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Your pet's illnesses can be predicted

As one of only a handful of full-time pet insurance actuaries in the United States, Laura Bennett's job is to determine what ailments or injuries are most likely to drive medical costs for your cat or dog.

Her goal is to use medical data to establish accurate policy risks for Ohio-based Embrace Pet Insurance, where she is CEO. Pet insurance rates, just like rates for humans, are determined by the mathematics of risk. Insurance companies must keep their rates low enough to remain competitive but high enough to cover claims and be profitable.

If insurance actuaries know your pet's breed, age and place of residence, they can estimate the cost of medical treatment during the animal's lifetime. They base predictions on medical data, but location also is important, since treatment is more expensive if you live in a large urban center.

pet health insuranceOne of the keys to saving money on pet insurance is to buy it while your pet is young and free of disease, Bennett says. "People should buy this when their dog is healthy."

With growing databases of information to work from, actuaries have become very important to pet insurance companies, says Carol McConnell vice president and chief veterinary medical officer at Veterinary Pet Insurance (VPI), the largest and oldest pet health insurance provider in the U.S.

"It definitely is a niche," she says of pet actuary work. "We have a woman who came from auto [insurance] and has been doing it with us full time for five or six years. We work very closely with her."

Anticipating illness and injuries

Bennett, whose company insures only cats and dogs, uses breeds to determine the likelihood of certain illnesses and injuries, particularly among dogs. "Purebred dogs have a lot of breed-specific conditions," explains Bennett. "A Golden Retriever is prone to hip dysplasia. It is more common in a Golden Retriever than a Labrador. German shepherds are even more prone than Golden Retrievers."

If you were to count raw numbers of insurance claims for cats and dogs, "ear infections would be very high on the list," as would diarrhea, gastrointestinal issues and skin allergies, Bennett says.

VPI found that the most claims for dogs in 2010 were ear infections, followed by skin allergies, skin infections, gastritis and diarrhea. For cats, the top illnesses were lower urinary tract disease, gastritis, chronic renal failure, hyperthyroidism and diabetes.

Among exotic pets, the most frequent ailments were bowel obstructions, followed by gastritis, bladder infections, upper respiratory infections and eye infections.

Medical advances drive the demand for pet insurance

You might expect that recent advances in the treatment of animal illnesses would reduce medical costs, but the opposite is true. Pet insurance is becoming increasingly important for pet owners, says Bennett. As treatments once available only to humans are extended to pets, costs are rising.

Kristen Lynch, spokesperson for the North American Pet Health Insurance Association, agrees.

"Pets are living longer, healthier lives," she says. "They can do almost anything for a pet [that doctors] can do for a human. They can treat them for cancer. They can replace their hips and knees. Things that would have caused a pet to pass away at one time can be treated."

Medical doctors and animal care professionals are sharing knowledge, says McConnell. "Our medicine is much more sophisticated than it was even 10 years ago."

Before deciding that a pet insurance quote is too high, consider what your costs could be without pet insurance. Despite the financial risks that go along with having uninsured pets, "We estimate that less than 1 percent of pet owners [in the U.S] have their pets protected." says Curtis Steinhoff, a spokesperson for VPI.

The human factor

Although insurance actuaries are skilled at predicting veterinary costs, one thing they can't work into their calculations is the human factor, says Bennett.

For example, one of the most important things you can do to prevent pet injury is to secure your pets with harnesses when you drive with them in your car, she explains. How well you care for your pet plays a big role in its health.

"The ideal pet parent is someone who pays attention, feeds the pet well, keeps an eye on the pet's weight . . . and knows their pet well," she says.

Top 10 pet medical conditions

Dogs

Cats

Exotics

1.   Ear Infection

1.    Lower Urinary Tract Disease

1.    Bowel obstruction

2.   Skin Allergy

2.    Gastritis/Vomiting

2.    Gastritis/Vomiting

3.   Skin Infection/Hot Spots

3.    Chronic Renal Failure

3.    Bladder Infection

4.   Gastritis/Vomiting

4.    Hyperthyroidism

4.    Upper Respiratory Infection

5.   Enteritis/Diarrhea

5.    Diabetes

5.    Eye Infection

6.   Arthritis

6.    Enteritis/Diarrhea

6.    Cancerous Tumor Requiring Surgery

7.   Bladder Infection

7.    Skin Allergy

7.    Arthritis

8.   Soft Tissue Trauma

8.    Periodontitis/Dental Disease

8.    Skin Inflammation

9.   Non-cancerous Tumor

9.    Ear Infection

9.    Skin Abscess or Pressure Ulcer

10.  Hypothyroidism

10.   Upper Respiratory Infection

10.    Inflammation of Hair Follicles

Source: Veterinary Pet Insurance Co., 2010 data

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