Could Other Neobanks Introduce Pet Insurance?

The neobank Revolut just launched pet insurance as a stand-alone product. Pet insurance is a growing specialty area in the insurance sector and buying this coverage makes sense for customers who are concerned about unexpected vet bills. In the United States, Trupanion is one of the major pet insurance providers and I’ve been following them for a while. And, as always, insurance provides another stream of income for neobanks that don’t want to solely depend on collecting interchange fees. So I decided to look up Revolut’s offer to learn more about how it worked.

Pet Insurance Is a Growth Market

Revolut is not the first bank, or even the first neobank, to offer insurance products. Travel insurance was already one of Revolut’s main selling points, and several of its peers in Britain also offer insurance products. But it’s less common for banks to offer pet insurance, and that’s because pet insurance is less common than other types of insurance in general. In September 2021, Balancing Everything reported that Sweden had the highest rate of pet insurance coverage at 40 percent while the UK coverage rate was also relatively high at 25 percent. But only 6 percent of pets in Australia had coverage and less than 3 percent of pets in the US had coverage.

As a result, pet insurance offers growth potential for insurance companies as well as their partner banks. In its press release, Revolut explained that many people bought new pets during the pandemic. People were spending more time at home while events were shut down and social distancing measures were in place, so they wanted additional companionship. At the same time, many businesses laid off workers so new pet owners had to conserve their money. Pet insurance could protect these owners from an unexpected vet bill.

Revolut Arranged Custom Coverage

I looked into how Revolut set up the pet insurance offer to see if it was unique. Neobanks often use integrations and affiliate marketing deals to add new financial services, but the providers behind these offers can easily expand them to other neobanks as well. For example, a neobank can offer cryptocurrency investments by integrating its app with a cryptocurrency brokerage’s app. But it doesn’t look like that’s the case for Revolut’s pet insurance program. This looks like custom insurance coverage.

Revolut’s insurance coverage is provided by its travel insurance division, and the underwriter is the British company Ergo Travel Insurance. This insurance company doesn’t list pet insurance as an option on its website, but its travel insurance does cover medical claims so it has some familiarity with healthcare. So it looks like Ergo created a custom pet insurance policy just for Revolut and it doesn’t normally offer pet insurance to its other partners. Thus, it’s less likely that other neobanks can just add a connection to the Ergo app to offer pet insurance themselves.

Revolut also lists White Horse Insurance Ireland as its current partner for travel insurance coverage, but notes that after April 1, new travel insurance policies will be provided by another insurance company, Allianz Insurance. So Revolut selected Ergo even though it already had travel insurance partnerships with other insurance providers, and that indicates that travel insurance companies might not all provide pet insurance.

Other Pet Insurance Providers That Partner With Banks

After doing some more research, I learned that there are pet insurance companies that have bank partnerships. For example, First Citizens Bank offers pet insurance but doesn’t list a specific partner. At the bottom of the page, the bank does note that it has affiliate partnerships in place, though. Lone Star National Bank lists Nationwide as its partner insurance company. So there are traditional banks that have partnerships with pet insurance companies already and these banks could offer quotes to their current customers through their mobile apps.

Custom Pet Insurance Offers Are a Possibility for Other Neobanks

It appears that Revolut’s pet insurance offer is unique and the company arranged a special partnership with the travel agency Ergo Travel Insurance, so offering pet insurance may not be as simple as connecting a neobank’s app to an insurance company’s app. But traditional banks in the US currently offer pet insurance to their customers, so it does appear possible for other challenger banks in the US and Britain to do the same thing. Right now, the US market appears to have more growth potential, but pet insurance appears to be more widely used in Britain.

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