According to the American Pet Products Association, more than two thirds of households in the United States own a pet. Americans spend about $70 billion on their pets, in categories such as purchases of pets, food, veterinary care, and medicine. Within this broad category, the pet insurance industry is sized at $1 billion and is expected to grow at a CAGR of 7.5% for the next several years. Approximately 2.16 million pets are insured in the U.S. across a variety of plans and programs designed specifically for pets.
The U.S. pet insurance market is expected to continue growing at a fast rate driven by several factors such as increasing love and care for pets, growing interest of millennials for pets, rising pet adoption rates, and growing prevalence of cat- and dog-related diseases. Pet insurance allows pet owners to limit out-of-pocket expenditure on critical medical conditions, such as cancer or accidental injuries. The anticipated rise in companion animal population would increase the demand for veterinary facilities which are capital intensive and require veterinary doctors, skilled technicians, and specific diagnostic equipment designed for pets. Veterinary care can result in very expensive procedures and if the owner cannot afford life-saving procedures, the alternative may be “economic euthanasia” whereby the pet owner ends up putting a pet down.
While the number of insured pets are growing, only 1% of pets are covered under insurance in the U.S. vs. 20–60% in some European countries. The pet insurance market is a complex market with existing providers providing antiquated products that are not intuitive to pet owners. There are also constant challenges for new entrants in the industry due to barriers to entry and balance sheet risk associated with providing insurance providers. That being said, new market entrants are looking to differentiate themselves through innovative methods, such as utilizing cheaper customer acquisition methods, expanding distribution channel options, or taking alternative payment options.
Kli Capital portfolio company, Wagmo, is one such innovative pet insurance provider that provides both a pet wellness platform as well as an affordable pet insurance product. Wagmo provides a wellness package that reimburses participating members for routine care services that keep dogs healthy. Wagmo’s wellness programme provides pet owners with three tiers of coverage that extend from routine to preventative care. These include visits to veterinary doctors, vaccinations, grooming, dental care, and others. After enrolling in the wellness programs, members can also opt into pet insurance products that are simple and intuitive. Wagmo provides a single, comprehensive product to pet parents that covers emergency care and unexpected expenses such as surgeries, prescription medications, x-rays, lab tests, and cancer treatments.
Pet owners have to just visit Wagmo’s website to peruse and choose across wellness and insurance plan options that suit their budget and their pet’s needs. The reimbursement procedure is also simple whereby pet owners just need to submit a picture of their wellness invoice and Wagmo will reimburse them as early as the next day. Wagmo’s emergency insurance program is also very intuitive and does not require pet owners to wade through confusing insurance lingo. Wagmo’s priority has always been to break away from the traditionally complicated and stuffy insurance products to make pet insurance more accessible and ultimately, delightful.
Founded in 2017, Wagmo initially started as a pet wellness provider that was focused on building relationships with key customers. After helping Wellness members navigate their pets’ preventative care, Wagmo designed a new type of insurance product that extends the same quality service and ease of use to emergencies as well. Once the insurance product was rolled out in 2020, Wagmo already had a great understanding of how pet parents approach keeping their pet healthy, and used that to inform a better experience end-to-end. Wagmo’s plans are currently available in California, Colorado, Ohio, Illinois, New York, Pennsylvania, and North Carolina, with additional states rolling out over the next few months.
“When my beloved dog Denver was having a seizure on the floor of the pet hospital, I was quickly confronted with how traumatic and challenging pet parenting can be.” remarked Christie Horvath, CEO and Co-founder of Wagmo. “This experience inspired me to start Wagmo where we are helping pet owners feel safe and secure about the health of their pets before something tragic happens.”
Fueled by a recent surge in growth, the Company has most recently launched their insurance product in New York and California, two large untapped markets for Wagmo. Wagmo also plans to drive further efficiency by automating the claims process, leveraging new sources of pricing data, developing better predictive analytics, and utilizing alternative distribution channels to ensure efficient scaling. Wagmo has taken one step closer to reaching its ambitious dream of becoming the first insurance company people truly love. The Kli Capital team is fully supportive of Wagmo’s great management team led by Christie Horvath and believe that Wagmo will continue to make pet insurance more affordable and accessible to pet owners.
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