Pet insurance fraud horror stories abound in U.K., but not in U.S.

Michele C. Hollow

In a development that has shocked people around the world, crooks in the United Kingdom are injuring or killing their pets to get insurance money.

According to the Association of British Insurers, pet insurance fraud rose to nearly $3 million in 2010 from nearly $670,000 in 2009. The true extent of the fraud is thought to be much higher. Pet insurance fraud is the fastest-growing kind of insurance crime in the U.K., the association says.

Some pet owners in the U.K. are falsifying claims on pets that don’t exist and others are faking accidents. In some cases, pets are being left hurt or dead. All of this is pushing up the costs of pet insurance in the U.K.

Some people in the United Kingdom are hurting or killing their pets to collect money from pet insurance policies.

Here in the United States, however, instances of this horrific type of fraud are practically nonexistent. U.S. claim forms for pet insurance warn about the consequences of insurance fraud, including time behind bars.

“There are bound to be a few bad apples in the bunch,” says Laura Bennett, CEO and co-founder of Embrace Pet Insurance. “Thankfully, I have not heard of any cases of pets being harmed or killed (for insurance money) here in the U.S.”

Why the lack of pet insurance fraud in the good ol’ USA? For one thing, less than 1 percent of Americans have pet insurance, which covers accidents and illnesses. On the other hand, more than one-fourth of U.K. pet owners have pet insurance, says Laura Bennett, CEO and co-founder of Embrace Pet Insurance. “So with more policies, there are more chances of fraud, but we are not seeing that type of fraud happening here,” Bennett says.

What Bennett is seeing are falsified claims, with pet owners marking out dates for pre-existing health conditions. While this constitutes insurance fraud, it’s not on the same level as what’s happening in the U.K.

“No pet insurance company will pay for a pre-existing condition,” Bennett says. “So, if your dog is diagnosed with a disease and then you try to get coverage, you will be denied for all pre-existing conditions. Some pet owners purchase insurance then ‘white out’ the dates on the health insurance claim forms. Others have handwritten notes on the forms as if they were the veterinarian. The problem with this is that veterinarians use medical terms. In one case, a pet owner wrote that the pet dislocated a shoulder. A vet would not use the term ’shoulder’.”

Bennett says false claims are easily spotted, as veterinary technicians review claims filed with Embrace.

It’s hard to file a false claim for pet insurance. With all types of pet insurance, a pet owner buys a plan, takes his pet to the vet and pays for medical care out of pocket. In some cases, the pet owner fills out a claim to be reimbursed; in other cases, the vet fills out the form. The veterinarian always signs off on the form, though. The pet owner then sends the claim to the pet insurer. Pet insurance works the same way in the U.K.

Nicole Cross, a spokeswoman for pet insurance company VPI, notes that since pet owners pay for medical care before being reimbursed, there’s not much of a profit motive for would-be fraudsters in the United States.

Insurance fraud involving American animals isn’t unheard of, though.

From the mid-1970s to the mid-1990s, a number of insurance fraud claims surfaced for show horses that died as part of insurance schemes. Show horses can be worth thousands of dollars. Owners can purchase life insurance for their horses, but life insurance policies do not exist for cats or dogs. The murders of dozens of thoroughbred horses over a 20-year span were tied to insurance fraud.