Trupanion’s Murky Regulatory Quagmire (At Least ~31% Of Rev At Risk)

Trupanion offers Pet insurance through referrals from Veterinarians via the “Trupanion Express” software.

The company has previously leaned on the fact that they do not instruct their sales people (Territory Partners) or Veterinarians to specifically “solicit” insurance.

However, both of those parties are directly compensated when a patient becomes a plan holder.

The laws around referrals differ from state to state, but we believe that 15 states specifically prohibit referral payments and that those states represent about 30% of TRUP Revenue.

While you were in the Hampton’s during the last few weeks of August, I published two pieces on TRUP “Trupanion: A Regulatory Icarus With 75% Potential Downside” that was met with great anger from the company and subsequently followed by “Trupanion: A Moonshot Valuation With Lingering Questions“. The company has still not answered the three simple questions that I posed to them:

1. Do you – or have you this calendar year – rewarded veterinarian clinics for points “based off of certificates issued at your [the veterinarian] hospital”?
2. Do you – or have you this calendar year – provided cash rewards to your territory partners based off of the successful conversion of a new policyholder?
3. Do you provide training to the veterinarians and their staff that they are specifically NOT allowed to offer or comment on specific insurance products without being a licensed agent?

These questions are worded specifically as they speak directly to the roll the compensation structure plays in establishing the potential violation of the referral laws cited in the previous pieces. Although I think there are lots of potential violations of the state insurance regulatory structure when a firm is paying both the Veterinarian and their third party marketing sales force off of the sale of insurance, I spent the last week refining my thoughts on the referral laws vs. solicitation laws and came to a few conclusions. Most importantly that around 31% of the company’s revenue is derived in states that specifically prohibit payment for referrals based on the successful sale of insurance. Specifically, that’s 13 states that don’t allow for referral payments based on the successful sale of insurance and 2 states that don’t allow for the payment of any referral.

https://seekingalpha.com/article/4204713-trupanions-murky-regulatory-quagmire-least-31-percent-rev-risk