Editors Introduction: In these days of attention deficits, 140 characters tweets and short posts on Facebook and other social media platforms, its not often that those of us who set prices get detailed, comprehensive feedback from customers.
In this guest blog post from Judy Gillespie she tells us, in 7,653 characters (that would be 55 tweets!!!), why a 52% price increase in her pet insurance policy is not OK.
An
open letter to all pet insurance companies
Every business
has the right to make a decent profit for the money invested by the owner
and/or shareholders. I get that and I have no problems with it – in fact
I even wrote a blog post about it: I’m
a money hungry business person and proud of it!
However I was
horrified when I opened my pet insurance renewal and saw a hugely inflated
premium staring at me. Yep that was the first thing I saw when I opened the
letter. “That can’t be right” I
thought and so I called the customer service number.
I explained to
the staff member that I was sincerely hoping the figure was a typo as surely no
business could expect to get away with such a large increase? But unfortunately
no – it wasn’t a typo. It was then explained to me that the price
increase was due to an increase in veterinary fees and the fact that the
premiums were now being determined using breed, age and location. Apparently a
similar method to that used by insurance companies to determine house insurance
premiums.
Unfortunately for
the poor staff member I then had a fairly spirited conversation where I tried
to explain that vet fees had in fact not gone up (certainly not by 50%) and was
she perhaps meaning that the range of veterinary services now available had indeed increased which could have
an impact on insurance payouts? She was really only comfortable sticking
with her script and I was just getting angry that some of the reasons she was
being told to give to clients were in fact wrong and vets were being blamed for
the extreme price increase. So I asked to speak with a manager, however
there wasn’t one available but I was told someone would call me back.
After I hung up I
realised I had missed some paperwork behind the renewal invoice and I was
fascinated to see a letter that said:
Dear Judy......
We have some good news for you to share
with Nina! The details of their PetPlan Covered for Life policy are
enclosed! Woof, Woof – Hooray!
The letter then
goes on to talk about some changes in the look of packages, etc. I think - to
be honest I really didn’t read any more as I was too stunned by the ‘good news’
bit! You’re kidding right? Now you want me to be happy about
a 52% price increase?
So the next day I
waited for a call. It was nearing midday when it was suggested perhaps a
message on their Facebook Page was the way to go which I tried and
unsurprisingly I soon received a call. I must say the supervisor did a
brilliant job and we had a very interesting conversation.
So what
were the real reasons behind the 52% increase?
It was explained
to me that the pricing increase had been determined by the underwriters and
directors as for the last couple of years the company has been paying out more
than they have been collecting in premiums – never a good business model.
The pay outs have
significantly increased over the years due to the increase in available
veterinary procedures such as treatment for cancers and more complicated
orthopaedic surgeries etc.
The premiums had
to be significantly increased so there were sufficient funds to maintain
payouts (and I suspect for the survival of the company).
Ok, I get all of
these reasons – I really do. If revenue is less than expenses, any business is
in trouble.
But I
can’t for the life of me see that a 52% increase makes any sort of good
business sense and this is why....
The way I look at
it - in this situation there are 2 main groups of pet insurance clients:
1
- Those that can easily take their business elsewhere as they have younger pets with no pre-existing illness or injury, and
- Those with senior pets or those with pre-existing illness or injury that won’t be able to get insurance elsewhere.
Guess who will
stay and who will go? Yep, those with younger pets (i.e. the ones that
are less likely to make expensive claims) are likely to leave and find another
insurer and those with older pets (i.e. the ones that are more likely to
develop age related injury and illness and therefore more expensive claims)
will stay – because they have no choice.
Just how many
existing clients are going to put up with a 52% increase? Isn’t it also
likely that the number of clients that leave will negate any revenue increase
from the premium rise? Wouldn’t it have made more sense to perhaps work
with a 20% rise over three years for existing clients and a different and
higher rate for new clients?
If financially
this wasn’t an option and the 52% increase really was the only way to go for
the survival of the company then it still makes no business sense to do it the
way it was done. Why would you send me my claims renewal with the huge increase
staring me in the face when I opened the letter, and then rub my nose in it by
telling me there is some good news to share with Nina?
Why
wouldn’t you put together a letter from the CEO explaining the situation?
It could include
something like.....
- Over the years we’ve paid out xx in paymentt
- The veterinary care that is now available for our pets is so advanced it matches the care offered to humans however that comes at a cost
- Over the years we’ve become the best at paying out 100%/lifetime care/etc.
- However we’ve kept our premiums too low & our payouts too high for too many years and now we find ourselves in a difficult situation
- For the sake of the company and to continue to meet our payout obligations to you the pet owner we need to introduce serious premium increases.
- We understand that this is going to be very difficult for some but we wouldn’t be doing it if it wasn’t necessary
- We value you as a client and we hope you appreciate what we have been able to deliver in the past and will continue to do in the future
Really... I could
keep going.... And most importantly this letter full of honest
information should go IN FRONT of
the premium renewal.
Just
tell me the truth.
I’ll respect a
company that is honest enough to say “Ok,
so maybe we’ve stuffed up. We’ve tried to keep our premiums as low as
possible over the years and we haven’t been increasing them enough to keep up
with the amount we’re paying out for your pet’s care and so now it’s going to
hurt and we’re sorry for that.”
I don’t
respect a company that blames the industry that should be their closest
ally.
The pet insurance
industry and the veterinary industry have a symbiotic relationship and
ultimately they both want the same thing: for every pet owner to have insurance
for their pet. From a veterinarian and veterinary nurse perspective it would
mean they could deliver the very best of care without the lack of finances
hindering treatment options. From the pet insurance company perspective,
it obviously would be a huge financial benefit and to top it off they would
also love it if vets and vet nurses were able to convince pet owners to take up
insurance.
So why
aren’t both the veterinary and the pet insurance industries BFF’s?
For example why
haven’t both industries got together and worked out some sort of deal where pet
owners who actively look after their pets receive a reduced premium? Vets
could issue ‘Health Certificates’ to those pets that regularly receive wellness
checks, maintain a healthy weight and are fed veterinary prescribed diets. It would
be a win/win situation for both industries!
You see, apart
from pet insurance, I also pay $440.00 annually for Nina to be in a Wellness
Program which includes:
- Free consultations
- 20% discount on food
- 10% discount on drugs and other OTC products
- Vaccinations
- 1 x Dental scale and polish
- 1 x healthy pet screening (urine, bloods, etc.)
- 2 x comprehensive physical exams
- Amongst other services...eg weight management, etc.
Nina has only
ever been fed veterinary advised food, has never been overweight and has never
missed a vaccination.
So why am I paying the same
premium as a pet owner with an overweight dog who is only taken to the vet once
a year for vaccination and is fed Chum? It doesn't make sense.
And then
there is the moral side to the story
I have a choice –
I can take my business elsewhere. My heart breaks for those who
can’t. Those pet owners with senior pets who have paid premiums for years
and who now have to either find an extra 50% every year to maintain coverage or
even more heartbreakingly have to drop the coverage for their senior pet
because they can no longer afford it.
Seth Godin says
it succinctly in his blog post Shame
is a brand killer: “When your public
sees you choosing a path that’s shameful, that they don’t approve of, that
offends their sensibilities, it creates a dissonance that might never be
erased.”
And what does
this mean for you as vets and vet nurses? You’re the ones that will have
to have the difficult conversations with owners if/when these previously
insured senior pets do develop a medical problem that requires treatment - and
the insurance is no longer there.
Not only does a
52% increase in premiums not make much business sense to me it is also morally
wrong for those pet owners that have been clients for years and whose senior
pets are now most in need of the insurance. I can maybe forgive a bad
business decision, but I can’t forgive a decision that is morally wrong.
So now I'd really
like to hear your opinions - maybe I've got it wrong - tell me what you think
in the comments section below...
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