GHLIT-pet insurance partnership raises red flags

Competitors question ethics, legality of Trust’s newfound relationship

Published: July 28, 2008
By Jennifer Fiala

An insurance brokerage arm of the American Veterinary Medical Association (AVMA) has aligned with a pet health insurance company, and critics are pouncing on the arrangement, citing conflict-of-interest issues and ethical violations.

Last week, AVMA’s Group Health and Life Insurance Trust (GHLIT), which markets health and life insurance to veterinarians, announced an exclusive partnership with Pets Best Insurance. As part of the agreement, both businesses are being underwritten by Aetna, and GHLIT promises to exclusively promote the company in exchange for royalties on premiums. The goal, according to Trust CEO Libby Wallace, is to offer sound pet health insurance veterinarians and owners can trust, thereby “raising the bar of the industry.”  To date, veterinarians have been scared off by pet health insurance, which smacks of the managed healthcare debacle that plagues human medicine, she says.  

That’s not to say reputable pet health insurance companies other than Pets Best don’t exist and aren’t needed, Wallace insists. Still, the agreement has companies like Veterinary Pet Insurance (VPI) and Purina, which recently rolled out its own indemnity program, dismayed. In an interview with the Veterinary Information Network, Dr. Kent Kruse, vice president of Purina operations, says he felt duped when he discovered the exclusive deal, which comes on the heels of an AVMA-backed white paper outlining standards for reputable pet insurance agencies.

Although Purina’s insurance program meets GHLIT standards, he says, the Trust’s ties to Pets Best bar it from earning the group’s stamp of approval, which translates as an endorsement from AVMA. The Trust wasn’t forthcoming, he adds, noting that Purina actively supported GHLIT’s involvement in writing pet health insurance standards only to discover the exclusive partnership while attending AVMA’s annual July meeting.

“I feel completely betrayed,” Kruse says. “This arrangement is improper, to say the least. We’re competing with our own professional association. This doesn’t serve the best interest of the veterinary profession in any way.”

VPI spokesman Curtis Steinhoff agrees: “Based on what we have heard, there are several significant questions that we believe should be asked to ensure this proposed pet health insurance partnership will serve the best interests of the veterinary profession. The proposed agreement may also have serious legal, ethical and conflict-of-interest issues.  We plan to review the details carefully and respond appropriately.”

On the up-and-up?

Those “issues” hint of the relationship between CEO Wallace and her father, Dr. Bruce Little, longtime and now-retired AVMA executive vice president who is a Pets Best shareholder and sits on the company’s board of directors. While Wallace vows the arrangement had nothing to do with her familial ties to Pets Best (she was hired as GHLIT’s CEO last December, after negotiations began), the partnership really stems from the insistence of Aetna officials looking to get into the pet health insurance market, she says.

“Our agreement with Aetna includes a code of ethics from AVMA,” says Dr. Gary Holfinger, GHLIT trustee chair. “We recognize that we’ve gone into a partnership, but the profession will see that our information will be educational and promote all companies that follow the guidelines issued in our white paper.”

In addition, Aetna has agreed to advance GHLIT income from future royalties to hire staff to market the program. “We will not take income from our member products to help subsidize these efforts. Pet insurance will pay its own way,” Wallace says. “The key is for veterinarians to buy into the idea that pet insurance is good for their clients. They can prescribe a treatment and owners can afford it.”

‘Sour grapes’

That’s the whole idea, Pets Best founder Dr. Jack Stephens says. While critics call the GHLIT-Pets Best deal an endorsement, Stephens notes that it’s more of a partnership between two respected, experienced insurance entities. What really matters, he says, is that more pets will be insured and because of that cushion, might be saved from early euthanasia.

The criticism, he adds, amounts to nothing more than “sour grapes.” Formerly head of VPI, Stephens says there’s room for growth within each of the nation’s 15 pet health insurance companies, considering less than 1 percent of pets are insurance in the United States.

“This is just a competitive thing coming out. These people need to realize that this will raise the water for all the boats to float and do better.”

As for his colleagues' reaction, Stephens insists he’s heard no negative statements.

“A lot of veterinarians are afraid that pet insurance will become controlling, dictating fees, services and diagnostics,” he says. “With GHLIT involved, you know you’ll always have an alternative to that. People are absolutely in favor of this once they understand what we’re doing. I have not heard one single practitioner say it is not wonderful that their profession is taking a leadership position on this.”

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