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Major Medical Insurance: Equine’s Biggest Hurdle

Equine rates may be stable, but the market has faced a number of significant changes in recent years. In particular, major medical coverage has done a solid job running equine insurance off the beaten trail.
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Considering horses have been around for a while in various capacities—racing, work, personal pleasure, family pets—you might expect the equine insurance market to remain fairly stagnant over time.

But while that might be the case for rates—“the pricing profile is going to be relatively stable,” says Ken Rice, underwriting director at Atain, a property-casualty insurance company that is part of the Kaufman Financial Group—the equine market has actually faced a number of significant changes in recent years.

Copays for Horses

Major medical coverage in particular has done a solid job running equine insurance off the beaten trail. “Starting about a year ago, most of the carriers who write this line of insurance have made adjustments to their coverage wording and pricing,” says Kandi Kline, equine mortality underwriter at American Equine Insurance Group.

As recently as a few years ago, “you could commonly find markets that would allow you to insure a horse valued at $5,000 and offer it $7,500 or $10,000 or even more in major medical coverage,” Kline says. But today, “most of the companies out there are cutting that off. There is a shrinking number of opportunities now to offer a customer a major med limit that’s higher than the insured value of the horse.”

Why? You can blame the “terrible” loss ratios in equine medical coverage, Kline says. “Mortality coverage generally supports the existence of the major med coverage,” she explains. “But with the advent of more pricy modalities of treatment for lameness and more expensive diagnostic tests available for horses, the payout on a typical claim has increased—and for many years, the premiums didn’t increase at all to match that.”

Kline cites expensive, sophisticated medical technologies like stem cell therapy, multiple MRIs for diagnosis or treatment follow-ups and IRAP and PRP treatments, which involve removing blood from the horse, processing it and injecting it back into the site of lameness.

“Each one of these treatments is going to cost thousands of dollars, and that can build up into a pretty high claim payout pretty quickly,” Kline points out. “25 years ago, these same injuries would probably be treated just by resting the horse. But today, people want to use every cutting-edge technique they can to try to get the horse back to the show ring as quickly as possible.”

And the consequences for equine insureds involve more than just structural changes in medical wording and pricing. “Along with premiums going up and deductibles being increased, carriers have imposed copays on claims much like in human health insurance,” says Doug Panhorst, vice president of underwriting and administration at American Equine Insurance Group. “Either that, or they’ve imposed sub-limits for certain types of health conditions.”

It’s a startling development in a line of insurance that used to bear little resemblance to human health care. “Equine works differently in a lot of ways, partly because it’s a p-c line of insurance and not a life-health,” Kline says. “Five years ago, it was highly unusual to see copays in horse insurance at all. Now there’s maybe one, maybe two carriers left in the marketplace that don’t have copays or sub-limits in their med coverage.”

Other Equine Developments

In addition to major medical coverage developments, keep an eye on the agritainment industry. Also known as agritourism, this category of commercial exposures involves any agriculturally based operation or activity that brings visitors to a farm or ranch.

“We’re seeing more and more exposures in that area,” says Mike Williams, senior product director for the agribusiness division at Travelers. “Whether people just have a personal use for horses or it’s more of a commercial boarding/breeding/training operation, we’re seeing that both of these areas are extending more into the agritainment areas.”

From trail rides in the summer to sled rides in the winter and everything in between, including nightly rentals at farmhouses, “it’s becoming more of a trend,” Williams says. “People are trying to generate more revenue.”

On the coverage side, Travelers also notices inclusion of more advanced equipment for breeding operations. “More of that equipment is looking much more sophisticated from a computer standpoint,” Williams explains, noting the biggest coverage developments he sees are on the standard farms and ranches side.

“The pace of technology adoption is so quick in the farm and ranch industry right now and the coverage needs for standard farmers and ranchers are definitely going to be changing really quickly,” Williams says. For example? “Drones on the farm are a hot topic for insurance agents. They should be thinking about coverage solutions for that exposure.”

For tips on navigating the equine insurance sale in the midst of serious major medical coverage disruptions, keep an eye on and next week’s edition of the Markets Pulse e-newsletter.

Jacquelyn Connelly is IA senior editor.