Pet insurance policy premiums that don't increase over time - Trupanion case study

Some pet parents believe that the Trupanion Insurance premiums do not increase over time and so they ask us what Embrace Pet Insurance premiums will do in comparison. It's a good and valid question.

Trupanion states on their website and marketing materials that Trupanion policies will not increase Trupanion policy premiums due to the pet aging, which makes people think that the premium does not increase over time; however, there are many other reasons that Trupanion's premiums will go up as a pet ages - Trupanion premiums will increase over time.

For example, Trupanion was approved for a 51.77% for premium increase in California and a 32.7% increase in Florida plus they filed for an automatic 15% veterinary inflation increase every year thereafter (the automatic increases were not approved in either state). So even Trupanion says their premiums should increase over time.

The Trupanion premium increases reflect a number of factors such as:

  • true veterinary inflation, which at the present is 4.8%, according to the Bureau of Labor Statistics (November 2010 data) - this would be when a standard veterinary exam goes from $50 to $52.50
  • types of treatments your veterinarian performs for the same illness - this would be when your vet performs additional tests that he/she didn't do before
  • level of deductible a pet parent chooses - if the policies have higher deductibles on average than the prior year, people tend not to submit the lower amount claims that don't reach the deductible, increasing the average claim  
  • type of pets insured, such as more purebred dogs that have higher claims than before, and
  • increasing age of the pets insured - yes, this would be buried in the increase on an overall basis if the overall average age of the book of business went up, which would happen in a mature book of business, but likely not at this early stage of Trupanion's history (a growing book of business tends to add younger pets, which swamps the aging pets already insured)

So Trupanion's premiums are expected to increase every year. And to be financially responsible, pet insurance premiums should increase a small amount reasonably frequently to keep up with increasing claims payments so the pet insurance company is around to protect your pet for many years to come.