Contributor, Benzinga
September 30, 2022

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Loving your pet means providing the best medical care for them. The last thing you want to experience is a dire situation of not being able to nurture them back to health. The good news for animal owners is that pet insurance provides medical coverage. 

Several insurance companies have recognized the increasing demand for pet insurance and have offered it as a product. Benzinga reviewed four publicly traded insurance companies offering pet insurance and detailed their features and benefits.

Best Pet Insurance Stocks

Let’s take a closer look at the four insurance stocks that provide pet insurance coverage.

1. Lemonade

Lemonade Inc. (NYSE: LMND) specializes in renters, homeowners and car insurance. It also offers pet insurance for cats and dogs. Lemonade consulted veterinarians for drawing up its policy, and it provides coverage for blood tests, X-rays, labwork, CT scans and ultrasounds.

Coverage 

Part of the medical coverage is hospitalization, surgery, emergency care and outpatient care. Lemonade has also covered injections and prescription medication. Its preventive package enables you to save money on annual physical checkups, parasite evaluation tests, detection of diseases and up to three vaccines.

For certain coverages to kick in, you have to wait up to six months. But the preventive package offers benefits the day after you buy the policy. Lemonade requests your pet’s medical information to pay out claims and doesn’t cover pre-existing conditions. 

Price

You can use any licensed veterinary clinic, and payment is processed to your bank account efficiently thanks to its artificial intelligence (AI) claims system. A Lemonade dog or cat policy starts at $10 per month. Factors such as your pet’s age, location and breed determine the price. The price can rise to $60, but you can customize your premiums by adjusting the coverage.

Lemonade offers a 5% discount for annual payments or policies with two or more pets. A 10% discount applies when you bundle.

The deductibles are between $100 and $500, and the reimbursement options are 70%, 80% and 90%. One of the key highlights of this insurer is that it donates unused premiums to charities that clients support.

Renters' policies start from $5 and cover damaged or stolen goods, water leaks, lawsuits and medical expenses. Home, car and life insurance are also available from Lemonade.

2. Trupanion

The key difference between Trupanion Inc. (NASDAQ: TRUP) and most pet insurers is that it specializes in pet insurance. It provides coverage for dogs and cats for illnesses, injuries and breed-specific conditions. Procedures such as diagnostic tests, surgeries and hospital stays are also covered.

Coverage

Trupanion has no coverage caps and offers unlimited payouts. Instead of reimbursing you, Trupanion pays your vet. Additional coverage is available with the Recovery and Complementary Care package. It provides 90% coverage for acupuncture, behavioral modification, chiropractic treatment and several other treatments that are beyond normal veterinary medicine.

Price

Numerous price options are available depending on the coverage selected. As a guide, the average monthly premium for dogs is $70 — a higher premium than most pet insurance providers. It differs from other providers by offering one simple plan that provides overall coverage, and the claims are based on the actual cost and not market-related. 

Trupanion won’t increase your premium after a claim, and it offers 24/7 support. This insurer lets you pick a deductible ranging from $0 to $1,000. Another option is to avoid paying a deductible by selecting the $0 deductible option. 

3. Allstate

Allstate Corp. (NYSE: ALL) provides vehicle, property, life and business insurance. It also offers pet insurance coverage for animals that are under 14 years old.

Coverage

Its policy covers costs for illnesses or injuries such as accidents, surgery, cancer and chemotherapy services, genetic conditions and lab work. An optional Wellness Rewards plan offers coverage for vaccinations, annual checkups, dental cleanings and routine care.

The coverage doesn’t reimburse cosmetic costs, pregnancy-related fees, behavioral problem treatments, pre-existing conditions and supplements. Allstate distinguishes itself from most pet insurance companies by offering coverage for all types of animals. Coverage for multiple pets is available and entitles you to a 10% discount for each additional pet insured.

Price

The average Allstate premium for pet insurance is between $30 and $50. Dogs, old pets and large pets can cost more. An accident-only plan is more suitable for pets that are older than 14 years and have shown symptoms of diabetes, Addison’s disease and Cushing’s disease.

4. Synchrony Financial (Offered Through Pets Best)

Synchrony Financial (NYSE: SYF) is a financial services company that expanded its CareCredit platform by buying Pets Best in 2019. Pets Best offers innovative technology and long-standing expertise in the pet market.

Pets Best operates under the CareCredit platform, offering personal care products, health and wellness, as well as veterinary care. Coverage is available for dogs and cats that need medical care for accidents, illnesses and routine care.

Coverage

Comprehensive pet insurance coverage is available with the BestBenefit plan. It includes cancer treatments, emergency care, prescription medication, diagnostics, behavioral conditions, dental coverage and euthanasia. 

Exclusions from coverage are pre-existing conditions, preventive procedures, parasites, supplements and experimental therapies.

Price

You can opt for the accident-only coverage policy, which costs $7 for cats and $10 for dogs per month. For comprehensive coverage, you can expect to pay between $35 and $58 per month for a dog. The comprehensive coverage for a cat is between $22 and $46 per month.

Deductibles range from $50 to $1,000. The reimbursement options are 70%, 80% and 90% and annual limits are $5,000 or unlimited.

How Does Pet Insurance Work?

Pet insurance is akin to medical coverage an individual would receive. It’s a healthcare policy that pet owners pay monthly to insurance companies to receive a reimbursement for certain medical expenses for their pets.

The key difference between most pet insurance policies and regular insurance is that insurance companies reimburse you for your pet’s medical expenses, as opposed to the veterinarian. That means any clinic can treat your pet so you qualify for reimbursement. You don’t have to locate a clinic that’s in-network, as you would a hospital or doctor if you needed treatment.

Most pet insurance companies only cover cats and dogs, but some provide coverage for all pets. A regular policy covers unexpected injuries, surgeries, medication, tests and unexpected illnesses. To claim the reimbursement, you should have the pet’s medical history reviewed by the veterinarian, receipts and any other supporting documents. 

How Much is the Pet Insurance Industry Growing?

The average pet owner spends $1,000 on pet medical care. That is a significant amount for the average American. To avoid high medical costs, many pet owners have sought alternative funding. The solution for most owners is pet insurance.

Allied Market Research reported that the pet insurance market was worth $4.5 billion in 2020. In 2021, the market was valued at $8.3 billion. Experts have forecasted the industry to grow to $16.8 billion by 2030. That results in a 14.3% compound annual growth rate (CAGR). 

The exponential growth of pet insurance will reflect favorably on the stock prices of companies offering the coverage. The companies will probably generate higher revenue, which could result in a higher dividend distribution to shareholders.  

Are Insurance Stocks a Safe Investment?

Insurance is a necessity for most people, even in economic hardship. To protect assets and minimize replacement or repair costs, most Americans are insured. Approximately, 85% of American homeowners have insurance.

Forecasts for the global insurance industry are a growth from $5.3 trillion in 2021 to $5.9 trillion by the end of 2022. That’s a 10.4% CAGR. By 2026, the global industry is expected to grow to $8.3 trillion. 

Some stock analysts view insurance stocks as a defensive strategy against high inflation and geopolitical tensions; in other words — the current conditions we are experiencing. A significant portion of premiums insurance companies collect is used to buy U.S. Treasury bonds and corporate bonds.

The investment income insurance companies receive increases because the yields on the bonds they’ve invested in are rising while their risk remains stagnant. Most insurance companies are protected against inflation because premiums increase on new policies as replacement costs increase.

Insurance companies directly benefit from the rising interest rates that the U.S. Federal Reserve has implemented. Some investors consider insurance stocks as an ideal hedge against inflation and economic turmoil because of their inherent low risk and the safety net they provide.   

Frequently Asked Questions

Q

What pet stores are publicly traded?

A

Some of the stores that offer the general public pet insurance stocks are Chewy, Freshpet, Petco and the Original Bark Company. Chewy’s market cap in September 2022 consolidated at around $13 billion.

Q

Who invented pet insurance?

A

Jack Stephens founded the first U.S. pet insurance agency. Stephens, a veterinarian, issued the first pet insurance policy in the 1980s in California to TV dog Lassie.