Why VPI Doesn’t Cover Certain Hereditary and Congenital Conditions

Dennis' Diary: Part 7

Personal Insight from VPI's CEO

A basic concept of insurance is that a “risk” must be insurable.  In other words, insurance companies must have underwriting practices in place to screen out risks that will likely deplete the premium pool used to pay policyholders’ claims.

In general, each risk that enters the premium pool needs to have an equal chance of experiencing a loss. 

Premiums Must Cover Risk

For example, an uninsured driver cannot wreck a car and then expect to insure it. Any company would deny coverage since the likelihood of filing a claim is 100 percent.  If a company did insure a damaged car, existing policyholders would be subsidizing the new policyholder and premiums would need to increase to pay for the claim.  Of course, higher risk policyholders can be charged a higher premium to enter the pool — such as is done when adding a 16-year-old male driver to the family auto policy.

Hereditary Vs. Congenital

When discussing hereditary and congenital conditions, it is important to point out the distinction. Hereditary conditions are those that are passed down from parent to offspring. Congenital conditions are pre-existing at birth, but may not be the result of a parent’s genes. In some cases these conditions may not manifest for months or years.

We Don’t Want to Encourage Unprofessional Breeding

An unintentional consequence of breeding purebred pets over the years, is that certain hereditary disease conditions have become more common. VPI has chosen to exclude coverage of these conditions for two reasons:

Inclusion of hereditary conditions would dramatically increase the premiums paid by all policyholders. In effect, policyholders insuring pets not subject to these conditions would be subsidizing those that do.

Including these conditions may further encourage breeding affected pets.

VPI could fairly cover congenital and hereditary conditions with a premium surcharge for policyholders insuring high-risk pets. We believe this surcharge would be so large for many pets, however, that the insurance would not be deemed affordable to a vast majority of owners.  It could easily double or triple the average premium.

“If we can meet our business and social objectives with a viable product that we believe people will be willing to purchase, we will develop and offer it to you.”

We are currently analyzing our claims data to determine the cost and breadth of such coverage. If we can meet our business and social objectives with a viable product that we believe people will be willing to purchase, we will develop and offer it to you.

What is Considered Hereditary or Congenital?

VPI uses published veterinary studies and reports to determine what conditions are considered hereditary or congenital.  Unlike many of our competitors, we provide a list of breed-specific conditions that are excluded from coverage on our Web site.  We also use a benefit schedule so that our policyholders know what their policies cover, and what benefit amount is available for that covered condition. 

Be Careful of Others Who Claim Coverage

Some pet health insurance companies claim to “cover” hereditary conditions.  Be aware of the fine print on these policies.  If a VPI competitor is charging a premium similar to ours, but claims to cover hereditary and congenital conditions, something may be amiss.

We know of at least one company claiming hereditary conditions are covered just like other conditions, but in fact the coverage is very limited.  Another company claims to cover hereditary conditions but has lifetime incident limits so that coverage beyond one year will be greatly diminished or non-existent.  We believe both of these tactics are misleading, and can hardly be described as “coverage” for conditions that routinely cost thousands of dollars to treat.

A basic truth in life is that you don’t get something for nothing. If you really want hereditary conditions covered, we suggest you find a company that covers these conditions and charges for it. Their premiums will be much higher than ours.

The flipside is, if you don’t need or want hereditary coverage, avoid companies that fully cover and charge for it because you will be heavily subsidizing those who need and use it. Remember, every pet insurance company must balance affordability and coverage. This balance can only be achieved by years of market research and actuary claims data. VPI is the only company with more than 26 years of research and data; the only company able to design products with the insight of experience.

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