The Pet Industry Agrees: More Pet Insurance Regulation in California Is a Good Thing

Dababneh Assembly Bill 2056 is the answer to the California insurance commissioner’s call for more pet insurance regulation.

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Update: Dababneh Assembly Bill 2056, as of August 20, 2014, has passed both the California Senate and Assembly.

Originally published in the August 2014 issue of Veterinary Practice News.

California’s insurance regulator and a state lawmaker want to step up oversight of the pet insurance industry—and the majority of the pet insurance industry is behind them.

California Insurance Commissioner Dave Jones and Assemblyman Matt Dababneh, D-Encino, are rapidly pushing through the legislature Dababneh’s Assembly Bill 2056, which the men say will add consumer protections to pet insurance by bringing uniformity to policy language and disclosures to increase transparency in pet insurance policies.

“California has the largest number of insured dogs and cats in the nation,” Jones said. “It is essential that consumers purchasing pet insurance understand what they’re getting for their money. When policy terms are more easily understood, consumers are better able to select a product that meets their needs.”

Jones said the bill would provide important consumer protections now absent from pet insurance.

For the most part the pet insurance industry is supporting the bill, after working with lawmakers to improve problematic language.

“As originally written, the bill would not allow pet insurers to set affordable rates or even provide coverage if a consumer could wait until a medical problem for their pet developed before they acquired a policy,” said Jack L. Stephens, DVM, founder and president of Pets Best of Boise, Idaho.

“That would be the same as waiting until you had a wreck to buy auto insurance.” But he said he’s happy with the revised bill.

The North American Pet Health Insurance Association pulled members together to additionally fund and propose legislative language that would have a favorable impact for pet owners, said Stephens, the group’s founder.

NAPHIA supports the bill’s current version.

Curtis Steinhoff, director of corporate communications for Veterinary Pet Insurance of Brea, Calif., said the company supports the bill.

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“VPI worked closely with the author of the bill, legislators and the California Department of Insurance to help create the final version of the bill that would be favorable to the industry as well as to consumers,” Steinhoff noted.

Insurer Trupanion of Seattle also offered its backing after the bill was amended, as the company noted in a prepared statement.

“Trupanion supports this bill in its amended form. We also appreciate the California insurance commissioner’s efforts to increase transparency in the pet medical insurance industry and willingness to work with NAPHIA. The legislation will achieve the commissioner’s goal of enhanced disclosures to improve consumers’ understanding of their coverage, while working with the industry to ensure the long term viability and continued availability of pet health insurance in California.”

According to the California Department of Insurance, there are more than 200,000 insured pets in the state. CDI reports receiving about 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 pre-existing conditions. 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 that surprise consumers.

AB 2056 would require pet insurers to standardize definitions and disclose important information regarding their policies such as reimbursement benefits and pre-existing condition limitations.

Policies would be required to contain clear explanations of limitations of coverage, including coinsurance, waiting periods, deductibles and annual or lifetime policy limits. The also bill adds a 30-day “free-look period,” during which consumers could return their policy for a full refund, as well as stronger enforcement provisions in case of a violation of any policy provisions.

AB 2056 passed the Assembly on a unanimous vote and is making its way through the Senate without opposition so far.

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