Pulse - October 2024 - 11

For example, claims can be filed more
easily thanks technologies like artificial intelligence
being used by carriers. Policyholders
can also chat with customer support or connect
with a veterinarian through mobile
apps, according to Baker.
Premiums
As more people insure their pets, more
carriers are entering the industry, and pet
insurance is becoming more sophisticated
and offering more insurance products.
But a trend that may not favor pet owners
is rising premiums.
Average U.S. premiums for accident and
illness coverage for dogs rose from $594.64
in 2019 to $675.61 in 2023, NAPHIA data
shows. There was a slight rise for the same
coverage for cats-from $365.89 in 2019
to $383.30 in 2023. In Canada, the average
annual premium in 2023 for accident
and illness for dogs was $940.91, and it was
$488.73 for cats.
Kristen Lynch, NAPHIA's executive director,
said rising veterinary inflation plus cost of
care are putting upward pressure on rates.
The animal health marketplace experiences
typically high veterinary inflation, but
it has been higher than ever since the pandemic,
according to Lynch.
Lynch cited statistics from the Fountain
Report that over the past two decades, cost
inflation in veterinary services has consistently
outpaced inflation rates for all goods
in the consumer price index by 61%.
Higher premiums do not mean pet insurers
are raking in profits, Lynch said.
" Pet insurance also has a relatively low
profit margin as compared to other P&C
lines-like home and auto-largely because
pet owners use their coverage far more than
they would with other forms of property
and casualty insurance, " Lynch said.
The takeaway for pet owners is that pet
insurance premiums are based on " the true
cost and financial risks of pet ownership, "
she added.
The cost of coverage is determined by
a pet's age, health factors associated with
their breed, the actual cost of veterinary
care in the city and area where the pet
resides, and the choice of basic or more
comprehensive coverage.
" All of the factors that affect the actual
health costs of owning your pet are the same
as those that will shape the cost of your pet
PULSE
OCTOBER 2024
insurance premiums, " Lynch said. " That in
itself is a strong case for ensuring you have
coverage for your pets. "
A complex regulatory environment has
also made profit-making harder for pet
insurers, and by extension, it has made premiums
higher for insureds, Lynch said.
" The U.S. is, for many reasons, one of
the most complex regulatory environments
for pet insurance worldwide, " Lynch said.
" Insurance regulation is different in each
state, so a pet insurance company's coverage
will vary in every single state according to
those laws. "
Property and casualty insurers, which
include pet insurance companies,
are
required to file their insurance with every
state in which they offer coverage. They
must also submit rates and requested policy
changes to each state's department of insurance
for review and approval.
The mix of laws makes regulation hard
to keep track for insurers and insureds.
California was the only state to have pet
insurance legislation until 2022, when the
National Association of Insurance Commissioners
passed the Pet Insurance Model
Act, a guideline for a states to pass pet
insurance legislation.
Many states are now in the process of
either adopting the model law or making
changes to parts of the law to ensure it aligns
with that state's specific insurance laws.
The act creates a legal framework that
helps states mandate disclosures be made
in policies, such as preexisting condition
exclusions.
It has other guidelines that
include disclosures of coverage limits,
deductibles, claim history and how insurers
determine claims payments. Beside
disclosure guidelines, the act outlines sales
practices for wellness programs, and insurance
producer training.
" NAPHIA, whose members represent
more than 99% of gross written premium
in North America, has been working with
as many states as proactively and collaboratively
as possible, " Lynch said. " The industry's
goal is to ensure that the pet insurance laws
adopted by each state align with the act, but
are also adapted in key places to be stronger
for consumers, and allow for coverage to be
not only easier to understand but also more
uniform/standardized from state to state. "
She added that NAPHIA advocates for
pet insurance laws that are " not overly bur11
'While
pet insurance
in general is
becoming more
widely known
today, some of the
core functions of
most policies aren't
general knowledge
yet, which could
result in an
unexpected outcome
for the customer
at the time of their
claim.'
Pulse - October 2024

Table of Contents for the Digital Edition of Pulse - October 2024
