What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-17 compared with 2021-02-12 · 42 added, 31 removed, 183 unchanged (29% of the section changed)

Our mission is to inform and help loving, responsible pet owners budget and care for their pets—for life.

Our mission is to help loving, responsible pet owners budget and care for their pets.

Company Overview

We provide medical insurance for cats and dogs throughout the United States, Canada, Puerto Rico, and Australia.

Our data-driven, vertically-integrated approach enables us to provide pet owners with products that offer what we believe is the highest value medical insurance, priced specifically for each pet’s unique characteristics.

We operate in two business segments:

subscription business and other business.

We currently generate revenue in our subscription business segment from subscription fees related to our “Trupanion” branded products.

We generate revenue in our subscription business segment primarily by subscription fees from our “Trupanion” branded products.

We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our pet acquisition expense and acquiring as many pets as possible at our targeted average estimated internal rate of return.

Our other business segment is comprised of revenue from other product offerings that generally have a business-to-business relationship and different margin profiles than our subscription segment, including revenue from writing policies on behalf of third parties and revenue from other products and software solutions.

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Our subscription business’s cost-plus model is designed to spread the risk evenly within each category of pets so our members can budget for unexpected veterinary costs.

We have been collecting comprehensive pet health data for approximately 20 years.

We believe our data and approach to pricing is unmatched and it provides us with a greater understanding of anticipated veterinary costs.

We have been collecting comprehensive pet health data for over 20 years.

We believe our data and approach to pricing is unmatched and provides us with a greater understanding of anticipated veterinary costs.

We leverage this to price our subscription plan for each pet based on their specific circumstances such as breed, age (at enrollment), geography, and desired deductible or co-payment so that, in aggregate, the amounts paid by owners of lucky pets helps to cover the veterinary costs incurred by unlucky pets.

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Our growing and loyal membership base provides us with highly predictable and recurring revenue.

Our other business segment is comprised of other product offerings that generally have a business-to-business relationship and different margin profiles than our subscription segment.

These include providing pet insurance policies on behalf of the Veteran Affairs program, employer sponsored programs, and writing policies on behalf of third parties.

Additionally, our other business segment includes the sale of software solutions.

This segment provides us with data as well as generates profits that we can invest in growing Trupanion.

Our target market is large and under-penetrated.

According to the Insurance Information Institute, there are 183.9 million household dogs and cats in the United States, and according to the Canadian Animal Health Institute, there are 16.5 million in Canada.

According to Insurance Information Institute and Canadian Animal Health Institute, there are approximately 200 million household dogs and cats in the United States and Canada.

North American Pet Health Insurance Association estimates that the penetration rate for medical insurance for cats and dogs in North America is approximately one to two percent.

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Increasing the number of referrals from members.

We believe that it is critical to our long-term success that existing members add a pet or refer their friends and family to Trupanion, so we focus on improving the member experience, including increasing the percentage of claims that are processed rapidly at checkout and paid directly to veterinarians through our patented, proprietary software.

We believe that it is critical to our long-term success that existing members add a pet or refer their friends and family to Trupanion.

As such, we focus on improving the member experience, including increasing the percentage of claims that are processed rapidly at checkout and paid directly to veterinarians through our patented, proprietary software.

Improving conversion.

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Automating the payment of veterinary invoices.

We use machine learning to leverage the data from our software so we can automate the payment of veterinary invoices.

We use machine learning to leverage data so we can automate the payment of veterinary invoices.

We intend to increase the percentage of veterinary invoices paid without human intervention with the goal of ensuring that we can process veterinary invoices in seconds and do so without reducing the quality of our decision making on a case-by-case basis.

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We intend to pursue those new channels that we believe could, over time, deliver our desired return on investment.

Aligning with strategic partners.

We seek partnerships with players who are leaders in their field, have long-term alignment, and recognize the value of our brand and expertise.

Expanding internationally.

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In addition, within our other business segment, our wholly-owned insurance subsidiary, American Pet Insurance Company, has partnered with unaffiliated general agents offering pet insurance products since 2012.

We also may continue to expand our other business segment by selling software solutions to third parties.

Sales and Marketing

We also continue to expand our other business segment by selling software solutions to third parties.

Sales and Marketing (New Pet Acquisition)

We generate leads through a diverse set of member acquisition channels, which we then convert into members primarily through our contact center, website and other direct-to-consumer activities.

These channels primarily include leads from third-parties such as veterinarians and referrals from existing members.

We build awareness of our core Trupanion product predominately through the veterinary community, engaging our team of “Territory Partners”.

Our Territory Partners are independent contractors who market our product and are paid fees based on activity in their regions.

These channels primarily include leads from third-parties such as veterinarians, strategic partners and referrals from existing members.

We build awareness of our core Trupanion product predominately through the veterinary community, engaging our team of “Territory Partners." Our Territory Partners are independent contractors who market our product and are paid fees based on activity in their regions.

Their role is to create meaningful, long-term relationships with veterinarians and to educate those veterinarians about the benefits of high quality medical insurance.

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• a unique member acquisition strategy that leverages the relationships our Territory Partners have developed in the veterinary community,

• a proprietary database containing 20 years of comprehensive pet health data enabling us to be more precise in our pricing and pet acquisition expense, and

• a proprietary database containing over 20 years of comprehensive pet health data enabling us to be more precise in our pricing and pet acquisition expense, and

• our patented, proprietary software which allows us to pay veterinary invoices directly at time of treatment.

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Our team is further supported by 161 field sales Territory Partner business owners and their associates who represent Trupanion.

We also contract with team members in Philippines through a third-party service provider and in Australia through a joint venture.

About two thirds of our employees work in our Seattle headquarters office (pre-COVID), and others work virtually across the U.S., Canada, and U.K.

Our Seattle headquarters office is pet friendly and 400+ dogs and cats are signed-up to work at the office alongside their human coworkers.

We also contract with team members in the Philippines through a third-party service provider, and we operate in Australia through a joint venture.

Our team is increasingly global with team members working in our Seattle headquarters, Manchester England office, and virtually across the U.S., Canada, and U.K.

Our Seattle headquarters office is pet friendly.

We offer each team member the same benefits, regardless of role or level in the organization.

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Trupanion pays 100% of the tuition costs for one child per Trupanion team member, when space is available.

• Resources for Wellbeing – We offer a variety of benefits to support wellness at and away from work, including free access to our onsite gym, complimentary yoga classes, and an Employee Assistance Program for confidential support to navigate life's challenges.

• Resources for Wellbeing – We offer a variety of benefits to support wellness at and away from work, including free access to our onsite gym and an Employee Assistance Program for confidential support to navigate life's challenges.

• Sabbatical - For every five consecutive years of service at Trupanion, team members are eligible for a paid five-week sabbatical.

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• Medical Insurance for Your Pet – Team members have the option to enroll one dog or cat in 100% company paid Trupanion medical insurance at the highest coverage level we offer.

• Flexible Spending Dollars – Team members receive flexible spending dollars each year on benefits of their choice, including contributions to dependent premiums, fitness and nutrition, childcare, and personal development.

• Leave of Absence & Salary Continuation – We provide all team members that are too ill or injured to work with access to time off through leave of absence at a reduced percentage of their salary through our disability pay programs.

• Severance and Change in Control Policy – We have a Severance and Change in Control policy that applies equally to all team members, regardless of their role at Trupanion.

Diversity, Equity, and Inclusion

We believe that diversity, equity and inclusion is critical to supporting our fellow team members and enhancing our ability to fulfill our mission and achieve our goals.

We strive to offer an environment where individuals with diverse perspectives and backgrounds (including but not limited to the BIPOC community, disabled people and the LGBTQIA+ community) are valued and have the ability to contribute their full potential.

Diversity, Equity, Inclusion, and Belonging

We believe that diversity, equity, inclusion, and belonging (DEIB) is critical to supporting our fellow team members and enhancing our ability to fulfill our mission and achieve our goals.

We strive to foster an environment where diversity of people with different perspectives and backgrounds can thrive.

A core tenet of Trupanion is that we offer a work experience that applies equally to all team members, regardless of role, as noted for example with respect to our Benefits offerings.

This approach extends throughout the way we work together;

for example, each team member works in an open environment without hierarchy affecting size of working space.

We have multiple employee resource groups that celebrate aspects of our team’s diversity and provide a welcoming and safe space for support, education, and networking.

for example, team members that come into any of our offices work in an open environment where the size of working space is the same for everyone regardless of role or seniority.

We have multiple employee-led resource groups that celebrate aspects of our team’s diversity and help foster a welcoming and safe space for support, education, professional development, and networking.

We have a large representation of women at Trupanion including over 65% of leadership positions.

As part of our strategic plan, we have also set a goal to increase the representation of people of color on our team.

To achieve this goal we will take specific actions to hire more diverse talent, develop and retain these team members, and further a culture of inclusion at Trupanion.

For example, among other steps we have taken, we are hiring a Director to focus exclusively on DEI, we are establishing new relationships with partners focused on sourcing BIPOC talent, and we have a DEI Council that works in tandem with us towards meeting our representation goal.

As part of our strategic plan, we have also set a goal to increase the representation of underrepresented groups on our teams beginning with underrepresented races and ethnicities.

To achieve this goal we are taking specific actions to hire, retain, and develop people from underrepresented races and ethnicities, and further a culture of inclusion at Trupanion.

For example, among other steps we have taken, we have expanded the number of employee resource groups, are developing a DEIB curriculum that will be required for all team members, continue to develop accessibility enhancements to both our physical and digital spaces, and are setting department-level representation goals linked to executives’ compensation.

Our 2022 overall new hire representation goals were recently publicly shared in our Corporate Social Responsibility report.

Trupanion is committed to paying equitably for equal work, regardless of gender or race/ethnicity, and conducts pay equity analyses as part of our efforts in furtherance of this commitment.

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• Professional skills – Our continuing education course catalogue includes a wide variety of topics related to our business, the animal health industry, and professional skills.

• Leadership Development – We offer specific leadership development programs both for new managers leading for the first time and for more experienced leaders leading teams of other leaders.

• Leadership Development – Our Leadership Unleashed curriculum offers specific leadership development programs both for new managers leading for the first time and for more experienced leaders leading teams of other leaders.

We are proud of our response to the COVID-19 pandemic.

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Since then we have kept our culture alive with more frequent all hands meetings and office hours with leadership, and converted many of our office events, like the annual Pet Pageant, to virtual formats.

We also offer complimentary COVID testing available 24/7 at our Seattle office for team members and their loved ones.

United States Regulations

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Other state regulators also have broad authority to perform on-site market conduct examinations of our management and operations, marketing and sales, underwriting, customer service, claims handling and licensing.

Regulators may perform market conduct examinations by visiting our facilities for a period of time to identify potential regulatory violations, discuss and

correct identified violations, or to obtain a better understanding of how we operate in the marketplace.

Regulators may perform market conduct examinations by visiting our facilities for a period of time to identify potential regulatory violations, discuss and correct identified violations, or to obtain a better understanding of how we operate in the marketplace.

Further, U.S.

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The values for assets, liabilities and equity reflected in these financial statements are usually different from those reflected in financial statements prepared under SAP.

In 2021, we established two new wholly-owned insurance subsidiaries, ZPIC Insurance Company (ZPIC) and QPIC Insurance Company (QPIC), domiciled in Missouri and Nebraska, respectively.

We have funded required statutory capital to these new subsidiaries, however, neither subsidiary has begun underwriting insurance policies.

federal law generally does not directly regulate the insurance industry.

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The NAIC adopted risk-based capital requirements for life, health and property and casualty insurance companies .

APIC is subject to these risk-based capital requirements that require us to maintain certain levels of surplus $79.1 million as of December 31, 2020 to support our overall business operations in consideration of our size and risk profile.

APIC is subject to these risk-based capital requirements that require us to maintain certain levels of surplus, specifically $116.0 million as of December 31, 2021, to support our overall business operations in consideration of our size and risk profile.

If we fail to maintain the amount of risk-based capital required, we will be subject to additional regulatory oversight.

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While a ratio outside the usual range is not considered a failing result, regulators may investigate or monitor an insurance company if its IRIS ratios fall outside the prescribed usual range .

ZPIC and QPIC will be subject to similar regulations after they begin underwriting insurance policies.

Other Jurisdictions Regulations

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business