The U.S. pet health insurance industry, estimated at slightly over $1 billion in 2017, will nearly double to reach $2 billion by 2022, according to Rockville, Md.-based Packaged Facts market research firm.
The findings were featured in the recently published report, Pet Insurance in the U.S., 6th Edition.
The pet insurance market will grow more than 14 percent per year, supported by a number of trends in both this emerging market and competitive ones, according to company experts. Increased consumer awareness will be crucial to growth.
“Consumers are increasingly aware of the available pet insurance plans in the U.S. marketplace,” said David Sprinkle, research director for Packaged Facts. “Through marketing efforts and consumer education by pet insurance companies and associations, consumers are learning the benefits that pet insurance can offer when a pet becomes ill or injured.
“For example, pet insurance companies use social media and their websites to grow consumer awareness of their offerings by sharing information on pet health, dog and cat breeds, and how pet insurance works. As market penetration remains low, these efforts are crucial to continued growth in the number of policies in force.”
Packaged facts targeted five additional trends that are essential to helping the U.S. pet insurance market reach its full potential by 2022 and beyond.
Augmenting distribution channels
Most pet insurance companies emphasize partnerships with veterinarians, employers, animal shelters, and breeders. For instance, improving the veterinary channel will potentially allow pet owners to gain exposure to pet insurance before being faced with a high-cost procedure. Improving the employer channel allows increased exposure to plans and possible benefits like group discounts. Overall, augmenting the avenues of contact between consumers and pet insurance, beyond the internet or direct-to-consumer realm, will be critical to increasing consumer education and the number of policies in force.
Changing consumer perceptions, increasing coverage transparency
Data have shown that many consumers opt out of pet insurance because they think it is unnecessary or is too pricey. Increased efforts to educate the public on pet insurance plans and veterinary costs should help to shift these opinions. Additionally, some consumers cancel coverage because a claim was denied. Whether the claim was denied because it was an excluded veterinary service or considered a pre-existing condition, increasing transparency of covered veterinary services and efforts to enroll pets at a younger age will help avoid some cancellations. Overall, these efforts will increase consumer satisfaction and improve policy holder retention.
Partnering with competing payment options
There are plenty of other pet health financing options out there (pet credit cards, pet care savings plans) and differentiating pet insurance from those alternatives is paramount when converting new clients. Partnering with other payment options and explaining how they could work in tandem—e.g. using a specialty credit card to make costs not covered by insurance more affordable—presents opportunities for adding new policy holders.
Pet insurers should embrace the tech consumers use to submit claims and work with their policy. Further innovations of software and mobile apps to streamline pet insurance interactions will help retain clients going forward. Additionally, efforts to standardize pet health codes, currently lacking in the industry, will simplify claims processing, help insurance companies communicate coverage, and improve procedure pre-authorizations.
Covering exotic pets
Though participation is limited in the U.S., there are opportunities to expand the industry to exotic pets, as other countries with a pet insurance industry do. This leaves open an opportunity for other pet insurance companies to step in and help defray the costs associated with pets other than cats or dogs, particularly long-lived animals and/or those that are expensive to purchase (e.g. tropical birds, competition rabbits, certain reptiles).
View additional information about Pet Insurance in the U.S., 6th Edition here.