Why the Pet Insurance Industry is Booming

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pet insurance

As a pet owner, it’s always been important for me to have access to the best possible care for my small dog. A few years ago, I did a bit of casual research into insurance policies for my dog. I was not earning a lot of money, and I was worried about the possibility of an emergent situation that would cause me to scramble to find funding for treatment for my dog. 

I’m a millennial, born in 1985. My dog is my everything. My best friend, confidant, travel partner. It devastates me to even think of him being injured or sick.

But try as I might, I just didn’t have a great gut feeling about any of the pet insurance brochures I collected from vet offices or requested in the mail. 

The glossy brochures boasted about peace of mind and low cost, but when I started reading the fine print the shine seemed to wear off. “Too good to be true” became my feeling towards pet insurance companies, especially after going online to check out reviews and Better Business Bureau ratings. 

Fast forward to today, when it seems a new wellness focused insurance brand launches a new, millennial friendly, cost-effective product for pet owners.

Such is the state of the booming pet insurance industry, which reached an estimated $1 billion in revenue in 2017 and is forecasted to double that number in just three years, by 2020. 

Surely I’m not the only one who felt this skepticism towards insurance before — and truthfully may still, to a degree. But the numbers don’t lie. All over the world, particularly in the United States, pet owners are casting aside their doubts and snapping up a shiny new policy to protect their beloved best friends.

So what gives? What caused this big boom, this sudden wellness movement among pet owners? Let’s take a bit of a deeper look.

Millennials Love Their Pets

Love ‘em or hate ‘em, millennials have been the driving force behind much change in the marketing world. More technologically savvy than their Baby Boomer predecessors and driven by empathy and passion, millennials have embraced this new concept of “wellness” as it pertains to themselves and their pets.

Of the nearly 160 million estimated pets in the United States, millennials own about 35 percent of them, according to research by the 2017-2018 National Pet Owners Survey conducted by the American Pet Products Association (APPA)

Along with this spike in millennial pet ownership comes a more vested interest in the health and overall wellbeing of the pet. 

In the latest edition of the Pet Insurance in the United States study, trends are now showing increased expenditures in veterinary and pet insurance costs. This can be attributed to several factors, but a prominent one remains the close bond pet owners have with their companion animals. Now, health and wellness is just as important for pets as it is for the owner. 

And millennials believe in taking the utmost care for their animals to the point where they admit they’ll make financial trade-offs if it means their pet is taken care of. 

In fact, a 2016 IDEXX study shows that 61 percent of millennials are more willing to make these trade-offs in order to care for their pet, an increase from previous generations. I can attest to this as I recall the extra double shifts worked in order to pay for a vet bill or the money borrowed from a friend to cover a pet emergency. 

Pets are Living Their Best Life, Longer

Perhaps in part due to the increase in attention paid to general pet health, the life expectancy for companion animals has increased in recent years. 

As this life expectancy has increased, so has the lifetime cost of veterinary care for each pet. The aforementioned APPA study points to a total expenditure of over $18 billion on veterinary costs in 2018. This figure continues to rise each year. 

When combined with the heavier focus on pet wellness, more and more pet owners are turning to insurance products with the intent to cover any emergencies that arise as well as routine and preventative care at a lower up-front cost.

Pets have become closely integrated into our households and families, so it makes sense that now more than ever pet owners are heavily invested in keeping their animals in good health, for as long as possible. 

More Options Than a Candy Store

Consumers value their right to have a choice in what goods or services they hand over their hard earned money for. Because of this, the product offerings for pet insurance are highly competitive and marketable to health-conscious and discerning pet owners.

This plethora of insurance offerings can be overwhelming for even the shrewdest shopper, so pet insurance companies must be clear, engaging, and transparent when marketing their wares to pet owners.

And adding even more variety — or confusion, depending on your perspective — to the mix are wellness plans and discount plans, both of which offer different services and features than standard insurance. 

According to the APPA study, the pet insurance industry is projected to grow by about 14 percent per year. As this growth continues, pet owners can expect to see a wide variety of insurance, wellness, and discount plans. 

In addition, it’s become more crucial that these service providers are transparent and genuine in their business dealings and coverages. This is one area of pet insurance that has raised eyebrows from pet owners who have previously been burned by a company that wouldn’t pay out on benefits or overcharged for coverages.

With so many options available, it’s wise that pet owners take the time to do their research. If a coverage plan seems too good to be true — the cost is unseemingly low, the benefits seem far better than what the cost alludes to, etc. — it may be. 

Not every pet insurance company is created equal. Often, veterinary practices themselves will offer up their own recommendations for reputable pet insurance companies based on their dealings with the policies. 

Continued Growth and Growing Pains

Remember those financial trade-offs millennials are making in order to care for their pets? Pet insurance, which averages less than $50 per month (depending on variable factors, of course) is attempting to make those trade-offs less necessary.

Pet ownership is not expected to slow down or decline anytime soon, so pet owners and veterinarians alike can expect to see more products available for insurance coverage. 

With that being said, the industry will naturally go through more growing pains, just as it has done up to this point. Some of the continued barriers to entry, as the APPA study puts it, include a need for increased transparency and a higher level of efficiency within the industry.

At the end of 2016, just 1.8 million pets around the world were insured. This represents a small percentage of the overall number of companion animals, which means that the opportunity is there for the taking to increase the amount of insurance holders among pet owners.

The pet insurance industry is primed to maneuver into the enviable position of “can’t live without it”. Providers would be smart to continue to evolve and improve their products, align themselves with veterinarians, and market to an increasingly technologically savvy and wellness minded group of eager pet owners.

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