In order to ensure a fairer method of setting pet insurance premiums, Petsecure have moved away from what is known as “community rated” premiums where all pets pay the same premium no matter what risk profile they present. In Australia, Health Insurance premiums for humans are “community rated” as it would disadvantage older people significantly if they were rated on the risk.
For pet insurance, it wouldn’t be fair that the same premium applied for a Miniature Fox Terrier puppy and a 10 year old Great Dane. The veterinary risks and treatment costs will obviously differ significantly between these two extreme examples.
Petsecure Pet Insurance works like most other forms of insurance (except Health Insurance for humans), where the premium charged is calculated on “risk” factors associated with the insured risk (in the case of our policies, a pet). For example, motor insurance premiums are based on factors such as the make and type of vehicle, age and experience of the driver, where the vehicle is kept and so on. Life insurance premiums will be affected by factors such as age, gender, occupation and health history of the life insurance. It’s the same with pet insurance, where factors include the breed and age of the pet, location, and whether the pet is de-sexed or not, as these are risk factors. The following explains how the premium is calculated for new and renewing policies.
Your premium is calculated using a combination of factors about you and your pet. These factors can affect the premium amount up or down depending upon whether we believe it increases or decreases the risk to the underwriter, such as the cover you have chosen, the benefit percentage applicable to the cover you have chosen, where you and your pet permanently live, your age and the species, breed, gender of your pet, the current age of your pet, the age you first insured your pet, and other factors related to our cost of doing business.
Factors that are taken into consideration for renewal premium calculation include your pet’s age, breed, location, duration for which your pet has been insured, claims history, as well as data relating to the health of pets that are a similar age and breed. Each year we review premiums based on these factors to ensure we can accommodate the costs of possible treatment up to your annual benefit limit, in the event that your pet becomes injured or ill.
Will my premium increase every year?
Yes, your premium will increase each year. This is for two main reasons:
Reason #1: Just like humans, the older our pets get, the more likely they are to have health hiccups. Cats and dogs age faster than we do, which means that their likely veterinary treatment costs go up rapidly each year too. As a result, the cost of insuring your pet will also increase as they get older.
Reason #2: Advancements in Veterinary Treatments.
The overall cost of medical treatment for pets has increased in recent years due to the increased availability of medical treatments and technology-enabled services and ongoing demand for these services. The treatment options and advancements in technology are providing us with great opportunities to give our pets a great quality of life for longer.
While this is great news for the care of our pets, these treatments come at a significant cost. Year on year treatment costs increase, and this is factored into the cost of pet insurance.
Please see ‘How do you calculate my premium’ for more information about calculation of premiums.
Will my premium increase even if I don’t submit claims?
Every year, we review the cost of everyone’s insurance with regards to a combination of factors as well as claims inflation across all our insured pets. Increases in our claims costs due to increases in the range of available veterinary procedures, or due to an increased take-up of those services, impacts everyone’s premiums.
Your premium takes into account the average cost of care for pets like yours. To provide an example of this, a pet parent with a three-year-old French Bulldog will be affected by the trends we see in our data from hundreds of three-year-old French Bulldogs that we insure, as well as the specific claims history of their own pet.
Is my premium calculated the same way as my Private Health Insurance?
No. Pet insurance does not work like health insurance. Health insurance is ‘community rated’, which means that everyone pays the same premium for their health insurance regardless of their individual health status, age or claims history. This is not the case for pet insurance.
Health insurance providers are able to community rate health insurance because there are many other factors at play in the human health care system, such as Medicare and government rebates and subsidies, which is not the case with veterinary care and pet insurance.
Pet insurance claim reimbursements are paid for purely by the premiums received by those who insure their pets. In order for each person to pay a fair price for their pet insurance, premiums vary depending on your and your pet’s risk factors.