Pet Insurance: The $1 Billion+ Opportunity

Pet insurance is big business … just ask Freddie

It’s not a matter of if pet insurance surpass $1 billion in annual sales, it’s only a matter of when.

3-Year Projections

The North American pet insurance market is blowing up. To illustrate, the industry generated $745 million in sales in 2015 and is estimated to grow another 14.5% in 2016.

Based on these numbers here is what I estimate for the next three years.

2016: $853 million

2017: $955 million

2018: $1.1 billion

The magic is happening right now

Still Early

However, the most shocking statistic isn’t the fact that pet insurance will surpass $1 billion, but that less than 1% of American pet owners have coverage. In the United Kingdom over 23% of dogs and cats are insured.

“Less than 1% of American pet owners have coverage.”

Of course, the U.K. has a 37-year head start on us, so given time we’ll close the gap. I’m not sure we’ll ever reach 23% penetration, but considering there are 96 million cats and 83 million dogs in the U.S. and only about 1.4 million pets are insured, there is a lot of room for growth.

If the U.S. market had the same penetration rate as the U.K. it would be a $15.3 billion industry

Pet insurance hasn’t even finished the Innovators stage of growth

It’s impossible to predict what the future holds but I bet there will be a tipping point in the next 3–5 years where pet insurance will reach the masses and become standard for pet owners. You’ll start to see television ads and veterinarians will expect their patients to have coverage.

Market Landscape

There are 12 pet insurance companies in America. Only one, Trupanion Pet Insurance, is currently publicly traded on the New York Stock Exchange (TRUP). As of today (Wednesday, May 10, 2016) the company has a market cap of $432 million on $147 million in sales and $17 million in losses (they’re reinvesting in growth).

The funny thing is that Trupanion isn’t even the biggest pet insurance company in the states (that distinction belongs to Nationwide). And Trupanion isn’t the fastest growing, or the most highly rated (those would be Healthy Paws, Petplan and Pets Best). The reason I point that out is to show how robust and dynamic the current market is.

As the saying goes… options are good for consumers.

Model for the Insurance Industry

Veronique saved $3,500 with pet insurance when Baron needed surgery

Unlike home, auto, life and health insurance, pet insurance companies are built for the 21st century. Good luck finding an unbiased, 3rd party reviews for Geico, State Farm or United Healthcare. They don’t exist because people hate them.

Pet insurance is different.

Every company is an open book and it’s easy to find pet insurance reviews all over the Internet. The fact is these companies have had to grow up in the modern era of consumer behavior. In other words, if you’re great you grow. If you suck, you die.

That “startup” mentality has been a key driver in the pet insurance industry’s growth in America and will continue to push the market forward.

Conclusion

Our 13 week-old lab, Gus, is insured

Pet insurance is big business. Whether you believe in it, like it, get it or not, the industry continues to grow 3x faster than any other insurance product on an annual basis.

As long as American’s continue to care for and invest in their dogs and cats the pet insurance market will continue to grow and prosper.

Woof, woof… meow.


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