Business: Life Is Ruff. Buy Insurance
AND THOUGH THE current crisis wasn’t part of the scenario back when Chris and Natasha Ashton first worked on the idea for a business-plan contest at Wharton, it turns out that a once-in-a-lifetime economic calamity might just be a once-in-a-lifetime insurance boon. Newly aware that pet-loving hearts may demand miracles that recession-ravaged wallets can’t afford, owners are hedging their bets. March was Petplan’s best month ever. Move over, doggie shampoo. Enter the pet actuary.
Chris and Natasha Ashton met as undergraduates at Oxford in 1994. Chris was already a veteran of the Royal Marines, where he’d been an officer. To this day, his reserved style seems slightly out of place in an office that feels like a ’90s Silicon Valley start-up. Ebullient Natasha, more comfortable engaging in tales of comparative pet-doting, spent her childhood in Greece, where her family was in shipping. When the couple came to Wharton in 2001, their entrepreneurial goal was anything but touchy-feely: The plan was to use her shipping experience and his military training to set up a maritime-security business.
But before they could start fighting Somali pirates, their cat got sick. “She just stopped eating on us,” says Natasha. “She’s only six pounds, and when you have a cat that small stop eating, it’s dangerous.” Bodey had come all the way from England, so when the doctors at Penn’s veterinary hospital ordered up a battery of procedures, the Ashtons put a $1,500 deposit on their credit card. “Chris nearly had a heart attack. It was the night before our accounting midterm. They said, ‘You can take her home, take her to the regular vet, but we’re not sure she’ll make it.’” There was a feeding tube. There was a case of pneumonia due to that feeding tube. There were distressing kidney function tests. And there was talk of a kidney transplant, a new procedure, $7,500 at the time. Over the next few months, the couple traded down from a two-bedroom rental unit to a one-bedroom. “We got very smart about using credit cards and moving apartments to help the cat,” Natasha says.
Thousands of dollars later, Bodey was okay. But the experience got the couple to thinking. Back home, they’d always insured their dogs and cats. It was no sign of excessive coddling: Nearly a quarter of British pets are insured. Half of Sweden’s are. But here, where people spend so much on their pets — $43 billion in 2008 — even the most pampered pooches and kitties lack policies. The conventional explanation for this was cultural: Europeans, with their socialized medical systems, are comfortable with the concept of mutual care. Americans, on the other hand, assume heartless insurers won’t hesitate to cut off Grandpa, let alone Bodey the cat.
The Ashtons thought there was something else afoot: Most American pet insurance, they say, stinks. Unlike British plans, the basic American models typically won’t pay for hereditary conditions — the trick knees and flimsy hips that hobble so many pets. That leaves accidents and contagious ailments. The exclusion makes sense from a statistical standpoint. With so many breeds and conditions, and such uncertainty about who’ll come down with luxating patella or tricuspid valve dysplasia, it’s nearly impossible to game out the actuarial odds.
