While equine insurance pricing in general has remained relatively stable for many years, one sector continues to cause problems for underwriters. Turns out health care is just as confusing and troublesome for horses as it is for humans.

Pricing Trends

Michael Taylor, president of Taylor, Harris Insurance Services, says equine rates in general “haven’t really moved for a while.”

But equine insurance covers multiple sectors, and “thoroughbred rates have definitely been reducing as the market tightens,” Taylor says. “There are lots of agents and there are fewer insurers—that tightens rates.”

“The thoroughbred world definitely softened with the economy,” agrees Julian Bowen-Rees, managing director of the horse and farm insurance program for Markel Specialty. “For a lot of people, race horses are something of a luxury spend, so when the economy drops we see a drop-off in demand.”

In addition, the number of horses bred has dropped substantially since 2009—a contraction of nearly one-third, according to Bowen-Rees. “That’s approximately 12,000 fewer foals being born and therefore 12,000 fewer horses to be insured,” he says.

The toughest equine line right now? Major medical coverage. “Ever since its inception, major medical has cost underwriters more than any other coverage we provide,” says Kimberly Jarvis, president of C. Jarvis Insurance Agency, Inc. “Often, people confuse the policy terms with human hospitalization. Unfortunately, this has led underwriters to be bombarded with claims for cases it was not intended for.”

“It’s an industry-wide issue,” Bowen-Rees agrees. “The prices of a lot of treatments have gone up and the price of drugs can be incredibly expensive. The range of treatment options available to veterinarians, just like on the human side, is extensive and can be quite expensive.”

On the Horizon

In the near future, something’s gotta give—don’t be surprised if you see major changes for major medical. “It’s a huge problem,” Taylor says. “Prices are going up and claims are going up. The underwriter market is getting smaller, and they’re not going to sustain this sort of an issue for very long.”

Bowen-Rees says shifts might involve more co-pays, supplements for different types of treatment and exclusions for more unorthodox treatments. “I think we’ll see an increasing tightening of coverage and probably increasing premiums as insurers try to tighten up in that area,” he says.

Outside major medical, leasing will continue to become a more prominent practice, particularly with parents who have young children going through the equine ranks. “A top-level pony’s worth half a million dollars,” Taylor says. “You don’t necessarily want to spend half a million dollars for something you’re only going to use for two or three years. A lot of times it makes much more sense to lease.”

And expect new technology to play a bigger role in the breeding shed moving forward. “Excluding thoroughbreds, most equine breeds utilize advanced procedures like embryo transfers and freezing semen,” Jarvis says. “With the advances in modern medicine and fertility on a whole, we’re seeing different reasons to acquire coverage than we saw 20 years ago. We have to change with the times.”

Jacquelyn Connelly is IA senior editor.