California Pet Insurance Consumer Protection Bill Signed by Brown

Under Assembly Bill 2056, pet insurers will be required to disclose policy information such as reimbursement benefits and pre-existing condition limitations.

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California Gov. Jerry Brown on Tuesday signed a law to require pet insurers to disclose more information about their policies, to standardize definitions and provide consumers with a “free look” period.

Assembly Bill 2056 is the first law of its kind in regard to pet insurance in the nation, according to the state’s insurance department. The popular bill was supported by many players in the pet insurance industry as well as Insurance Commissioner Dave Jones and the Pet Industry Joint Advisory Council.

AB 2056, which goes into effect July 1, 2015, was authored by Matt Dababneh, D-Encino. It garnered unanimous support in both the Assembly and state Senate.

Under the law, pet insurers will be required to disclose policy information such as reimbursement benefits and pre-existing condition limitations, and offer a clear explanation of limitations of coverage, such as co-insurance, waiting periods, deductibles and annual or lifetime policy limits.

The law also gives consumers a 30-day “free look” period during which a pet insurance policy can be returned for a full refund.

One of the carriers that supported the bill was Brea, Calif.-based Veterinary Pet Insurance Co., which evidently had no trouble with the changes called for in the law, including the month-long consideration period for pet owners

“The 30-day free look exposes pet insurance to more people, so they’ll take that 30 days to give pet insurance a free try,” said VPI spokesman Adam Fell.

Fell said the insurer likes the fact the law creates a level playing field in the increasingly large pet insurance industry.

“It’s important to bring uniformity to policy language and disclosures,” Fell said. “There are so many companies in the market it’s important that everybody’s playing the same rules.”

VPI is already in the process of changing policy language and taking other steps to be ready when the new law takes effect, Fell said.

“We’re moving full steam ahead and we’re excited to adopt these new changes,” he said. “We’ve always been very transparent so this is going to be a continuance with the way we deal with our policyholders.”

Jones, who is known for supporting consumer-friendly bills on insurance, stated: “In the state with the largest number of insured pets, once again California is leading the way by becoming the first state in the nation to enact a law that adds consumer protections to this rapidly growing line of insurance.”  

The state’s insurance department has asserted the bill will address the majority of complaints it receives regarding pet insurance. 

According to the California Department of Insurance, there are more than 200,000 insured pets in the state. CDI reports receiving nearly 100 complaints annually regarding pet insurance coverage, the majority of which after investigation result in findings for the consumer. 

One of the most common issues pet insurance consumers face is coverage of pre-existing conditions, CDI stated. Pet owners often purchase policies either not knowing that pre-existing conditions are not covered or the policy language is unclear as to what constitutes a pre-existing condition, leading to coverage denials, according to CDI.

VPI’s Fell said that having the comfort of a new law to protect them, more pet owners in California may consider becoming policyholders.

“This may bring us more customers because it will help policyholders understand pet insurance a little better,” he said.

More than 1 million U.S. pets were insured under $500 million in insurance premiums written in 2013, a year in which the pet insurance market grew more than 14 percent, according to the North American Pet Health Insurance Association.

The total number of insured pets has risen steadily over the last few years, numbers from NAPHIA show: 14.3 percent in 2013; 7.2 percent in 2012; 6.0 percent in 2011; 8.9 percent in 2010.

That translates into big business considering the group reported an average annual premium of $441.11 for a typical accident and illness policy.

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