Business: Life Is Ruff. Buy Insurance
CASTING ABOUT FOR new investors, the Ashtons dropped a line to the region’s most famous pet-loving plutocrat. He called them within the day. Now, he’s on the phone with them nearly every day, championing an approach that looks not so different from the cheery fast-food style he once brought to banking. “I like businesses that build fans, that have a business model where the customer and the company are united,” Hill says. “They see themselves as more of a pet company than an insurance company.”
The idea gets at the major difference from human insurance. If a human health-insurance company has a costly customer, the incentive is to get that person off the rolls as quickly as possible. Petplan’s calculus is different: One dog’s knees may indeed be an underwriter’s nightmare. But his owner is likely to have two or three more dogs down the line. Be good to a troubled puppy, and you’ll get that business, too.
The waiting room at Penn’s veterinary hospital, though, is no place for the subtleties of market positioning. Where the overall vibe in a human ER is tedium, pet owners wait in a state of teary alarm. The difference isn’t so much the prospect of imminent death as the possibility that you’ll have to be the one who orders the execution. Even in good times, euthanasia is an option for those who don’t want to put an animal through further trauma — or subject themselves to massive costs. This year, the latter population has shot up. “We’re finding people can’t go for the big workups and the big follow-throughs,” says Ken Drobatz, the doctor who treated Bodey seven years ago and today serves on Petplan’s veterinary advisory board.
The main argument for pet insurance is that it’ll take money out of that decision. This resonated with one of Petplan’s costliest clients, a woman named Joyce Overholt with a black Lab mix named Stitch. Once upon a time, the schoolteacher and her firefighter husband debated whether to pay for a measly $175 operation on a pet. But Overholt, retired from Northeast Philly to South Carolina, has changed along with the country. “I knew I’d do anything” if the new pup’s life was threatened, she says. So she shopped around and decided that a roughly $25 monthly check wasn’t such a ridiculous hedge after all. It turned out to be a good move: Stitch’s bum knees have required three surgeries in his three years. On paper, the procedures are worth about $8,000. She’s only shelled out an extra $1,500, beyond her premiums.
Someday, if pet insurance ever becomes as widespread as it is in Europe, the Ashtons may have to spend most of their time differentiating their firm from its rivals. For now, though, playing up stories like Stitch’s — or the various woes of Chili the Labradoodle, with his thousands in urinary-tract surgeries; or Phyphe and Yagi, the feline duo whose owner would have had to pony up for their respective hyperthyroid and renal-disease treatments — may be the best strategy of all. “We get a lot of people who call in and their pet’s in surgery or has just been diagnosed with cancer,” Natasha says. “Well, then it’s too late. Well, it’s not too late, but we won’t pay for that surgery.”
Philadelphia writer Michael Schaffer is the author of the recently published One Nation Under Dog (Henry Holt), a look at America’s pet obsession.
