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New Federal Pet Insurance Guidelines to be Proposed this Month

— April 2, 2021

NAIC is set to propose new pet insurance guidelines for states.

U.S. insurance regulators are working on standards around pet insurance that would address long-standing consumer complaints.  A National Association of Insurance Commissioners (NAIC) committee is currently meeting to decide whether a pet’s condition is “pre-existing” and how long customers must wait to file claims, among other issues. Customers say they’ve have been caught off-guard when claims are rejected, and they’ve been met with unexpected restrictions and loopholes.

“Less than 3% of U.S. pets are insured, compared to 20% in some European markets,” according to recent research.  That expected to increase from “$1.6 billion in insurance plans in 2020 to $2.4 billion in 2025.”  Pet policies are similar to traditional human coverage with annual premiums and deductibles.  Rates are typically based on an animal’s age and the level of care needed.

NAIC’s national meeting will be held later this month.  Lawmakers from all 50 states will meet to discuss the issue further.  The discussions to be held ahead of time are meant to develop a “model” pet insurance law for regulators’ approval.  Through the NAIC, state insurance regulators develop standards and best practices, conduct peer review, and coordinate their own oversight.  NAIC staff support these efforts, and following the national meeting, states can decide whether to adopt the proposed law or create their own adaptations.

New Federal Pet Insurance Guidelines to be Proposed this Month
Photo by Helena Lopes from Pexels

“The pandemic led many Americans to adopt or purchase pets for companionship during extended lockdowns.  Dog inquiries on Petfinder, an online pet directory, rose 36% for the year ended January 31,” a NAIC committee spokesperson said.

Philadelphia resident and consultant Chris Arlene pays Embrace Pet Insurance $45 per month to cover Chance, his dog.  Chance was in the hospital last year after swallowing a stuffed animal.  Afterwards, Arlene was met with an argument by Embrace denying the claim because the incident was considered a “pre-existing condition.”

“I was so emotionally distraught,” said Arlene.  He appealed, providing additional information and eventually convincing Embrace to cover the costs.  However, if he hadn’t, Chance’s owner would have been met with a $1,100 bill.

“You have to read the policy carefully,” said Robert Hunter, insurance director for the Consumer Federation of America. “I’ve never been a big fan despite having owned dozens of dogs.”

California has been the most proactive state when it comes to adapting insurance conditions to include broader coverage.  Its structure has provided NAIC with insight for its proposal.

There are several players in the pet insurance market, including popular coverage companies like Nationwide and MetLife Inc.  Trupanion, PetPlan, Lemonade Inc., and ManyPets in Illinois also offer plans.

The NAIC said that the agency began working on the proposal in 2016, and there’s no guarantee states will adapt it quickly or at all.  Some states may also opt to adapt stricter policies.  However, the efforts will at least provide a framework for state legislators to consider.

“Pet insurers simply want customers to understand what they are buying,” the North American Pet Health Insurance Association said in March, adding that a model could “provide consistency.”


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