injured, she would only have had to pay the $75 deductible and 20 percent of the veterinary bill. The other 80 percent --up to $7,000 --would have been covered by Pets Best.

Career change

Jack Stephens had a small animal veterinary practice in Anaheim, Calif., when he first got the idea for pet insurance. He said he just got tired of seeing his clients having to choose euthanasia for their pets because they just couldn't afford to pay to treat their diabetes, liver disease or cancer. There had to be a better way, he thought. What about pet insurance?

The chairman of the Veterinary Association of Southern California at the time, Stephens floated the idea among his colleagues, who agreed it was an idea whose time had come. But when he took it to the mainstream insurance companies, no one was interested. So with the help of his fellow veterinarians, Stephens raised the money and founded Veterinary Pet Insurance --VPI --in 1982. That's when his career took a new path.

"I never dreamed I would leave my veterinary practice," Stephens said.

Launching the company, and keeping it going, wasn't easy.

"It was very, very hard," Stephens said. "It lost money for 17 years. Then, in 1997, we made $8 million. By 2003, it was over $100 million."

A different vision

Stephens parted with the company a couple of years ago when he and his partners had a difference of opinion in the direction they wanted the company to go.

He and his wife, Vicki, packed up and moved to Twin Falls, Vicki's hometown.

Not long after, Stephens crossed paths with Greg McDonald, chairman of General Fire and Casualty in Boise, and the former owner of McDonald Insurance in Twin Falls.

McDonald shared Stephens' vision for a simple, user-friendly pet insurance company. About a year ago, they joined forces to start Pets Best.

Pets Best offers four different plans -the Basic Plan, the First Plan, the Accident Plan and a Wellness Plan. Clients choose between a $75 or a $200 deductible, and monthly premiums range anywhere from $4 to $50 depending on the plan, its deductible and the age of the pet. After paying the deductible for the "incident," which could be anything from a chronic illness like diabetes to an accident like Martens' pet had, the plan pays 80 percent of everything else, including office visits, tests, surgeries and medications.

"Our plan is very simple," McDonald said. "It pays 80 percent of the medical bill."

A growing industry

Pet insurance is a relatively young, but growing industry in the United States, McDonald said. He said Pets Best has four major competitors, including VPI, though there are some smaller companies sprinkled across the country.

"Pet owners in the past five years have been purchasing more and more insurance to help pay their veterinary bills," McDonald said. "In European countries, pet insurance has been popular for 15 years. It really didn't catch on here until five years ago and it's been accelerating ever since."

McDonald said five years ago, about 65,000 pets in the U.S. were insured. Today, it's over 600,000. Still, that's less than 1 percent of the nation's pets. In the United Kingdom, 14 percent of pets are insured, he said.

So why is the industry growing? Both Stephens and McDonald say "bonded" pet owners want more for their pets.

"For a bonded pet owner, their pet's insurance is just as important as their own health insurance," McDonald said. "They're going to do everything they can to make sure their pet receives the very best veterinary care if it's sick or hurt."

Local veterinarian Dr. Zsigmond Szanto said he's seeing more and more clients with pet health insurance in his practice.

"There are definitely more people interested in it as costs are rising," Szanto said.

Szanto said he likes the way Pets Best operates. Pet owners give their bill to Pets Best, which simply reimburses the pet owner. The pet owner can take his pet to any veterinarian he wants to.

"Veterinarians are kind of cut out of it," Szanto said.

He also likes the simplicity of Pets Best insurance.

"It's a nice change in pet insurance as far as the way they're setting up premiums and what they're covering," Szanto said.

Szanto encourages pet owners to ask many questions when shopping for a pet insurance company. For instance, they should find out if the company covers ailments that are specific to certain breeds of dogs? For instance, dachshunds can have neck and back problems, and older Labrador retrievers can have hip problems. Pet owners should make sure the insurance they purchase will cover those things, Szanto said.

Pets Best has a call center and 25 representatives in Boise, and eight representatives out in the field, and it's looking to open a call center in Twin Falls somewhere down the road. Pets Best has clients in 24 states and expects to have clients in all 50 states by year's end. It markets its plan through its Web site and material placed in veterinarians' offices, and clients can purchase insurance online with the click of a mouse.

Stephens expects the company to bring in $6 million or $7 million its first year, $31 million in 2007 and $56 million in 2008. But the best thing, he said, is the comfort of knowing that more and more people will never have to decide on "economic euthanasia" for their beloved pets.

"It prevents a pet owner from ever facing that dilemma," Stephens said.

Times-News Business Editor Sandy Miller can be reached at 735-3264 or by e-mail at smiller@magicvalley.com.

Copyright (c) 2006, The Times-News, Twin Falls, Idaho,
Distributed by McClatchy-Tribune Business News.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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