People’s mindset has been changing from being a pet owner to pet parent. They are treating their furry friends as an important part of the family. The pet insurance market is growing on account of rising companion animal population and an increase in the awareness related to pet insurance. This industry has both small and large market players, strategizing accordingly with launch of new insurance policies and regional expansions. Remarkable rise in the pet ownership is also a factor that is driving the need for pet insurance policies as pet owners are willing to spend on their pet’s health and welfare with less expenditure on veterinary bills. Thus, the pet insurance market is projected to thrive at present and in the future owing to the rising number of people owning pets along with the growing awareness about pet’s health.
Pet insurance provides illness and accident coverage for family-owned pets, primarily dogs and cats and bears many similarities to human health insurance with annual coverage offered at an actuarially-determined rate subject to various terms and conditions.
NAPHIA (The North American Pet Health Insurance Association) represents more than 99 per cent of the U.S. and the Canadian pet health insurance industry as an advocacy group. The below figure represents the United States premium volume for the period 2013-17:
U.S. Pet Insurance Premium Volume, US$ Million
Source: North American Pet Health Insurance Association (NAPHIA)
According to the NAPHIA statistics, the total premium volume for NAPHIA members in the United States was US$1.03 billion in 2017 which represented 23.2 per cent growth over the prior year while the direct premium accounted for approximately US$640 billion during the same year.
According to a survey conducted by the American Pet Products Association (APPA), nearly 68 per cent of U.S. households owned at least one pet including dog, cat, or other. The figure below represents the number of total insured pets in the United States for the period 2013-17:
Total Insured Pets in U.S.
Source: North American Pet Health Insurance Association (NAPHIA)
According to NAPHIA, nearly 1.5 million dogs and 300,000 cats in the United States were insured in the year 2017 with the number of insured dogs and cats rose 17.5% from the previous year. Thus, with the booming demand for pet insurance among pet owners, insurance companies are also expanding their product portfolio into this lucrative market. According to the NAPHIA, there were more than 6,500 companies in the U.S. and Canada in 2017. With unexpected vet treatment often costing a lot, it is not surprising that some pet owners, especially when you have an expensive breed, can struggle to afford unplanned medical care for their furry friends. Pet insurance can protect people against the unexpected costs that arise when their pets need medical treatment while helping the pet to live a longer and healthier life.
Pet insurance policies include:
- Veterinary fees for the cost of diagnosing and treating injuries/illnesses which includes consultation fee, examination fee, test fee, cost of medication, bandages, surgery, and hospitalization. Veterinary fees also includes the cost of alternative therapies such as acupuncture, homeopathy, herbal remedies, and complementary treatments such as hydrotherapy and osteopathy.
- Third Party Liability in case one’s pet injures someone or damages someone else’s property for which the owner is legally responsible.
- The purchase price of the pet in case it gets lost, stolen, or dies due to an injury or illness before a specified age.
- Advertising costs in order to help find the lost pet and the cost of reward if someone finds or recovers your pet.
- Overseas vet fees so as to pay for emergency veterinary treatment for the pet if the owner takes it abroad under the Pet Travel Scheme.
There are a wide range of pet insurance policies available in the market, catering for different needs. Since policy can differ, it is important to ensure that the owner checks and understands what various policies cover.
Despite pet insurance being a relatively small segment of the overall insurance sector, it is showing signs of considerable growth as pets are becoming more integrated into people’s lives.
Global Pet Insurance Market Size, US$ Billion, 2019 and 2025
Source: Knowledge Sourcing Intelligence Analysis
As per NAPHIA statistics, around 2.07 million pet owners in the North American region had their pets (dogs and cats) insured at the end of 2017, with the United States being at the top. Also, premium volumes in Canada surged from CAD$91 million in 2013 to CAD$161.1 million in 2017. Pet owners are buying insurance policies for their pets in order to afford some of the most expensive treatments their pets need. Pet insurance has been more established in European countries such as the UK and Sweden where the coverage level is around 30 per cent. The first pet insurance policy covering a dog was issued in 1924 in Sweden only. Then in the UK, the first pet insurance policy was issued in 1947.
Rising pet adoption along with the prevalence of several pet-related diseases are significantly driving the global pet insurance market growth. As the human-animal bond grows, considering pets as a part of the family is becoming a part of the culture and more accepted in the society. Also, with increasing urbanization, pets are becoming more important part of human lives. This emerging trend of pet humanization is because of the companionship of pets that provides a fundamental psychological need for many people. As such, many human-characteristics pet products and services are in sale these days due to rising demand across pet owners. These products and services include pet insurance, pet grooming, and pet-friendly traveling services.
According to a 2015 study by the American Veterinary Medical Association (AVMA) in collaboration with Mississippi State University’s Department of Agricultural Economics found that pet insurance policies offering unlimited benefits and wellness plans have significant effects on pet owners’ purchase decisions; when a wellness plan is included, people are more likely to visit the veterinarian more frequently than those without a wellness plan.
The role of a pet insurance is unique and dynamic as people are filled with positive energy to keep their beloved pets happy and healthy.
ABOUT THE AUTHOR:
Anjali Joshi is a senior market research analyst at Knowledge Sourcing Intelligence. She oversees a team of analysts and is known for the quality of market intelligence she delivers to the clients which range from start-ups and Non-profit Organizations to Fortune 500 companies. Anjali’s keen understanding of international business and market dynamics, coupled with her years of experience working in this industry, allows her to analyse current and future trends across both global and clients’ target markets and help them in making informed decisions.