The Washington Insurance Department has fined Trupanion Managers USA, Inc., a Seattle-based pet insurance producer, $100,000 after finding that it violated Washington state insurance laws and rules.
Washington's insurance commissioner, Mike Kreidler, said in a statement that he found that Trupanion had committed the following violations:
- Gave gifts in excess of $100 to one veterinary clinic from 2016 to 2018 in exchange for referrals. State law limits an insurance producer's gifts to no more than $100 per recipient per year for referrals.
- Trupanion paid Reviews.com, an unlicensed producer, to market the pet insurance and generate leads on their behalf. Trupanion received 28 completed applications from April 2017 to May 2018. State law prohibits producers from accepting business from unlicensed producers.
- Contracted with unlicensed and unaffiliated “territory partners” to promote its pet insurance to veterinary clinics, animal shelters, and animal stores. From 2015 to 2018, Trupanion paid nearly $245,000 in commissions to five unlicensed territory partners on thousands of pet insurance transactions. State law prohibits producers from paying commissions to unlicensed producers.
Trupanion Managers and American Pet Insurance Co., Inc., the insurer it is affiliated with, are owned by the same parent company, Trupanion, Inc.
Commissioner Kreidler fined Trupanion Managers $150,000 in July 2016 after concluding it sold nearly 3,300 pet insurance policies through its unlicensed call center employees and contracted territory partners, totaling $3.3 million in premiums. He also fined American Pet Insurance Company $250,000 in July 2016 for what he said were multiple violations including charging incorrect rates and mishandling consumer complaints and policy cancellations, among other issues. He suspended $100,000 of the fine as long as the company followed his plan to bring the company into compliance. In November 2016, the commissioner imposed $10,000 of the suspended fine amount for continuing to charge incorrect rates to policyholders.
“I'm always concerned when those in the insurance industry commit multiple and repeat violations,” said Commissioner Kreidler. “I've worked closely and at length with Trupanion and American Pet and I expect their business practices to improve going forward. These violations are not difficult to fix and these laws are fairly straightforward to comply with.”
The Washington Insurance Department is working with the National Association of Insurance Commissioners on a potential model law to regulate pet insurance, an increasingly popular product among consumers. Commissioner Kreidler said that his office has fielded consumer complaints about claim denials for pre-existing conditions and claim handling issues.
“Consumers should closely read the fine print when they are thinking about buying pet insurance,” said Commissioner Kreidler. “The desire to protect pets is understandable, but many of these products exclude common conditions found in certain pet breeds. We've also found that premiums increase and benefits decline as pets age.”
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].