The Last Word
All in the Family

• Renée Kiriluk-Hill
• November 2020
• 

It's a fetching time for pet insurers. Potential customers identify as pet parents and grandparents, willing and financially able to take measures unheard of just a decade ago to make their pets live longer and healthier lives, according to industry professionals.

Pet health insurance—a $1.56 billion market in the United States—is a wide-open line with tens of millions of potential insureds and penetration rates in the low single digits. The global pandemic accelerated demand for pet health insurance, observers said, as adoptions soared and pre-COVID-19 owners self-isolated with their pets.

About 60 million—or half—of U.S. households include at least one pet, the U.S. Census Bureau estimates. And they're spending more on them: Sales of pet care services doubled to $5.8 billion over the decade ending in 2017, the bureau said at the start of the year.

Meanwhile, pet insurance premium has risen an average 22.1% annually over the past five years, according to North American Pet Health Insurance Association Executive Director Kristen Lynch, as last year more than 2.81 million pets were insured in the United States and Canada. U.S. pet insurance premiums hit $1.56 billion and Canadian premiums $159 million in 2019, NAPHIA reported.

The COVID-19 pandemic has led to more adoptions and acquisitions, combined with a dramatic change in pet owners' lifestyles ... people were home from work and school. “These very real shifts in our behaviors and values around our pets are what is known as the evolution of the human/animal bond,” Lynch said. “If we consider this alongside the pandemic's impact on our earning and spending habits, it is easy to see why pet insurance is seeing increased growth.”

Trupanion, which is considered the second-largest carrier in the line, reported the number of pets enrolled in its plans increased 29% in the second quarter to 744,727. The company posted a $1.4 million net income compared to a $1.9 million net loss a year earlier.

Nationwide, as Veterinary Pet Insurance, issued the first U.S. pet health insurance policy in 1982 for screen star Lassie.

It's the largest insurer in the line, covering more than 847,000 pets, and the only one to insure birds and exotic animals, said Chief Pet Officer Heidi Sirota. The line started taking off about six years ago as new entrants—largely managing general agents—raised the profile of pet insurance, she said.

Concurrently, younger generations are fueling demand. “They're adopting pets in record numbers, choosing pets over partners,” Sirota said. “It's really a fast-growing and evolving industry.” Moving forward she sees different types of pet health subscriptions emerging and the acceptance of telemedicine for veterinarians.

Were the penetration rate to rise to 10% over the next decade, Cognizant Chief Digital Officer and Consulting Leader Chris Blatchly said, it would provide massive growth for “an industry that doesn't see growth” in other U.S. personal lines.