The pet insurance industry got its start almost a century ago in Sweden where about half that country’s pets are now insured. In North America, Veterinary Pet Insurance Co., a subsidiary of Nationwide, sold its first pet insurance policy in 1982 to cover the dog playing Lassie on television.
The North American Pet Health Insurance Association (NAPHIA) reported that the pet health insurance sector for the United States posted gross written premiums of $1.99 billion in 2020, up 27.5 percent from $1.56 billion in 2019. The market has been rising at an average annual growth rate of almost 24.2 percent from 2016 to 2020. The total number of pets insured reached 3.1 million at year-end 2020.
Dogs represented 83 percent of in-force gross written premium in 2020. In 2020 average annual premiums reported by NAPHIA for dog insurance were $218 for accident-only coverage, which includes care for foreign body ingestion, lacerations, motor vehicle accidents, poisoning and other injuries. Average annual premiums for accident and illness were $594, which covers accident-only benefits, plus illnesses such as cancer, infections, digestive problems and other illnesses. For cats, annual premiums for accident and illness coverage are about 40 percent less.
According to NAPHIA, there are 20 pet insurance companies in North America, ranging from Nationwide, the first insurer to offer pet insurance and the top writer of pet insurance, to insurtech Lemonade. According to the Society of Actuaries, policies are not standardized as some plans include routine health maintenance, diagnostic tests, lab fees or prescriptions. Deductibles vary as well, and many plans exclude preexisting conditions but some add exclusions for congenital conditions, cancer treatments or other issues. Insurers may offer discounts for service dogs or multiple pets insured.
During the COVID-19 pandemic, nearly one in three (30 percent) of Americans adopted a pet, according to the Insurance Research Council’s October 2020 report, Consumer Responses to the Pandemic and Implications for Insurance. Many pet owners decided to forgo pet insurance, according to Liberty Mutual Insurance. The company’s survey found that almost three-quarters of animal owners do not have pet insurance.
Seventy percent of U.S. households, or about 90.5 million families, own a pet, according to the 2021-2022 National Pet Owners Survey conducted by the American Pet Products Association (APPA). This is up from 56 percent of U.S. households in 1988, the first year the survey was conducted, and 67 percent in 2019.
Total pet industry expenditures in the United States totaled $103 billion, up 6.7 percent from $97.1 billion in 2019. APPA estimates that expenditures in 2021 will reach $109.6 billion.