Billion dollar Pet Circle expands into insurance after creating the purrfect policy

Australians are insuring their pets like never before – treating them like diamond rings and fast cars – and there’s a new company taking on the big players.

Pet Circle CEO Mike Frizell, with dog Kobe, says its taken the company a decade to create a pet insurance policy it can stand behind.

Pet Circle, the online retailer worth more than $1bn, is moving to disrupt insurance for dogs, cats and other animals – a product that has become so ubiquitous that you can buy it at Coles and Woolworths.

Animals have become big business during the pandemic as demand for pets, and as result prices, soared during lockdown. The market is showing no signs of slowing and Pet Circle is betting on insurance as sparking its next wave of growth.

As prices for dogs and cats hit nose-bleeding high levels – with some breeds selling for almost $10,000 – pet insurance has become a popular product as Australians place their pets in the same category as diamond rings and fast cars.

It comes as Pet Circle is facing more competition than ever, with Australia’s overall pet care market estimated to be worth $13bn.

Woolworths Group CEO Brad Banducci and his three-year-old King Charles Cavalier cocker spaniel cross, Juno.

Woolworths chief executive Brad Banducci – beaming as he held his cocker spaniel-cross Juno – announced the supermarket chain would spend $586m acquiring Petspiration – owner of PETstock.

Meanwhile, Bunnings managing director Mike Schneider – with his dog Henry by his side – pivoted from tools to pets in February, launching the hardware chain’s biggest category expansion in 20 years.

Asked why it has taken Pet Circle – which was founded in 2011 – until now to launch pet insurance, co-founder and chief executive Mike Frizell said it came down to quality.

“We’ve looked at launching pet insurance many times over the last decade but it was only in the last year or so that we felt we could basically create a policy that was good enough to stand behind and give our customers a good outcome,” Mr Frizell said.

“We will build a solution for a pet parent when we think we can improve on the status quo. Basically, about 85 per cent of insurance policies out in the market have elements we don’t think are great for customers, mainly sub-limits.

“Our feedback from our vets and customers is that is one of the most painful things in policies. So that was catalyst enough to build this (Pet Circle’s own pet insurance offering).”

Despite pet insurance policies being offered from health insurance majors to supermarkets, a common frustration with policies is caps on certain conditions. For example, Mr Frizell says treatments for paralysis tick can have a $1200 sub-limit but cost more than $4300, leaving pet owners thousands of dollars out of pocket.

Bunnings managing director Mike Schneider and his dog Henry.

This has forced many to question the value of pet insurance and, as Mr Frizell says, force people to choose between their finances and pet’s health.

At worst, as Brisbane vet Remona Horn told The Weekend Australian earlier this year, this leads vets being forced to euthanise pets if their owner cannot pay for treatment, which she said was contributing to a nationwide shortage of vets.

Then there is aggression – not from animals – but their owners, which has placed vets at a higher risk – about four times more – of suicide than the general population, according to the Australian Veterinary Association.

To help prevent bill shock and arguments over payment, Pet Circle’s insurance – which is underwritten by Pacific International Insurance and distributed by Knose – has one policy limit, set at $30,000 a year for dogs, eliminating sub-limits.

“It’s a tough industry out there at the moment. If we can get lots of customers under policies like this, with this level of coverage and features, I really hope that it helps,” Mr Frizell said.

Pet Circle was initially called Paws for Life when it was founded and after a $4m capital fund raising, the company tripled its warehouse operations and expanded its product range.

Between 2013 and 2015, the company grew by over 300 per cent. It has since relied on venture capital funding to expand its operations. In late 2021, Pet Circle secured a $125m investment led by US-based Prysm Capital and Sydney’s TDM Growth Partners, valuing it at more than $1bn.

At the same time, pet ownership has exploded. Australians own an estimated 28.7m pets. This equates to 69 per cent of households owning a pet, compared with 61 per cent before the pandemic, according to Animal Medicines Australia.

While this has triggered a gold rush from companies looking to pivot more towards pets, Mr Frizell said he welcomed the competition.

“It’s really about getting the right thing for the customer. On the competition side, I’m generally all for it. For a long time we had big players opposing that and had an incentive to keep the status quo.

“So when you see some big players jumping over to the specialty side, I think it’s good for competition.

“There’s no doubt having the big retailers move into it could be a bit hard for the smaller retailers, so they’re going to find their niches and find a way that their service levels really standout for their customers.”

Pet Circle’s pet insurance launch follows its multimillion-dollar investment in its last mile logistics, fulfilment centres and range to keep up with demand from the pet boom.

The company operates its own delivery fleet in Perth and has opened two new fulfilment centres in Perth and Brisbane, which takes its overall footprint to more nine football fields and allows it to dispatch about 13,500 unique products.

If you or someone you know are feeling overwhelmed, phone Lifeline on 13 11 14 or visit lifeline.org.au

Originally published as Billion dollar Pet Circle expands into insurance after creating the purrfect policy