Ask Liz Watson about what she does for a living and she will tell you, “I work for the coolest company in the coolest industry you’ve never heard of.”
Watson is chief marketing officer for Crum & Forster Pet Insurance Group, one of the oldest and largest pet insurers in the United States. Nestled in the shadow of the landmark Lockheed Martin Corp. Airdock on Massillon Road, it provides health insurance for companion animals — dogs and cats primarily, but more recently horses, too. Plans typically cover accidents and illnesses, although preventative coverage is available.
The Akron business was known as Hartville Pet Insurance Group until last month, when it adopted the name of parent company and specialty insurance provider Crum & Forster Co. The rebrand is meant to give Watson and her team greater visibility as they penetrate the U.S. marketplace, where currently only about 2% of all pets are insured.
“The awareness is not there as much as it is in other places, like the U.K.,” she said. “We think this industry can get from the 2% to the 5%, but it really is still in that growth phase.”
According to Watson, 65% of American households — nearly 80 million families — own a dog or a cat. Pet owners spent $63 billion on their pets last year. That includes $16 billion worth of veterinary care, where costs have increased 71% since 2006, driven primarily by greater utilization and a wider range of treatments and services, such as chemotherapy, hip replacements and root canals.
Recurrent Harris Polls, meanwhile, show that Americans are becoming more pet-centric in their attitudes toward companion animals, with 95% of today’s pet owners saying they consider their pet a part of the family — a trend not lost on marketers that frequently refer to owners as “pet parents.”
And more pet parents are turning to insurance to manage higher veterinary costs and give Fido and Fluffy the best care possible. As an industry, Watson said, pet insurers have seen 14% to 15% year-over-year growth in the past three years, with about 1.6 million dogs and cats in the U.S. currently insured.
Crum & Forster is seeing policy growth rates closer to 20%.
“The company has developed really well with an increasingly pet-centric culture,” according to senior vice president Dennis Rushovich, who oversees the Akron outfit. “Ten years ago, we had 48 employees and about 25,000 pet policies in force. Today, we employ more than 150 people and are at nearly 120,000 policies.”
Yes, Americans love their pets, but the Hartville moniker was derived from its founding in the Canton-area village in 1997, not a cutesy nod to that affection. A New York-based hedge fund investor brought Rushovich on board in 2005, and Hartville Pet Insurance moved to North Canton one year later.
Early on, Rushovich set out to differentiate Hartville by aligning the insurance company with the American Society for the Prevention of Cruelty to Animals, aka the ASPCA, one of the world’s largest humane societies.
In 2006, Hartville approached the ASCPA about donating a portion of each policy sold to the nonprofit, which in turn agreed to endorse Hartville’s insurance if it stopped covering services the ASPCA considered inhumane, such as declawing, tail docking and ear cropping. Soon after, Hartville added the name ASPCA to its policy line.
“It’s been extremely successful. We’ve had that brand and that partnership for more than 10 years,” Rushovich said. “It is part of our growth, part of our culture, and we’ve aligned ourselves very closely with them.”
Rushovich also was a founding member of the North American Pet Health Insurance Association, launched in 2007. That was important, Watson said, because “in an industry that is starting to grow and does not necessarily have as much market awareness as other insurance, you have to find a way to work together collaboratively to raise the awareness of the product and come up with best practices.”
In 2013, Crum & Forster, a longtime underwriter for Hartville’s policies, bought the company and added Hartville to its specialty insurance portfolio.
Watson said the financial wherewithal of Crum & Forster — which is owned by Ontario-based Fairfax Financial, a $9.3 billion global financial holdings business — allowed Hartville to invest for growth. That meant moving out of the cramped North Canton facility and into a newly renovated, open and airy corporate headquarters in a building abandoned by Lockheed.
The 25,000-square-foot office, opened in 2015, houses a state-of-the-art call center, a data center, a cafeteria appropriately named the “chow room” and an outdoor play area for dogs.
“We have over 30 dogs in the office every day,” Watson said. “Little ones. Big ones. Some people will bring in two. Young. Old. They’re are all here.”
In its 20 years of business, Crum & Forster Pet Insurance Group has issued 400,000 policies and processed more than 1.6 million claims. Gary McGeddy, president of Crum & Forster Accident and Health, which includes the pet insurance group, said much of that success can be attributed to the ever-evolving product line.
When pet parents wanted preventative care, the company added a wellness rider. Age and breed restrictions were removed in response to consumer demand.
It also switched from reimbursements based on “reasonable and customary” charges — as is done in human health insurance — to those based on a percentage of actual charges, which decreases out-of-pocket costs for customers, McGeddy said.
Watson thinks much of Crum & Forster’s current growth is linked to a new Complete Coverage package that allows customers to choose the type of services that are covered, the percentage of reimbursement and their deductible.
“You can get the amount of coverage you need that fits into your budget,” she said.
Going forward, the company has a multichannel plan to get a growing slice of the expanding pet insurance pie.
Some of those channels, like vet reps and direct-to-consumer, have been in place for years. Others are emerging, most notably companies making pet insurance a benefits option for their employees.
Pet insurance ranks as one of the two most requested voluntary benefits in corporate benefit plans, Watson said, often just behind identify theft coverage.