Go ahead and roll your eyes and let out a snigger or two, but with new vendors entering the marketplace and others predicting 25% growth, pet insurance is serious business. Add on the fact that the voluntary benefits are increasingly being shopped by the under 35 crowd, and that's reason enough for Steven Farish, SVP and practice leader of voluntary worksite benefits for Wells Fargo Insurance Services, to work with at least seven pet insurance vendors.

From divorcees and empty-nesters who spend after-work hours alone with their pets to twenty-somethings who are postponing marriage and opting for a hound over a husband, "the pet has become their dependant," says Farish. "So that just tells me I have to be cognizant of what's going on in the market."

The market grew wider recently with the addition of the ASPCA's pet health insurance plans. According to the ASPCA Web site, the animal advocacy group has partnered with The Hartville Group to offer four levels of insurance, obtainable individually or through the workplace. An "Agents & Brokers" link on the site explains how to sign up.

Benefit to broker

While some benefits professionals say, "Why bother?" when it comes to pet insurance, others say, "Why not?"

Farish has a brokerage client that offers nearly 20 different voluntary products - including pet insurance. "They want to be able to provide a whole menu of products no matter what it is," he says.

It's about being able to bring the latest products to employers, says Laura Bennett, co-founder and CEO of Embrace Pet Insurance, adding that an average of 65% or 70% of employees have pets, which makes this a benefit to which the majority can relate.

"It gives the brokers a way to go to the employer and say, 'Hey, here's something you can provide that will make you look like a hero without any cost. Everybody likes that," says Bennett. "And it gives them another reason to go and present themselves to the employer."

Embrace doesn't have an official broker program, but works on an informal basis with those looking to make a "goodwill" gesture to clients. "They say, 'We don't really need to be compensated for this, but our clients would like this and we're using this as a way to satisfy our clients' needs,'" says Bennett.

As director of group account sales for VPI, Ken Stallings has had similar talks with brokers who want to use pet insurance as a differentiator in the crowded voluntary space. "Any broker can come to a new employer and say, 'Hey, I've got auto, I've got home, I've got long-term care, I've got legal.' They're hearing that once a quarter. What makes you different?" says Stallings.

Although pet insurance is regulated as property and casualty insurance, Stallings recently worked with a broker who is marketing medical and pet insurance together with the philosophy of "we want to insure and protect all members of your family, including your pet."

VPI's commissions are a standard 10% for the first year on base medical plans, 5% on renewal business, with a renewal rate of "higher than three out of four policies," says Stallings.

When choosing a pet insurance carrier to partner with, Farish adds, it's important to distinguish that they know the difference between working with individuals and employer groups, which have different performance standards.

"We have to make sure that the carriers we use have great service and then we also need to make sure that those carriers provide great communication materials to the employees and that's included in the cost of the program instead of, 'Oh by the way, here's a $7,000 bill for all these communications we delivered to your client,'" he says.

Benefit to employer

According to Stallings, an employer's decision to offer voluntary pet insurance usually comes from a groundswell of employee interest. Particularly as raises and annual salary increases have dried up, making the decision to offer pet insurance can be a good PR move that compensates employees in another way.

"It is an announcement that HR can do that is considered good," says Stallings. "Lots of HR announcements aren't always taken that way."

While some employers still laugh at the prospect of offering pet insurance, "many of them are doing anything they can to get as many benefits as possible into the employees' hands," says Farish.

When Embrace sells pet insurance as an employee benefit, it's usually after an employer has approached the company directly. The employer will sign up for a group discount code that can then be passed onto employees. There's no minimum enrollment required, says Bennett.

Pet insurance is a benefit best served as a payroll deduction, says Stallings, because it makes it a lot easier for employees to budget for the product. "Some of those premiums are fairly expensive," he adds. "You take a $65 or $70 a month premium that you're paying for the dog or the cat, it gets pretty expensive."

Benefit to employee

Stallings notes that while the average American has an aversion to insurance companies, that doesn't seem to apply to pet insurance. "If I'm on an airplane and I don't want to speak to the person next to me, then I tell them I'm in insurance," he says. "If I do want to engage them in conversation, I tell them I work for a pet insurance company - bam - it goes in the opposite direction."

Still, the average plan sponsor offering pet insurance typically sees only 1% to 5% of employees utilize the benefit, and just 0.5% of pets are insured in the U.S. says Bennett, compared to more than 25% of cats and dogs in her native United Kingdom.

"People aren't very familiar with the concept of pet insurance, mainly because it hasn't been done very well in the past," she says.

Farish has seen employers respond positively to products from companies, such as PetFirst Healthcare, that offer multi-tiered programs with low, medium and premium benefit levels straight out of the box. "That seems to work very well with a lot of our clients," he says. "They want to have options."

Bennett recalls one pet insurer's failed attempt at an HMO-type plan.

"The fact is the veterinarians don't want it. They've seen what's happened on the human side," she says. "While they like the idea of pet insurance because it is a benefit to their clients, they don't want a pet insurer to be telling them what they can charge and what treatments to be doing."

Although it can't happen unless pets are no longer classified as property, one change that would "jumpstart the industry" would be to allow for tax-free payroll withholdings or to make the plans qualified for an HSA, says Stallings.

Despite the unlikelihood of that happening any time soon, Bennett says the market is growing at a rate of approximately 25% a year and hasn't slowed down.

"I think it's accelerating," she says. "More people are seeing that it's actually doing the job that they expect it to."

Some truly creative (and maybe a little kooky) pet owners landed their furry friends on VPI's list of the Most Unusual Dog and Cat Names of 2009.

Dogs

1. Doogie Schnauzer MD

2. Sargent Sausage

3. I Am Sparticus

4. Lunchbox

5. Angus Sir Loin

6. Bam-Bam Noodle Butt

7. Mouse Meat

8. Fluffernutter

Cats

1. Snag L. Tooth

2. Clawed Monet

3. Velvet Elvis

4. Eartha Kitty

5. Blue Man Chew

6. Catzilla

7. Thurston Picklesworth III

8. Yardsale