The Future of Pet Insurance and How It's Evolving

The future of pet insurance is looking more and more bright especially for pet parents as there are developments happening in terms of policies, technological advancements, and laws and regulations.

Pet insurance goes back a long way. The first pet insurance policy was written in 1890 in Sweden by Claes Virgin. But at that time, it was focused on horses and other livestock as the concept of keeping dogs and cats as pets had not evolved that much. It took another 100 years for pet insurance to include smaller animals like dogs and cats in its realm. Lassie, the famous TV collie, received the first pet insurance policy issued in the U.S. in 1982. Today, 44.5% of U.S. households own dogs and 29% of households own cats.¹

This affinity towards pets has also meant that more people insuring them. In fact, as of 2022, more than 4.8 million pets are insured, this represents a 124.9% increase from 2018.¹

Having said all of this, let us look at where is the pet insurance industry in the US heading towards.

Change in Pet Parents

Millennials make up the largest percentage of pet parents in the US by occupying a third of the total number of pet parents¹. Because of this, there is a change in spending patterns on the pets. More and more comprehensive packages are becoming the need. Also, technological innovations are also becoming a must to survive in the industry as the younger generations won’t make do with average offerings. Factors that have become important for consumer success are –

The outcome expected here is a seamless experience for tech-savvy pet parents.

Technology and Pet Insurance

There has been a surge in technology in the pet insurance market. Thanks to the use of technologies like AI for underwriting and claim management processes, pet insurers are able to provide more accurate risk assessments and hence customized plans tailored to the specific needs of the pet parents.

Wearables – Technologies like IoT have enabled more accurate and on-time data about pets using wearables. Pet’s weight, exercise habits, security, overall health, and many other data points can easily be available to the insurers at any given point in time using wearables. This allows insurers to offer more granular pricing to the pet parents as the risk assessment becomes much more accurate for them. It also helps pet parents to take better care of their feline friends as they can have a look at the health quality in real-time and make changes to the diet, exercise plans, training, etc. accordingly.

Pet doors – Pet doors with facial recognition have also entered the market. Along with that, there is a rise in the use of GPS trackers, RFID sensors and accelerometer sensors on pets.

AI – Artificial intelligence has in a way mandated changes in the overall pet insurance eco-system. From risk assessment to claim settlement to IT systems to quote generation; pet insurance is no longer a tedious manual thing. For example, process automation through AI enables a direct issuance of low-value, low-risk policies and the straight-through processing of low-value claims. It also allows insurers to minimize risks as it allows them to continuously mine case and claim data and identify fraud and security risks in real-time.

New Offerings

The pet insurance industry, like any other industry, ties its growth with new offerings in the market, For that, the industry is constantly evolving and factoring in all the needs, current and anticipated, of pet parents and developing products accordingly.

Peer-to-peer insurance – Peer-to-peer insurance is when a group of individuals pool their premiums together to insure against a risk. Some pet insurance companies in the US are offering the same to pet parents.

Rewarding insurance – With the growth in the usage of IoT, insurance companies can have access to real-time health data of pets. This has allowed them to offer rewards for taking better care of the pets.

NAIC and its involvement in pet insurance

In August of 2022, the National Association of Insurance Commissioners adopted the pet insurance model law which largely focuses on how veterinarians discuss pet insurance with clients. The body has stated that ‘“The goal of the model law is to establish clear rules for the sale of pet insurance and provide important disclosures to pet owners purchasing this product,” Farmer said.⁴ “States would have to adopt the model law for this regulatory framework to apply to the industry in their state.”⁴

Since the NAIC adopted the model law in 2022, the only states to adopt it have been Mississippi, New Jersey, Pennsylvania, Rhode Island, and Washington.⁵ States are able to adopt the entire law or incorporate only certain parts in their statutes. The adoption of pet insurance is very low currently in the whole of the US, with not more than 3% of the pets insured.⁶ However, studies have found that pet owners were more satisfied when they had pet insurance.⁴ This is supported by Dr. Wendy Hauser who stated that , “Overall, the benefits obtained by hospitals that embraced having proactive pet insurance education conversation with clients are strongly positive.”⁴

The body is also trying to look into some details for example, a definition of “preexisting condition” and participating in discussions about whether a veterinary team member would need to be trained by an insurance company to discuss products with clients.

SPOT and Pet Insurance

At Spot Pet Insurance, we offer coverage for accidents and illnesses, which can include alternate therapies, prescription diets, chronic conditions, microchip implantation, hereditary & congenital conditions, behavioral issues, exam fees, specialist visits, and more. We also offer a 10% multi-pet discount on all pets enrolled after the first.

Conclusion

Pet insurance is witnessing a boom in the market as the younger generations are forming a major percentage of pet parents in the country and they are better aware of the risks and challenges.¹ This has influenced providers to keep evolving with the changing needs of the pet parents and offer more customized and comprehensive packages. Government and local organizations are actively working to educate pet owners about pet insurance and improve its accessibility and benefits.