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[UPDATE] Pet insurance industry continues to bloom, expected to reach $12 million by 2027

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The global pet insurance market is expected to reach $12 million by 2027 as the increase in pet adoptions and awareness about pet care and treatment propel the market’s growth. 

According to the American Pet Products Association (APPA), 151.1 million — or 70% of households in the country — own a pet and will spend an estimated $32.3 billion on vet care and products in 2021. But this isn’t a new trend — consumer spending on pet medical care has been steadily rising since 2001 (increasing by 23.4% annually over the past five years). Here are a few reasons why the pet insurance industry is gaining so much traction.

Millennials are willing to spend more on their pets

Millennials are treating their pets like “their firstborn child”  and are going as far as devoting a growing share of their disposable income to them. Because of this approach, many pet owners have indicated that they are more willing to engage in more complex financial planning for their furry children, and are willing to splurge when they need to. A survey conducted by Lending Tree reported that some pet owners have even stated that they have gone into debt for their pets with one in 10 participants still paying that debt off. Read about what cities are best for animal lovers and pet owners in our recent research report here.

The pandemic’s impact on the human-animal bond

Due to stay-at-home orders, many Americans adopted pets for companionship during lockdowns. A survey conducted by TD Ameritrade found that a third of Americans have considered fostering or adopting pets, with the rate being the highest among millennials (50%)

According to the CEO of Pawlicy Advisor, the nature of crisis also played a role in the recent spike of pet insurance policies as pet owners started “thinking about their own health, [which] has led people to be interested” in their pet’s health too. 

In a survey of dog owners conducted by Rover, 33% of millennials reported that they’ve spent more than usual on their dogs during the pandemic. The report also stated that the cost of owning a dog can range from $650 to $2,295 annually, but nearly half of those surveyed responded that they actually spend up to $3,400 on their pets each year. As a result of pet owners investing more into their furry companions, animals are also living longer. As lifespans of pets increase, consumers could start to look to their insurance carriers to help manage preventive and long-term pet healthcare.

Animals are living longer

Due to the growing education about pet health as well as pet owners investing in better food for their furry friends, pets are living longer. But with the longer lifespans come rampant chronic conditions such as diabetes and cancer, just like humans. Because of this, pet owners look to pet insurance to cover preventative care, in addition to getting coverage options like acute and chronic illness and emergency medical care costs.

According to the North American Pet Health Insurance Association (NAPHIA), consumers prefer to get “comprehensive” insurance plans for their pets: 98% of pet policyholders in the U.S. get Accident and Illness plans or Embedded Wellness plans.

Carriers continue to expand into the market

Currently, regulations of pet health insurance vary on a state-by-state basis, but P&C carriers are flocking into the pet insurance space; gross written premiums in the market reached $1.56 billion in 2019  according to the North American Pet Health Insurance Association. Here are few recent moves carriers have made to expand into the pet insurance industry:

As more traditional carriers and up-and-coming insurtechs look into how they can contribute to the rapidly growing pet insurance industry, it won’t be long before the market will start to apply concepts like UBI and AI to determine quotes based on attributes like breed and age, conduct routine check-ups and suggest exercise plans to maintain pet health. Some companies have already started implementing pet tracking and telematics into their pet insurance policies, paralleling traditional carriers’ advancements in the world of P&C insurance.

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Jasmine KimB2B Content Manager

Jasmine is The Zebra’s newsroom content writer. With a background in journalism, she reports on breaking news, trends, mergers and acquisitions, and financial reports related to the insurance industry.