Why is pet insurance having a moment?

The awareness around pet health has hit fever pitch, according to Spot Pet Insurance’s president, Scott Taylor (pictured), prompted in part by better financial planning and the continued humanization of animals as more than just a companion, but a family member.

“I think part of that trend could be the awareness of pet health insurance – it’s just not for when you get a new pet, it’s also for people who are seeing veterinary costs rise considerably and are looking for that financial relief that pet insurance brings,” Taylor said.

With almost a decade of experience working in the pet insurance industry, Taylor has witnessed firsthand the demographic shift in pet ownership and those who are seeking insurance.

“It used to lean more heavily towards older aged women. And now when you look at the demographics, particularly of our booking business, it looks more like a pie with equal slices in it,” he said.

“Newer pet parents that are purchasing or adopting an animal as their only family member, or as a start to a bigger family, are being financially responsible, doing the research, identifying an insurance provider and understanding the need for going out and getting coverage.”

In an interview with Insurance Business, Taylor spoke about some trends that helped shape the pet insurance market in 2023 and how the industry reacted to the onslaught of mysterious respiratory ailments dogs were experiencing.

Employers responding to newer preferences

According to a recent report by Spot, the rising costs associated with veterinary care and related insurance claims have risen throughout the last year.

• Overall, there was a 21% cost increase in accident and illness claims year-over-year.
• Annual exam fees rose by 18% year-over-year.
• Costs for diagnosing and treating respiratory problems increased by 28% on average year-over-year, amid a mysterious respiratory dog virus.
• Veterinary costs rose by 9% year-over-year according to the November inflation report.

“Improvements in veterinary technology and treatment have facilitated higher costs, alongside the standard inflation that is affecting every industry,” Taylor said.

To make sure that rates are increasing at an acceptable pace due to economic or social factors, pet insurers need to keep a close eye on data trends throughout the market.

“You need to have actuaries monitoring these numbers, especially since there may be a lag time before the rates go up,” Taylor said.

“Businesses need to make sure the rates are appropriately adjusted to the various breeds and trends and minimize any rate increases that might occur based on those trends.”

Elsewhere, in 2023, pet insurers had to adapt NAIC model laws as more states adopted its provisions.

This requires pet insurers to disclose information regarding reimbursement benefits, preexisting condition limitations and a clear explanation of limitations of coverage including coinsurance, waiting periods, deductibles, and annual or lifetime policy limits.

“Insurance companies will need to modify their coverages to comply with the model law where that’s adopted,” Taylor said. “The North American Pet Health Insurance Industry Association (NAPHIA) was involved with developing the model law, and a large percentage of pet insurers are a part of that organization, so a lot of carriers had very detailed information in lead up to its passing.”

Taylor has also taken notice of the growing pool of employers who are offering pet insurance as a voluntary benefit.

An ailment that shook the internet

Elsewhere in the report, and seen on various TikTok, Facebook and Instagram feeds, was the rise of a respiratory illness – canine infectious respiratory disease complex (CIRDC) – that dogs were experiencing in droves.

While nationwide numbers are not known at the moment, the American Veterinary Medical Association noted how Colorado, New Hampshire, and Oregon officials are working with state and federal veterinary diagnostic laboratories to determine the underlying cause(s).

more on the mysterious respiratory illness affecting dogs from an emergency veterinarian pic.twitter.com/6aNe4aBQtM

— Franchesca Ramsey (@chescaleigh) November 23, 2023

In response, Spot Pet Insurance’s data reveals a notable increase in claims related to respiratory issues, with the share of claims for upper respiratory infections surging by 75% year-over-year, while undiagnosed coughing increased by 54% from 2022.

Furthermore, respiratory issues also accounted for $33,000 in claims payouts at Spot, second only to cancer.

“We also expect that figure to increase based on the trends and reports that we’re getting from the veterinary offices,” Taylor said.

Thankfully, pet insurance customers who have a policy that includes any type of respiratory infection would have coverage for this specific and undefined sickness.

“As a result, it’s important to create awareness around the importance of bringing your pet to the vet, or contacting a telehealth line, when you see symptoms and just addressing that quickly,” Taylor said.