Pet Insurance Is the Latest Perk for Companies Courting Millennials

Source: Crain's Chicago Business | Published on January 14, 2019

It used to be that one of the best ways to win over employees was through their stomachs. Now it’s their pets.

More startups, which are trying to hire in-demand talent in a hurry, are adding pet insurance to an ever-growing menu of perks that includes catered lunches, unlimited vacation and discounts on gym memberships, commuting costs and legal and identity-theft insurance. Among the fast-growing tech companies that offer it are Sprout Social, Tempus Labs, Trunk Club and ActiveCampaign.

“For us, it’s one aspect of what we think of as a benefits offering,” says Maureen Calabrese, chief people officer at Sprout, which makes social-media management software for companies. Sprout’s headcount roughly doubled in the past two years to about 500. “I’m not sure that’s ever been the deciding factor for a candidate. But it is something that when people get here, it has been a popular thing.”

Pet insurance is another example of how employers are pushing the envelope on perks in a full-employment economy. “If you’re an employer fighting for talent, (pet insurance) is the type of thing they offer to show (an employee) you’re not just a number,” says Bill Gimbel, president of LaSalle Benefits, a benefits brokerage in Chicago. “Tech and professional companies are more open to it because they have a different battle for talent.”

It also reflects the impact of millennials who have come into the workforce with different circumstances and expectations. “For millennials . . . their dogs are their children,” says Rusty Sproat, who founded Chicago-based pet insurance company Figo in 2012. Today it has 40,000 customers, including employees at Sprout and other companies. Figo’s staff has grown to 57 from 17 in the past two years.

Other employee benefits geared to the concerns of millennials have hit the market in recent years. Chicago-based Peanut Butter helps companies offer matching contributions to employees paying off student loans. Vacation Fund, a Toronto-based startup that was part of the most recent Techstars Chicago class, offers similar programs for vacation savings. For companies, another advantage of these new benefits is a less distracted workforce. With day-to-day worries like pet care taken care of, “you can just focus on your profession,” says Denise Bindelglass, vice president of people at ActiveCampaign, a marketing-software maker that more than doubled headcount last year to 340. Only a handful of employees chose the coverage at ActiveCampaign. (Full reimbursement for Metra, CTA and Divvy is more popular.) “It has a low adoption rate,” Bindelglass says. “The people who have it really appreciate it.”

FETCHING GROWTH

The number of consumers with pet insurance grew 17 percent in 2017, and premium volumes jumped 23 percent, according to the North American Pet Health Insurance Association. There are about a dozen major companies in the $774 million industry, including Figo and Healthy Paws, which is owned by Aon. The biggest is Nationwide, which estimates that nearly half of Fortune 500 companies offer pet insurance as a benefit. Walgreens Boots Alliance of Deerfield is among them, and Chicago-based Boeing says it will begin offering the benefit next year. Jellyvision, a Chicago company that makes employee-benefits software, estimates about 10 percent of its customers offer pet insurance.

Most offer the insurance to their employees directly through providers at a discounted rate but don’t pay or subsidize premiums as they would for employee health insurance. Coverage skews overwhelmingly toward dogs, and costs—which are largely based on breed, age and ZIP code—vary widely. But the average premium is about $600 a year, insurers say. Treatment costs are rising with advances in both medical care and expectations, as well as more reluctance by owners to euthanize aging pets.

“There’s nothing you can’t do for pets we can do in human health care,” says Sproat. “The most common claim is a cruciate (knee) tear, which costs $2,500 to $6,000. A couple months ago, we paid a $22,000 claim for cancer treatment that saved a 4-year-old pet.”

Not everyone is sold. Jellyvision considered offering pet insurance but passed. However, it’s looking for other pet-friendly employee perks. “We want to support ‘family’ as each employee defines it, which is increasingly with pets,” says CEO Amanda Lannert.