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P&C insurance for man’s best friend isn’t just a feel-good sales funnel, it’s also big business with an incredible growth trajectory in 2022 and beyond.

The North America Pet Health Insurance Association (NAPHIA), which represents about 99% of the North American pet-insurance industry, reports that, by the end of 2020, more than 3.1 million pets were insured in the US.

For P&C insurers, this is welcome news. About 70% of families living in the US own a pet these days, and according to NAPHIA, the consumer demand for pet insurance has enjoyed an annual growth rate of nearly 25% in the last five years alone. 

That number, some say, is only a preview of bigger and better things to come for the P&C market. Currently, pet insurance offers coverage to owners for medical costs associated with treating unexpected illnesses and injuries, as well as some routine exams. Though essentially a health policy for fur babies, pets are considered “property,” so pet coverage is classified and regulated as P&C insurance.

Cost and coverage specifics may vary depending on multiple factors, including the type of animal being insured. 

Pet owners generally purchase insurance plans to cover dogs and cats, but some carriers also offer policies that cover more exotic animals, including birds, guinea pigs, potbellied pigs, reptiles, and more. 

As with so much in this exciting new P&C sales growth space, specifics on the who, what, what, when, where, and why of insurance coverage continues to change as demand grows and the product matures.


Pawlicy & Coverage Types

Coverage specifics vary widely across carriers, but in general, there are three main types of pet insurance — comprehensive, accident-only, and wellness. 

Comprehensive Insurance Coverage

As with auto insurance, comprehensive coverage has the most expansive range of benefits to offer. Affectionately known as “nose-to-tail” coverage, comprehensive pet insurance usually covers:

  • Accidents & injuries 
  • Common & chronic illnesses
  • Hereditary conditions
  • Diagnostics & testing
  • Emergency care
  • Prescriptions
  • Wellness exams & routine check-ups

Additional benefits available to pet owners can include such extras as dental care, boarding fees, liability coverage should the pet cause property damage, and end-of-life care and burial costs. 

Not all comprehensive insurance policies cover the same conditions, obviously, but reimbursable vet expenses such as surgeries, X-rays, medications, veterinary hospital stays, cancer treatments, and emergency visits are fairly standard. 

What may be excluded — or covered only after a waiting period once coverage begins — also varies by carrier and plan. 

Certain hereditary or chronic illnesses that are documented on a pet’s health records prior to the commencement of coverage may be considered pre-existing conditions. The sooner a pet is covered, however, the more likely such conditions won’t be documented or considered “pre-existing.”

Pet owners can also expect elective procedures such as teeth cleaning and microchipping, and non-medical expenses such as grooming fees and obedience training to be excluded from standard coverage in their pawlicies. It’s worth noting too that insurance coverage exclusions can be breed-specific and can also vary by type of pet.

Accidental Pet Insurance Plans

Accidental pet insurance policies are less expensive and expansive than comprehensive insurance coverage, and tend to be fairly straightforward in what the plan covers. More often than not, insurance coverage includes:

  • Being hit by a car
  • Poisoning
  • Cuts & lacerations
  • Ingesting a foreign object
  • Torn ligaments
  • Prescription medicines for covered conditions

Though pet insurance is very similar to hooman health insurance, p&c policy owners can expect more restrictions in coverage. Along with certain medical conditions and procedures, it’s also fairly common for accidental coverage to include annual spending caps along with the co-pays and deductibles. 

When selling this type of p&c coverage to your clients, be sure to spell out these differences and coverage highlights well in advance of the policy being put to use.

Wellness Insurance Coverage

On the lower end of the cost scale, wellness pet insurance plans tend to cover the basics, and are a good fit for pet owners who spend $500 or less a year on their furry companions. While comprehensive and accidental insurance plans are intended to help cover the unknown, wellness insurance plans are aimed at covering routine costs and spreading out known, expected costs over the course of a year.

Policy owners of wellness insurance plans can generally expect to have preventative care such as spaying/neutering, heartworm and flea prevention, teeth cleaning, and annual check-ups.

Licensing & Regulatory Issues

Most states require agents to carry a P&C license to sell pet insurance, though the level of necessary licensing may vary from state to state, and is still a topic of debate within the industry at large.

According to the National Association of Insurance Commissioners (NAIC), “several market conduct enforcement actions on pet insurers were reported from 2015 to 2016. The issues identified in these actions included unlicensed sales, illegal inducements and rebating, improper use of rates, and unlawful claims practices.”

Such instances have since spurred debate within the NAIC’s Producer Licensing Task force on what level of licensing should be required to sell and negotiate pet insurance policies, as well as how the product should be regulated. 

Currently, the NAIC Pet Insurance Working Group — a sub under the Property & Casualty Insurance Committee — is developing a proposed model law to establish regulatory standards for pet insurance.

Intended to "provide clarity and nationwide consistency in policy provisions and disclosures of pet insurance" the proposed model law was tantalizingly near completion as of December 2021 but was then pulled from consideration by the full NAIC on Dec. 16 with no explanation.

As for licensing, the NAIC has recommended the limited lines licensing replace P&C licensing requirements, stating that "this would serve to better educate producers, protect consumers, and may expand the availability of pet insurance."

As for licensing, the NAIC has recommended that limited lines licensing replace P&C licensing requirements, stating that “this would serve to better educate producers, protect consumers, and may expand the availability of pet insurance.”


Stay Tuned

Be sure and keep an eye out for the third installment in the The P&C Playbook Blog Series. Next up, we’ll explore how walking a mile in your customer’s shoes can pay off big!

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