Trupanion: Aging Cohorts Risks
Former President of North American Digital Consumer Division at Chubb
inpractise.com/articles/trupanion-aging-cohorts-risks
Trupanion: Aging Cohorts Risks(April 4, 2024)
Former President of North American Digital Consumer Division at Chubb
The expert is a former senior executive at Embrace Pet Insurance and an adviser at Chubb. One of his main tasks at Embrace Pet Insurance was to develop product pricing practices from scratch. Post Embrace, he advised Chubb on pet insurance product opportunities and underwriting. The expert also consults start-up pet insurance companies on strategy, product pricing, and distribution.
Interview Transcript
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Yes, because you have this J curve or L curve with prices going up. I guess Trupanion would argue, as they do on their website, that the birthday pricing in the later years is higher than what you'd have to pay with Trupanion, let's say, at year seven. Of course, that's their argument.
But there is another factor that affects everyone, regardless of age. It's the duration of a group of policies. Consider an average policy, not just one, but say 1,000 policies. You sell 1,000 policies, regardless of the age, and then at the end of that, you maybe have 750 policies, and then after that, you have 650 and so on. Over time, who do you think is staying and who do you think is cancelling? The majority of those who cancel have not had a claim. So, your pool of policies is now skewed towards those that are claiming. Trupanion also experiences this impact. This was probably not predicted in their level pricing. Therefore, they have to increase their prices to reflect this.
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