Animal insurance: faced with the non-regulation of the market

Unlike tariffs for human medicine (TARMED), those for veterinary consultations are not regulated, which complicates the pricing policy of insurers.

Animal insurance has experienced a great boom over the past twenty years, although everyone is free to insure their dog or cat or not. As a result of progress in veterinary medicine and rising costs, this type of insurance plays a major role in the decision to treat your four-legged friend or not. Since taking over Animalia insurance from a Swiss health insurance fund in early 2016, the Vaudoise Assurances Group has more than doubled the number of insured animals and developed related services around animal health and well-being (food, sale online products, etc.). The Group also took over Epona insurance in early 2022 in order to develop a multi-brand strategy and consolidate its leading position in the field of animal insurance in Switzerland.

The love for his pet is unconditional. In Switzerland, there are just over 1.5 million cats and 500,000 dogs. A third of households have a cat or a dog. This figure has steadily increased over the past two years due to the Covid-19 pandemic. From now on, we go to the veterinarian a bit like going to the pediatrician.

Unregulated prices

In this particular field of medicine, the costs are not borne by public authorities or through taxes. Thus, each veterinarian is free to set the price for a given service. This phenomenon generates both “healthy” competition between veterinarians, since prices are not regulated, but also large disparities.

For the animal insurance sector, this tariff freedom represents many challenges. First of all, the nomenclatures of acts are not defined. Unlike Tarmed, which determines a fee schedule and an associated code for each service in order to facilitate exchanges between doctors and insurers, nothing exists in the field of veterinary medicine. Insurers do not benefit from any possible automation in the processing of claims.

If we take the example of the vaccine for a human, there is a coding for the consultation, the dose itself, the syringe and the needle. For the animal insurance branch, all combinations are possible, since there are no associated codes. In the case of a vaccine for a cat, for example, the fee structure varies from one veterinarian to another. A veterinarian can thus invoice the product and the consultation separately or in an integrated manner.

Thirty nomenclatures fixed

Therefore, how to set prices if there are no references? In the field of animal insurance, we practice what we call in the jargon an “experience pricing”. We know how much treatment costs historically (a vaccine against rabies or a basic operation). However, the past is not always an indicator of the future. Some animal insurers have however set reference tariff positions, where there is no variability in treatment costs from one animal to another. These are a few cases out of thousands, since there are a multitude of diseases and therapeutic situations. Operations are thus excluded here, as the costs may vary if the animal has spent half an hour or three hours on the operating table. The fixed tariff headings therefore relate to very simple medical acts for which there is no possible interpretation and which can therefore be reimbursed at a maximum amount.

Increase in veterinary costs

The animal insurance industry is facing other important challenges such as the increase in health costs for animals.

What was, thirty years ago, the cutting edge of human medicine has benefited veterinary medicine. From now on, it is no longer a problem for a veterinary surgeon to treat hip dysplasia by implanting a prosthesis.

The treatment of cancers in animals is now possible. There was a time when we did not seek to further investigate the disease of his animal. We thought, rightly or wrongly: “My animal is suffering, I have to relieve it and therefore unfortunately euthanize it.” From now on, behaviors are changing: “He’s a member of the family, he’s suffering, I have to do everything to save him.” Thanks to technical progress, state-of-the-art veterinary care has been democratized for a multitude of diagnoses and operations.

In addition, veterinary costs also vary depending on the equipment. Clinics often cover a broader, but also more expensive spectrum of treatments.

An unknown: inflation

Since the beginning of the year and the geopolitical situation in Eastern Europe, we are facing inflation of 2.5%. For now, veterinarians have not necessarily increased their prices, but will they soon? Inflation will certainly have an impact on the rates set by them. Even if they do not invest in new equipment every year, veterinarians buy goods and services on the market which influence customer prices. The future will tell us what the influence of inflation will be on this sector of animal health.

Leave a Comment