A Market Driven Solution for Dogs?

When it comes to cars, we sensibly require driver’s licenses, vehicle inspections, and liability insurance to cover the predictable costs of traffic collisions and liability arising from accidents and incidents related to vehicle operation.

Car insurance rates vary by age of the driver, type of car, and an individual car owner’s driving record.  

The insurance cost for a 67-year old with no moving violations who is driving a 13-year old  4-cylinder Ford, is going to be substantially less than the insurance costs of a 20-year old with three moving violations, and two wrecks, who is driving a 2026 Porsche 9-11 Turbo.

Car insurance and health insurance are commonly understood financial products, but as George Mason University economist Tyler Cowan has noted, there are insurance markets in almost everything.  

A few examples:

▪️Hole In One Golf Insurance:  In Japan, golfers who hit a hole-in-one are expected to throw parties “comparable to a small wedding,” including live music, food, drinks, and commemorative tree plantings.  In response, a hole-in-one insurance industry has been created, with approximately 30% of all Japanese golfers shelling out $50-$70 a year to insure themselves against up to $3,500 in hole-in-one party expenses.

▪️Foreign Student Enrollment Insurance:

The University of Illinois at Urbana-Champaign has paid over $424,000 a year to insure itself against a significant drop in tuition revenue from Chinese students.  The university’s three-year contract with an insurance broker provides coverage of up to $60 million in lost revenue should there be a tightening of exit or entry visas.

▪️In the news at the moment is the high and rising cost of operating oil tankers in war zones, whether that’s Russian ships in the Mediterranean and North Atlantic, or American and European ships in the Straits of Hormuz or Bab al-Mandab. No ship owner will sail without insurance, and just two or three ships sunk or on fire in a broadly-defined war zone has a ripple effect across the globe. 

I bring up insurance to broach a new idea.  

What if every dog breeder was required to purchase a four-year nose-to-tail health insurance policy for every puppy sold?  

The insurance costs would, of course, be passed on to puppy buyers and would, of course, change from breed to breed.

Why would breeders be required to buy the insurance, rather than consumers?  

Simple:  breeders are the creators of the puppies, and the party most familiar with the predictable health problems associated with their breed.  If you want more healthy dogs, and fewer unhealthy ones, you park the costs at the point of production, same as you do for hygiene, health, and ingredient inspections at a bakery.

In addition, breeders are a logical point of enforcement.  Breeding dogs is either a business or a hobby, and either way income is taxed.  If breeding dogs is a for-profit business, expenses of all kinds can be written off against profits.  If four years of nose-to-tail pet health insurance was required, however, even hobby breeders would be able to write off the cost of insurance and health testing.

Insurance companies, of course, could lower premium costs for breeders with low inbreeding by descent numbers (aka genetic COI), and those who health-test their dogs.

What might be the result of such a scheme?  

Well, for one thing dogs would benefit as there would be a financial incentive for breeders to reduce inbreeding and to a conduct more health tests.  

On the consumer end, there would be an up-front financial incentive to stay away from famously unhealthy breeds, as the issue would no longer be kicked down the road by willfully ignorant consumers. 

Insurance markets are not perfect regulatory mechanisms, but they are generally better than no regulatory mechanism at all, which is where we are now in the world of dogs. 

There is no question that insurance pressures drive a lot of production and consumption decisions, from house location to roofing types, from career paths to hobby choices.  

If fewer people bought famously unhealthy breeds, and the creators of those breeds were less enamored with inbreeding and morphological deformity, would that be a bad thing?  

I think not.

And what about the dogs?  Would they not benefit from more testing and more corrective intervention in their first four years of life?

I think so.

What about breeders of non-pedigree crosses and mutts?  Would they be required to purchase insurance as well?  

Of course, but you can expect that insurance to be less costly than for morphologically extreme and inbred dogs. 

And what about Kennel Clubs?  

They are already in the business of selling pet insurance. To push this scheme into hyper-drive would require no new legislation; it would only require the Kennel Clubs to mandate the purchase of a four-year health insurance policy for every registered dog. 

Kennel Club breeders like to tell themselves they exist to improve dogs and showcase “ethical breeders”.  Here’s how they can match their actions with their rhetoric.  If they won’t do it, we’ll learn a lot about what *really* drives their decision process.  I suspect it’s not dogs, but I would be *very* pleased to be proven wrong.