Trupanion is shutting down a veterinarian rewards program amid an investigation into how the pet health insurer’s policies are sold.
The Washington state Office of the Insurance Commissioner is looking into whether the company “is offering inducements to organizations in exchange for referrals to purchase Trupanion’s insurance products,” according to The Wall Street Journal. Insurance policies can be sold only by licensed agents, the newspaper noted.
Seattle-based Trupanion said in a statement that it had “no reason to believe that any state regulator believes that our business model violates the letter, or spirit, of insurance regulations.”
“Furthermore, we have no expectation that we will need to change our business practices,” Trupanion added.
The Trupanion Express points program that attracted regulators’ attention will conclude Dec. 31 because it “was not having the desired results,” the insurer stated.
The program allowed veterinarians to earn credits good toward travel and merchandise when the proprietary software was used to process insurance claims and for other purposes. Integrated with a hospital’s practice management software, Trupanion Express at its core is designed to eliminate insurance paperwork and speed reimbursements to practices.
Trupanion released its statement Nov. 1 in response to what it called “market speculation and misinformation in the investment community.”
“In 2016, we began a test program where partner hospitals could earn points for using the full range of Trupanion’s software, including, for example, fulfilling a request for a pet’s medical history,” the company stated. “The points program was one of a number of initiatives packaged together with the ultimate goal to enhance the behaviors within hospitals in support of the Trupanion member claims experience that our software provides.
“The points program was tested over a two-year period. In September 2018, we concluded that the additional expense incurred from offering the points program (fees to a third-party administrator) failed to create any incremental value or behavior change. The termination of the program was unrelated to any regulatory inquiries.”
Trupanion noted that the rewards were modest.
“The aggregate value of point redemptions nationwide has averaged less than $50,000 per year, with only approximately 1 percent of the 20,000 hospitals that Trupanion’s Territory Partners reach,” the company explained.
A statement filed Oct. 30 with the U.S. Securities and Exchange Commission outlined Trupanion’s business practices with respect to veterinarians. According to the letter:
- “Veterinarians are not asked to sell or solicit insurance.
- “Trupanion does not pay any compensation to veterinarians or their staff based on the sale of insurance, including activating a certificate.
- “Territory Partners and veterinarians do not enroll policyholders. Trupanion sells insurance to pet owners online and through its telephonic service center via licensed representatives.”