Pet owners have been snarling about pet insurance for years and regulators are taking note. A committee of the National Association of Insurance Commissioners (NAIC) is considering a model law that would set new rules about such issues as pre-existing conditions and how long customers must wait after buying a policy before they can file claims.
The issue has been around for years but has been gaining added urgency since the COVID-19 pandemic drove consumers to buy or adopt pets to keep them company during the lockdowns and remote-work periods. That has brought about a big increase in vet visits and, therefore, vet bills.
The problems consumers encounter with pet insurance are similar to the problems they encounter with their own medical coverage — rejected claims, misunderstandings and processing delays.
Like most other forms of insurance, pet coverage is regulated on a state-by-state basis, creating a hodge-lodge of laws around the country. California has had consumer-friendly pet insurance laws since 2014 and is considering strengthening them to include neutering in all policies. But many other states have little if nothing in the way of consumer protection laws for pet owners,
The model law being considered by the NAIC would — as its name implies — be a model for states around the country and, if enough adopt it, could create more uniformity in coverage nationwide.
The North American Pet Health Insurance Association is putting a happy face on the proposal, saying it could “provide consistency.” NAPHIA President Rick Faucher said that ideally the model law would “help consumers be educated about what they are buying.”
“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,” Ray Farmer, NAIC president and South Carolina Department of Insurance director, said. “States would have to adopt the model law for this regulatory framework to apply to the industry in their state.”
Less than 3% of U.S. pets are insured, compared to 20% in some European markets, according to IBISWorld. The research firm expects pet-insurance earnings to swell from $1.6 billion last year to $2.4 billion in 2025.
One thing driving the growth of pet insurance is similar to a major force behind growing medical costs for humans — longer lifespans.
“As lifespans of companion animals increase, costs of veterinary care may increase for the consumer. This could be beneficial for the pet insurance industry in the future as more consumers turn to pet insurance to help manage preventive care, acute and chronic illness, and emergency medical care costs for their animals,” NAIC says in a briefing paper.