Pets are an important part of family life for millions of households. They appear in holiday photos, accompany their “parents” on errands, and fill social media feeds with their personalities and daily adventures. Many pet owners arrange playdates, enroll their furry companions in daycare, and treat them as their first “children.” With this level of attachment, it’s no surprise that their health and well‑being are a top priority.
Pet Insurance Is Not a New Concept
Modern pet insurance, focusing on animals as “pets,” or companions emerged in the late 20th century. In 1982, celebrity dog Lassie is generally credited as being the first pet insured under a pet insurance policy. Since that time, pet insurance has evolved from basic accident coverage to comprehensive plans reflecting the growing recognition of pets as family members and the demand for accessible, high-quality veterinary care.
Today, pet insurance is one of the fastest growing markets in the U.S., with gross written premiums increasing more than 70 percent in the last five years.
The Need for Regulation
Not surprisingly, as the pet insurance market surged, consumer confusing and dissatisfaction did as well—with many pet parents finding that they were sold “policies” that covered few, if any, actual vet visits. The National Association of Insurance Commissioners stepped in and, in 2022, adopted its Pet Insurance Model Act, largely based on regulatory standards already in place in California. Since then, about one-third of the states have adopted the NAIC model, and may more are expected to in the next few years. The Pet Insurance Model Act sets standards for preexisting conditions and clearly distinguishes between coverage considered “insurance,” and benefits that constitute a wellness program.
Insurance vs. Wellness Programs
True pet insurance typically covers a wide range of medical conditions and unexpected health situations that affect household pets, with policies designed to help owners manage the high cost of veterinary care. The two primary types of pet insurance policies available today are Accident and illness, and Accident‑only. Both are designed to provide financial protection when a pet experiences an unexpected medical event.
Wellness and preventative services programs, on the other hand, are designed to help cover the cost of routine or preventative care (think: grooming, and preventative care, like vaccinations). Many wellness programs are sold through veterinary offices and are not considered to be insurance. However, coverage for wellness and preventative services may often be purchased as part of a pet insurance policy, which must be sold by a licensed insurance agent.
Opportunity for Growth
In 2024, pet insurance gross written premiums increased nearly 21 percent over the prior year, totaling more than 5 billion dollars, with more than 30 insurance companies offering pet insurance products. The American Animal Hospital Association projects that, by 2030, the U.S. pet insurance market will reach $10 billion. Yet, surprisingly, according to the North American Pet Health Insurance Association, less than 4 percent of the total estimated number of pets in the U.S. are insured—leaving their humans exposed to the risk of unexpected and costly vet bills—and revealing a market wide open to opportunity. While pet insurance is neither mandatory, nor needed by everyone, many clients may benefit from adding the coverage to their insurance portfolios.
Pet Insurance CE from XCEL
XCEL offers a two-hour insurance CE course, Pet Insurance: What Every Producer Needs to Know, to help you better understand pet insurance so you can offer it to your clients with confidence. Check out our Property & Casualty continuing education solutions, choose your state, and select the course to get started!
