Association of insurance commissioners passes Pet Insurance Model Act

The National Association of Insurance Commissioners announced Aug. 13 that its members have passed a Pet Insurance Model Act to establish regulatory guidance for states regarding pet health insurance.

The AVMA provided input during the drafting process for the model state law.

In 2021, the pet health insurance industry provided insurance to about 4 million pets in the United States, up from 3.1 million pets in 2020, according to the North American Pet Health Insurance Association. The U.S. industry had premiums of about $2.5 billion in 2021, up from $2 billion in 2020.

Veterinarian auscultating a puppy

“This model law establishes clear rules for the sale of pet insurance and provides important disclosures to pet owners interested in purchasing this product,” said Beth Dwyer, superintendent of insurance for the Rhode Island Department of Business Regulation, in the Aug. 13 NAIC announcement. “Now, it is up to the states to see if they would like to adopt or modify the model law for this regulatory framework to be in effect.”

Key elements of the model include the following:

  • Codifying several consumer protections in areas such as policy renewals, required disclosures of waiting periods, policy limits, conditions, and benefit schedules.
  • Limiting how insurers can deny pet insurance claims related to preexisting conditions of covered pets.
  • Requiring insurers and sellers of insurance to clearly differentiate noninsurance pet wellness programs from insurance policies.
  • Codifying training for sellers of insurance to ensure they are appropriately prepared to present information to consumers, including veterinary-specific topics such as preexisting conditions, hereditary disorders, congenital anomalies or disorders, chronic conditions, and how pet insurance policies interact with those conditions or disorders.

The AVMA policy “Pet Health Insurance” states: “The AVMA endorses the concept of pet health insurance that provides coverage to help defray the cost of veterinary medical care and encourages veterinary healthcare teams to proactively educate their clients about the existence of such resources. The AVMA recognizes that viable pet health insurance programs may be an important approach for the veterinary profession to continue to provide high quality veterinary services.”

The policy lists nine bullet points outlining what the AVMA believes that pet health insurance should do. These include being clear about policy limits, pricing structures, and optional coverage, such as coverage for annual wellness visits; being transparent about how the terms and conditions of plans will impact coverage and costs; and communicating clearly about the fee reimbursement process.