Making Pet Insurance Work for More Pet Owners: Odie's Approach to Coverage, Distribution, and Value Creation

If you own a pet, you may have considered purchasing a policy to help cover unexpected veterinary expenses. I've written about pet insurance before, and am of the strong opinion that every pet owner should purchase pet insurance coverage when they bring a new pet into their home. However, many pet owners remain uninsured, with only around 4% of dogs in the US currently covered. The pet insurance market is still relatively immature compared to other insurance lines, but it represents a huge growth opportunity.

On the most recent episode of Petworking , I spoke with Miles Thorson , founder and CEO of Odie Pet Insurance . We discussed the current state of the pet insurance market, common barriers to adoption, and Odie's innovative strategies to make pet insurance more accessible and valuable to pet owners.

Pet insurance isn't simply a financial tool to protect you from unexpected veterinary expenses. It allows pet owners to seek the best medical care for their canine and feline companions, without allowing financial circumstance to influence their decision making. I can speak from firsthand experience how grateful I have been to have had pet insurance since 2017, when my dog, Peony, became part of my family.

Peony was diagnosed with melanoma in late 2019. It made the questions surrounding her treatment purely about medicine, and what was best for her, as opposed to a financial calculation. Fast forward to today, and Peony is 9.5 years old, and is still by my side every day. However, I'm always grateful for the fact that I never once questioned taking her to the vet when I discovered her lump, because I knew that no matter what happened, we were covered. In a similar situation, uninsured pet owners are left to make a monetary decision instead of being able to truly focus on their pet's health.

More recently, Peony had a 3-4 week stretch in March/April 2024, where she would lost control of her hind legs on a stretch of gravel path that we walk almost every day. At first, I didn't think anything of it, because the episodes would last 30-45 seconds, and then she would return to normal. However, as the episodes continued, and began to occur in places other than the gravel path, I decided the best course of action would be to take her to the vet.

I took a video of Peony dragging her legs on the gravel, and showed it to my vet when I brought Peony in. She was baffled, and said that she was almost certain this was a neurological condition. However, she said wanted to seek consultation from her neurology professor from veterinary school about the best course of action. When we heard back from my vet's professor, she offered four possible causes:

1. A disease related to spinal cord compression, such as a bulging disc or cauda equina syndrome
2. Neuropathy- such as bilateral sciatic nerve pain.
3. Secondary to an underlying endocrine disease like diabetes or hypothyroidism
4. Associated with heart disease- with certain heart diseases, patients can develop blood clots. These blood clots can lodge in the aorta and cause episodic weakness

To determine the cause of Peony's episodes, it was recommended that she undergo bloodwork to rule out endocrine disease as a possible cause, and also to look for evidence of infection (in case of discospondylitis or meningitis). An MRI was also recommended to look for spinal cord compression, evidence of infection, and a possible clot in the aorta.

Because I had pet insurance, I was comfortable moving ahead with the recommended treatment, because I knew that it would give Peony the best possible health outcome. Ultimately, the MRI showed that Peony has a lumbosacral disk herniation causing mild right sided nerve root impingement. It doesn't fully explain the bilateral nature of her episodes, but she is responding well to gabapentin, and the episodes have resolved for now. I also have peace of mind that we have ruled out other potential causes, such as endocrine disease or a blood clot. The medical approach that I took with Peony mirrors how I would approach care for myself or my human children, and I think is what most people ultimately want from their pets.

One key challenge is that most pet owners who seek out insurance do so when their pet is older or already showing signs of health issues. At that point, many conditions are considered pre-existing and excluded from coverage. Premiums also tend to rise substantially as pets age, essentially locking customers into a single carrier for life to maintain coverage for chronic conditions. This rigidity in the market makes it difficult for new entrants like Odie to acquire customers from other providers.

To overcome these hurdles, Odie is pursuing a differentiated go-to-market strategy. Rather than spending heavily on direct-to-consumer advertising like many incumbents, they are leveraging B2B distribution channels like employee benefits programs and white-labeling partnerships. This approach helps them reach a broader audience of pet owners at a lower acquisition cost. Odie is also offering more flexible coverage options at varying price points to appeal to pet owners across the economic spectrum.

Many pet parents overestimate the cost of pet insurance, don't think they'll need it, or have been misinformed about the benefits/effectiveness of pet insurance offerings. But still, the question of pet insurance's low adoption rate is a baffling one. After all, over 90% of Americans say that dogs and cats are members of our families. Would you let your kids be uninsured?

Looking ahead, Miles envisions pet insurers playing a central role in driving better health outcomes by collaborating with veterinarians, pet food companies, pharmaceutical manufacturers, and other stakeholders. By aggregating data from veterinary records, smart devices, genetic testing, and more, insurers can develop more predictive risk models to price policies accurately. They can also nudge customer behavior in a positive direction, for instance by offering premium discounts for feeding a recommended diet or providing health tracking data from a wearable device. Making claims data available to veterinarians in real-time could streamline the treatment approval process and take friction out of the customer experience.

As the ultimate payer in the pet healthcare system, insurers have an opportunity to align the incentives of diverse stakeholders. Keeping pets healthier and alive longer is a win for veterinarians, pet owners, and insurers alike. Miles foresees a future in which Odie negotiates discounted rates with veterinary groups by expanding their overall customer base and revenue. Insurers are also in a unique position to combine claims data with other novel data sources like genetic screening and electronic medical records. This could open up new product categories, like risk-based wellness plans, that shift the focus from treatment to prevention.

With three out of four pet owners considering their pets family members, the demand for high-quality veterinary care will only increase over time. However, without insurance, many owners will face difficult tradeoffs between getting their pets the best possible care and staying within their household budget.

By making pet insurance more affordable, flexible, and valuable, innovators like Odie can help millions more pet owners access the care they want for their furry family members, without compromising their financial wellbeing. As the industry matures, partnerships between insurers, veterinarians, and pet health companies could usher in a new era of data-driven, prevention-focused pet healthcare. Pet owners should follow this trend closely - before long, insuring your pet's health may become as obvious as insuring your own.