You know the value of pet benefits.

We know the value of pet benefits.

But do your employees know it?

When introducing a benefit, we often focus on the “what”: What does the benefit cover? What does the benefit cost?

Communicating value means explaining the “why”: Why is this benefit a worthwhile investment? How will it improve your employees’ lives?

NAPHIA’s latest annual report indicates that communicating value is a top factor in employee engagement in pet benefits.

NAPHIA State of the Industry Report

In mid-April, The North American Pet Health Insurance Association (NAPHIA) published its annual State of the Industry Report. The big news?

The industry topped $4 billion for the first time ever:

• $4.27 billion in total in-force premiums in 2023, up 21.9% from 2022.
• Over 6.25 million insured pets across North America, up 20.9% from 2022.
• 92% of policies were for combined insurance, including accident, illness, and wellness.
• The average penetration rate in the U.S. was still only 3.69%.

That’s incredible news for the pet benefits market! Not only is this the fifth straight year with more than 20% growth, but the low penetration rate indicates room for exponentially more expansion.

Key Takeaways

In reviewing the data, Rick Faucher, NAPHIA President, is justifiably optimistic. “When we look at our sustained growth across North America, we see a tremendous upside for the industry and are very encouraged about the future,” he says.

NAPHIA Executive Director Kristen Lynch reflected on the meaning behind the numbers. “At a time when households are experiencing growing financial pressures, pet insurance provides owners with financial protection to cover the rising costs of veterinary care,” she said. “Our industry’s strong growth is evidence that North American pet families recognize the value of pet health insurance coverage and appreciate the certainty it offers when their pet has an unexpected illness or injury.”

Current statistics back up Lynch’s analysis:

• Urban veterinarian prices rose 7.9% from February 2023 to February 2024 and are up 11% from 2022. (Bureau of Labor Statistics)
• 91% of pet owners have endured financial stress because of pet care costs. (USA Today)
• 63% of dog and cat owners said inflation has made it harder to pay an unexpected vet expense. (Forbes Advisor poll)

Yet, despite the financial stress, less than 4% of North American pets are insured! Clearly, most pet parents—possibly including your employees—don’t recognize the tremendous value of pet health insurance.

The Value of Pet Benefits

Any discussion about value starts with the obvious: Pet insurance significantly reduces out-of-pocket pet health expenses, including accident, injury, and wellness costs.

It’s important to understand that while wellness costs are known in advance, even young, healthy pets can have unexpected accidents or illnesses. An emergency room visit can cost anywhere from $150 to $5000! Synchrony’s 2023 survey found that one in three pet owners will experience an unanticipated expense that will cause worry.

That point alone should be enough to convince any pet parent, but there’s more:

• By paying a monthly premium, pet parents can spread out pet health expenses and budget accordingly.
• Pet insurance providers often offer discounts for insuring multiple pets.
• Some pet benefit plans include savings on pet products or services, such as prescriptions, preventatives, treats, or toys.
• Pets with health insurance are more likely to receive wellness care. Preventative care and early detection can reduce or eliminate catastrophic healthcare costs.

Communicating Value to Employees

Considering the facts above, why would any family NOT get pet health insurance? Yet, as HR knows all too well, it’s not enough to present facts. You have to convince employees that the topic is relevant to them.

For example, many pet parents don’t know how much they spend on pet health and wellness. It’s not a single annual or monthly line item that they can easily track. According to Synchrony, nearly half of pet parents acknowledged they had “underestimated” the lifetime cost of their pet’s care.

Step one is to educate employees on how much they pay out of pocket. Rover.com estimates that in 2024, a dog will cost anywhere from $1000 to $5,225 annually. (That’s up $100 a month from 2023.) Pet benefits can help with many of those costs, from vet bills to preventatives to treats and toys.

It’s also helpful to give a concrete comparison of pet insurance premiums vs. health costs. A simple example can work wonders:

• Dog insurance for three years costs $680 a year. That’s $2,040 total in pet insurance premiums.
• In year two, your dog ingests a small toy. Vet bills add up to $4000.
• You have a $500 deductible and a 90% reimbursement level. Your out-of-pocket cost is ($500 deductible) + (10% of 3,500) = $850.
• With insurance, after three years, you spent $2040 (premiums) + $850 (toy incident cost) = $2890.
  Without insurance, you would have paid $4000 for the incident.
• Your total savings with insurance is $4000 - $2890 = $1100!

Hypothetical examples are helpful, but real-life examples are even better! Whenever possible, include stories and testimonials showing how pet insurance has benefitted other employees.

“At Pet Benefit Solutions, many of us are pet parents ourselves,” says Becky Schaen, Marketing Director at Pet Benefit Solutions. “It’s incredibly powerful when our account managers share first-hand stories about how our products have saved them money and improved their pets’ well-being.”