New guidelines will hail a milestone for US pet insurance

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New guidelines will hail a milestone for US pet insurance

In the US, the National Association of Insurance Commissioners (NAIC) recently announced it is developing a new model law for the country’s growing pet insurance industry.  The new regulations will aim to provide clearer guidelines for the sale of pet insurance and the recommended disclosures for pet owners when purchasing a policy for their pet.  It will also outline how vets should discuss insurance with pet owners.

It is anticipated that the new regulations will come into effect later in 2021.  We consider this an important and timely milestone for the US pet insurance market, given that this fast-growing sector currently lacks the uniformity of regulations seen with other types of insurance.


New regulations to support future growth

Since the early 1980s, the popularity of pet insurance has steadily grown as more households take on pets.  The mindset now is that pets are very much part of the family and this has helped to fuel investment in pet insurance policies.

The American Pet Products Association found that 67 percent of US households owned a pet in 2019-2020, a total of 84.9 million homes, compared with 56 percent in 1988.  Devoted pet owners spent around $1 billion on pet premiums in 2017, and this is expected to rise to a global spend topping $10 billion by 2025.  A report from Verified Market Research supports this trend, predicting that the pet insurance market will more than double in size between 2018 and 2026.


The opportunity for more uniformity

The call for new regulations is a positive step to support market growth, given that currently the regulation of pet health varies widely by state.  According to the North American Pet Health Insurance Association, at least 20 companies across the US and Canada currently provide pet insurance. In the short-term, it is highly likely that more insurers will enter the market and launch pet insurance offerings, hence a need for clearer guidelines on policy sales.

It is surprising, however, that the new model law will not be compulsory. The National Law Society notes that each US state will have the choice of whether to adopt the new regulations.  This presents a potential challenge for insurance companies in terms of how they can best adapt their sales processes to account for regulatory differences between states.  For example, insurers may have to ask pet owners different or more in-depth questions when selling new policies in states that have fully or partly adopted new regulations.


Choose digital to adapt to state differences

Thanks to digital technology, it should be possible for insurers to quickly adapt to these differences.  Aquarium Software’s platform already enables insurers to tailor policy recommendations and sales to the individual customer and the specific needs of their pet.  Simply confirming where a pet owner lives as the first question, should trigger relevant questions and advice to adhere to the regulations in that state.

We feel that the proposed new law is taking the future of the pet insurance industry seriously and we encourage insurers to consider how intelligent, flexible digital solutions can more readily embrace the forthcoming changes.



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