Perhaps the costliest problem in insurance is distrust. People don’t like their insurance companies and don’t trust their insurance companies. It doesn’t matter how much money the insurance company has, people, don’t believe they’re going to pay them when the day comes. Pet insurance is a business with lots of room to grow. Americans spend more than USD 14 Billion on vet bills annually, but pet insurance premiums total at most a half-billion. In the insurance industry, the abundance of protocols to tackle distrust can add layers of complication and cost, both for the insurer and the insured. The research report titled North America Pet Insurance Market Outlook, 2026 by Bonafide Research categorizes the market to forecast the revenues and analyze the trends in each of the following segments: based animal type, by insurance type, by end-user, based on countries & major companies.
It is believed that these strong human-animal relationships are driving pet owners’ desire to address financial uncertainty by mitigating unexpected veterinary costs, contributing to a record USD 1.11 Billion in 2015. However, in 2020, the world saw the stay-at-home and work-from-home measures introduced during the pandemic create even closer bonds between pet owners and their pets. For better or for worse, pet parents have had to rethink how they feed their pets, provide medical care for their pets, and how they protect their pets.
The marketing challenge in the region is signing up customers from a population that either hasn't heard of pet insurance or views it, justifiably, with some suspicion. Out of these half-knowledge potential customers, the majority pick up strong preference towards the accident & illness policies, which contributed to over 97% of the market in 2015. Even now, however, insurance generally makes sense only for cash-flow-challenged owners who fear they won't have the money to cover their best friend's vet bill. So far, insurers have offered coverage for pets under lifestyle plans and would mostly pay only for the death or disability of the pet. Unless it can be categorized as an injury, dental treatment will not be covered. Claims arising from skin-related treatments will not be admissible, neither will expenses incurred due to spaying covered.
Spending per pet is rising, there’s a macro argument here that pets act as a substitute for kids and they’re increasingly favorably priced relative to the alternative. Pet health care is advancing, just like human health care is, and in modern economies advanced health care mostly consists of expensive health care. There’s a back-and-forth between regulations and budgets here; surgery that’s economically viable for humans first can be viable for pets later, while medications that are illegal for humans can be cheaply available for pets.
Insurance companies are not the only organizations caught in cycles of distrust. Even new business models centered on trust have had their trustworthiness questioned in recent times. Trust in terms of pet insurance cannot be taken, it must be earned. Much of the current thinking is around how the pet insurance and broader financial sector can rebuild trust; the approach has involved increased regulation, more compliance officers, and further processes. A better approach would be to rebuild trustworthiness.
The average pet insurance cost is higher for dogs compared to cats for accident and illness policies. With claims capped and predictable, the key to profit is signing up more pets and keeping their owners loyal. In North America, consumers don’t have any problem finding a policy for their pets. Whether they should pay for one is an entirely different matter. Some owners will save thousands on unexpected vet bills, but many others will simply kiss their premiums goodbye.