Western Europe has had pet insurance much longer than North America and their penetration rates range from 5-40%, so let’s assume that’s where the North American market will peak. Between 5% and 40% of $106.2 billion is a total eventual market of between $5.3 billion and $42.4 billion. That is quite significant potential for a current market that is less than $1 billion. Another major trend in the industry is corporate entities rolling up independent vets. We’ll see how it plays out, but this could potentially be a good thing for Trupanion if they can get exclusive relationships with some of these large roll-ups. Trupanion has already started to do this with their VCA Inc ( WOOF ) deal. VCA owns 800 animal hospitals across North America and chose Trupanion as their exclusive insurance provider. VCA’s 800 stores account for almost 3% of the entire vet hospital population, so it’s a pretty meaningful deal. And as VCA buys more hospitals, this is free additional business for Trupanion. If Trupanion got relationships with the other corporate roll-ups, the business would almost take care of itself.

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