What’s New in Pet Insurance?

Pet adoption skyrocketed during the pandemic. Result: Veterinary hospitals are overwhelmed with animals in need of medical attention. And yet the vast majority of pets remain uninsured. That’s because petinsurance policies need to be improved. Fortunately, insurers are taking baby steps in that direction…

Adding coverage. Consumers had been reluctant to purchase pet insurance because not enough medical conditions were covered. But today most insurers cover needed services, including wellness, and are offering plans with unlimited payouts. But that has had the unintended effect of driving up costs as more pets need care.

Smart restrictions. Sometimes it’s better when insurance covers something only partially. Example: Medical diets for dogs. It’s heartbreaking when a vet prescribes a special diet and the pet owner can’t afford the more expensive food. But: 100% coverage of medical diets makes insurance more expensive for everybody. A smart policy will cover, say, half the cost of a medical diet, putting the price in the same range as that of a normal diet. Result: The animal gets fed…the owner pays roughly the same amount…and premiums don’t spike.

Abandoning the reimbursement model. Possibly the biggest disincentive to pet insurance is that almost all policies require owners to pay the veterinary hospital out of pocket and then file claims to be reimbursed. Most companies still use this reimbursement model, but one company—Trupanion— now provides 24/7 claim approval and direct payment to the hospital. When other companies start providing 24/7 preapproval of claims, those pet owners who can’t afford to pay bills up front will be more likely to take out insurance.