Over the last year, the North American Pet Health Insurance Association has seen a 30.5% increase in annual pet insurance premiums and a 27.7% increase in insured pets. With the rise in popularity of pet insurance among North American pet owners, the members of the National Association of Insurance Commissioners (NAIC) established regulatory standards through the passing of the Pet Insurance Model Act.
The NAIC identifies four key elements of the new model: consumer security, protection of preexisting conditions, differentiation of wellness programs, and training requirements.
There are a number of consumer protections codified within the model including policy renewals, policy limits, benefit schedules, waiting period disclosures, and covered conditions. This helps consumers to choose the policy that best fits their furry, and not so furry, friends. For preexisting conditions, the model puts the responsibility of proving a preexisting condition limitation into the hands of the insurer, therefore limiting denials of those claims. The model also requires that pet insurance providers distinguish between pet wellness programs and pet insurance policies, minimizing uncertainty of the two options. Pet wellness programs, as defined by the NAIC, are designed to be reimbursement-based programs promoting the general health of pets as well as covering routine veterinarian visits. (NAIC, 2022) Pet insurance, however, provides coverage for unforeseen injuries and incidents. Finally, the model sets training requirements for all insurance producers. (Training requirements for the pets are still at the discretion of the pet owners.)
As of August 13, 2022, the NAIC has passed the Pet Insurance Model Act, and it is at each state’s discretion to modify or adopt the model law.