Alex Krooglik is the co-ounder of Embrace Pet Insurance. His company is one of the newest entrants into the pet health insurance marketplace. As part of my pet health insurance series, here I get to ask him anything I’d ever want to know about his company, his business and why he does what he does.
Alex, how did you get into this line of work?
It started with a business plan back in 2003. While I was at Wharton I was part of a team that won against a bunch of other teams with a pet insurance plan. I’ve always loved business and working for myself and, being competitive by nature, running with the idea seemed natural.
Apart from being a fellow Wharton MBA, what uniquely qualifies you or anyone to get into the insurance game?
I spent several years as a product manager at one of the nation’s largest and most innovative insurance companies where I got excellent training on many aspects of insurance from some awfully smart people. And Laura, my business partner, is the only full-time pet insurance actuary in the country. Embrace is run by people who really know insurance. One other key qualification is to not have allergies to cats or dogs when they come into the office to visit!
Do you have pets of your own?
We currently have a 1 y.o. cat, Milla, who is a spinning vortex of kittenish energy. We adopted her from the Geauga Humane Society. We would love to get a small dog too but they are popular in the shelters so we’re still waiting for the right one to light up our lives.
Does she have Embrace Pet Insurance?
But of course! And we had to use it last year too when Milla got an abscess from a neighborhood cat that bit her. We’re rethinking the whole outside cat deal as a result but Milla is insistent, snow or not, that she wants out sometimes.
How would you characterize the state of your industry?
Developing. For the longest time pet owners and veterinarians have had little or no choice of companies or plans and the industry has been lethargic in bringing fresh ideas and concepts to market. In our opinion, long-standing companies have not delivered on the promise behind their product. But things are changing – fast – and pet parents and veterinarians now have an array of choice that has never existed before. Good things generally happen when competition comes along, expect to see the industry really pull up its socks over the next several years.
What do you think about the flurry of new pet health insurance companies hitting the market just now? Why now?
Part of me wants to believe it’s going to be good for the industry but I have some reservations. Running an insurance business is not easy and getting a policy sale is the easy part; the hard part – the part that really matters – is how you treat your customers once they’ve picked you. You only have to look at great insurance companies like USAA to see that there is a big gulf between the best and the rest.
I think the activity in the marketplace now is obviously driven by the size of the opportunity but the barriers to new companies entering are lower. Back 4 or 5 years ago, it was nearly impossible to get an insurance partner to take a chance on a product like pet insurance. That is not the hurdle it once was, as a result more companies are now entering.
What would you say to someone asking you whether they should get pet health insurance or not?
Pet insurance is the best choice for young or otherwise healthy pets because they generally have far fewer pre-existing conditions than older pets. And with new plans like Embrace’s that cover all of the major medical issues facing pets, pet owners don’t have to fear having their claim rejected arbitrarily.
The one inescapable fact is, as you’ve pointed out on your blog, that veterinary medicine continues to advance and it is increasingly expensive. Pet parents have a number of choices available today to pay for this care. They can use Care Credit, dedicated credit cards or savings accounts, pet insurance, and discount plans like Pet Assure.
Many people look at pet insurance as a form of saving or investment: it is not, it is insurance, by definition some people will “win” and some will “lose”. You get insurance to help share the cost of the expensive, unexpected things, not to save money on veterinary bills.
But too often pet parents leave it until too late to get pet insurance and then they’re dissatisfied when they find out they cannot insure a sick cat or dog. As we constantly remind people, insurance is the one thing you can’t get when you need it the most, you must plan ahead for the financial needs attendant with owning a pet.
But no matter what method pet parents choose to pay for veterinary care, they should at the very least answer this question: how would I come up with $2,500 tomorrow for an emergency veterinary visit?
What do you see for the future of this industry?
People are justifiably concerned that pet insurance could go down the path of the PPO/HMO and restrict care and/or fees. Personally I don’t see this happening because veterinarians have made it very clear that they are against this model and, without their will and support, I just don’t think it can happen. Also, the pet insurance industry does not need a PPO/HMO model (that’s a discussion in itself!).
We will begin to see big brands and household names get into pet insurance. They’ve been watching from the sidelines for years now and some are preparing to enter the market as we speak.
You will continue to see more and better plans coming on to the market too. This will be good for pet parents in one sense – more choice – but perhaps a little tough in another – more choices to pick from.
Lastly, I think once pet parents see that there are companies that are serious about putting the “sure” back in “insurance”, then uptake will increase and, perhaps after more than 25 years, we as an industry can finally deliver something that pet parents have wanted all along: value.
