Business: Life Is Ruff. Buy Insurance

Human health care may be a train wreck, but pet health care is booming. How a Philly couple (with help from banker Vernon Hill) found a new way to cash in on America’s dog-and-cat craziness

Visiting Chris and Natasha Ashton’s office feels a bit like stepping into a time capsule. Outside, the stock market may be tanking and the unemployment rolls may be swelling and the mood may be bleak. But in here, where the walls are a dazzling yellow and the pets dart underfoot and the enthusiastic young staff has doubled in six months, it’s like the bubble never burst. In fact, it’s like the last couple of bubbles never burst.

It’s Mardi Gras at the Philadelphia headquarters of Petplan, the fledgling pet-insurance firm founded in 2006 by the Ashtons, a 30-something British husband-and-wife team who came here for a Wharton education and wound up staying for America’s pet-industrial possibilities. On a table in the corridor, a collection of brightly decorated, rainbow-hued king cakes marks the holiday. “People like any excuse to celebrate,” says Natasha. “We always have food here for any kind of special occasion.”

In Natasha’s own office, the surfaces are covered with other shiny objects that seem out of place in this unhappy season. Over here, a sheaf of new advertisements for the couple’s growing business, which covers veterinary expenses more or less on the old major-medical model, with no fussing about network providers. Over there, copies of Petplan’s new glossy magazine  —  on actual paper  —  that will spread the word about contemporary pet pampering. The Ashtons are just back from the Caribbean, where they chewed through business plans with the investor who recently became their board chairman — Vernon Hill, the famously pet-smitten founder of Commerce Bank.

Now, with a Cavalier King Charles spaniel named Wellington darting in and out of her office, Natasha has spent a chunk of the morning poring through résumés of applicants for new marketing slots at the firm. Layoffs at local advertising agencies mean there’s lots of talent to choose from. “I love this economy,” she jokes. They’ve added so many staffers that Petplan is about to colonize some vacant office space next door.

Media ventures! Hiring binges! Real estate expansions! Free cake! No wonder pet insurance, which covers less than one percent of America’s estimated 150 million dogs and cats, has drawn the attention of so many deep-pocketed business types. Seven new firms, backed by the likes of pet-food titan Purina and coffee kingpin Howard Schultz, the founder of Starbucks, have more than doubled the number of established brands on the market over the past half-decade; the consumer-research firm Packaged Facts projects the industry will grow from $248 million in sales in 2007 to as much as $1.1 billion in 2012. That’s still less than we spend on pet grooming — $1.2 billion in 2005 — but it’s not too shabby.