The NAIC passes pet insurance model act for 50 states
The pet insurance regulatory standards would require certain consumer disclosures, among other provisions.
Members of the National Association of Insurance Commissioners (NAIC) passed a pet insurance model act, which institutes regulatory standards for pet coverage including consumer protections, rules for preexisting conditions and training requirements. States would still need to adopt the model law either as written or in a modified form.
“This model law establishes clear rules for the sale of pet insurance and provides important disclosures to pet owners interested in purchasing this product,” Beth Dwyer, superintendent of insurance for the Rhode Island Department of Business Regulation, said in a release. “Now, it is up to the states to see if they would like to adopt or modify the model law for this regulatory framework to be in effect.”
The NAIC reported key provisions of the model act include:
- Consumer protections: The model codifies several consumer protections related to renewals, required disclosures of waiting periods, policy limits, conditions, benefit schedules, and more. Robust disclosures allow consumers to affirmatively choose the policy that is best for them in a world with dozens of available options.
- Regulations for preexisting conditions: The model limits how insurers can deny pet insurance claims related to preexisting conditions of covered pets. And the onus is put on the insurer to prove those preexisting condition limitation applies.
- Wellness programs: The model explicitly requires insurers and their producers to clearly differentiate pet wellness programs from insurance policies to help eliminate consumer confusion between insurance policies and non-insurance wellness programs.
- Training requirements: The model codifies training for insurance producers to ensure that producers are appropriately prepared to present information to consumers.
In 2021, the North American pet insurance market had around $2.8 billion in annual premiums, which represented a 27.7% year-on-year increase in in-force premiums, according to the North American Pet Health Insurance Association. More than 4.41 million pets were insured in North America in 2021. In the U.S., total premium volume grew 30.4% from 2020-2021 to reach a record $2.6 billion.
Although pet insurance is similar in scope to health insurance, it is regulated and reported as P&C coverage as pets are considered property under the law.
Related: 10 best pet insurers for 2022