International expansion: Doug and Gwen Ford’s pet insurance business is still growing fast
Australian pet insurance trailblazers Doug and Gwen Ford are aiming to conquer the European market in a major expansion of their privately owned Petcover operation.
And they’re well on the way to succeeding. A newly granted licence for Petcover to set up in Germany will pave the way for operations in all 27 European Union countries.
Sitting in his office on the edge of Melbourne, Mr Ford says the European business will dwarf Petcover Australia in the long term. Around half the company’s $105 million annual premium is already earned in Europe.
“We’ve started to really get traction in the UK, which is a mature market. However, Europe is growing rapidly. It’s a good opportunity to get in at the moment.”
Petcover now has operations in Australia and New Zealand, as well as the UK, Austria, Ireland and France. It also has a claims centre in India.
Germany, Italy and Spain are next on the Fords’ list, and in Australia a major retailer will offer some Petcover product lines under joint branding from December.
Mr Ford also reveals he is in confidential talks about picking up the business of a UK pet underwriting firm which has been given notice by its reinsurer. If successful, that acquisition could almost double Petcover’s annual gross written premium.
The remarkable story of Petcover began after the UK’s number one brand, Petplan, was sold in 1996 for £32.5 million to Allianz. Mr Ford had long wanted to replicate the Petplan model in Australia, but its founder Patsy Bloom had dismissed his overtures.
Mr Ford says she saw Australians as “callous rednecks” and believed the market here wasn’t suitable for pet insurance.
That’s when Gwen, Doug’s wife, business partner and a strong personality in her own right, had a serendipitous meeting. She was on the board of Insight Insurance Brokers Association in the 2000s, and found herself seated at a lunch beside an Allianz executive. She explained the situation and he was sympathetic, saying he’d help her get approval to bring the Petplan model to Australia.
“We thought it was probably just the wine talking,” Mr Ford says. But a meeting was soon arranged at Allianz in the UK, where the Fords sealed the deal.
“They trained us and gave us everything that we possibly needed to imitate the UK business in Australia. We brought it here to Melbourne to set the whole thing up.”
For the next two decades the Fords ran Petplan in Australia – and later New Zealand – via a licensing arrangement, paying a royalty to use the brand. But two years ago the Fords dropped the Petplan arrangement, transforming into Petcover Group.
Show success: Gwen has long held a passion for pets, especially beagles
“The [Petplan] brand was too restrictive and we wanted to do so much more,” Mr Ford says. “We wanted to do different things, and Allianz was very rigid. They wouldn’t do exotic animals, for example.”
Farmers Mutual Group initially provided capacity, and later Allianz and HDI Global Specialty. Today Petcover is underwritten by Arch Re, employs more than 150 people – 60 of whom are in Australia – and Gwen and Doug are both highly regarded international dog show judges, beagle specialists and generous sponsors, a passion they’ve indulged since Doug’s first visit to the famous Crufts dog show in London in 1979.
It was showing dogs that brought them together. They met aged in their 30s while showing dogs and living in Darwin, where Doug was the volunteer Northern Territory president of the RSPCA.
“We live and breathe animals; it’s been our life,” Mr Ford says. “We are really focused on animals and we’re not trying to be all things to all men.
“We’re going to sell you pet insurance that you can trust and work with. It’s as simple as that.
“Our profitability is the last thing on the list I worry about. My view is, if you look after your customers and do everything the right way, the profits will follow.”
Mr Ford rejected family pressure to study dentistry, medicine or chemistry when he left school. Instead he joined Commercial Union in 1967, rising quickly to become the manager of the insurer’s crop business.
Some years later his very first four-legged client came his way: a doberman named Windswept Mary May. He was asked if the company would insure the dog, and he managed to talk an underwriter into accepting the business.
“The boss said, ‘That’s ridiculous – but go on, you’ll learn something’.” Mr Ford later moved to Stenhouse, now part of Aon, and in 1986 founded brokerage Ford Kinter & Associates.
Petcover now encompasses around 21 businesses, and has added a professional product line for pet industry participants such as kennels and dog groomers. Petcover also offers exotic animals cover and schemes for dangerous wild animals and wolf crosses in the UK.
Then came Europe. Mr Ford’s mother was German, and after tracking down some lost relatives, the Fords began their European foray. Today they own two houses in Austria, which was a “testing ground for Germany, which is the prize really – the big market”.
“It was easier for me to get licensed in Austria, and now we’ve virtually started in Germany. It’s very new. We’re just finalising the binders with the underwriter.”
“Corporatisation” of vet practices is now taking off in Europe, Mr Ford says, matching the UK model and Greencross in Australia. That development is driving pricing and higher market penetration, driven by cashed-up venture capital players such as Germany’s JAB Holding Company, which has targeted investment in vets and pet insurers.
“They have been on a buying spree. They’ve got a €5.5 billion war chest. It’s beginning to blossom. Corporates are seeing it as a major opportunity for their growth.”
Petcover’s ventures are “totally self-funded – we don’t borrow anybody’s money,” says Mr Ford.
The global pet insurance market will experience 7% compound annual growth and almost double in size to $US16 billion by 2032, according to Global Market Insights analysis, driven by pet adoptions, innovative policies and the rising cost of veterinary treatments.
But despite its massive business potential, there’s one market Petcover isn’t interested in – the United States, where each state has its own regulator and the demand for pet insurance is huge. “People keep on telling me that’s where I should be, but I don’t know if I’ve got the capacity to want to have 52 ASICs chasing me,” Mr Ford says.
However, a move into the Canadian market is under serious consideration, starting with Toronto.
After years of Petcover and Hollard dominating the Australian pet insurance market, RACQ Insurance, Trupanion, Guild Insurance, Pacific International Insurance and Budget Direct have also launched or backed pet products.
Consumer group Choice says since it awarded pet insurance a “shonky” award in 2019, the product has improved, with restrictions lifted or clarified.
Mr Ford says he has watched newer competitors take market share off Petcover, only to win it back when price discounting led to large losses.
“Basically they bought the business by undercutting everybody. They’ll borrow to the hilt, promise the world, undercut the price. I’ve never gone into a market and lost money.”
He says Petcover has some strong practices that ensures clarity for customers. “We will tell you if we’re going to exclude [some provisions] before you buy, and we put very few sub limits on our policies.
“We offer the best quality products. It’s all up-front, and we’ve been very successful with it.”
Mr Ford is still actively involved in Petcover’s planning and development, and while he would “just prefer to be the chairman of board, to be honest,” he will carry on for now.
He’s confident the group’s experienced management team has “the right people in place” when he and Gwen decide to step back.
But obviously stepping back isn’t an option yet. This year Petcover is piloting a policy that will cover pre-existing conditions, and another new preoccupation is a team of 10 IT developers working on dramatically speeding claims-paid timing to just hours.
“We’ve got new products coming on the market which the underwriters agree on,” he says. “We’re just making sure they are sustainable.
“I’d like it to keep growing. We’ve still got some very strong new ideas to come.”