Pet insurance gross written premiums grew more than 20% in 2023
The sector’s gross written premiums have been growing by 20%-30% annually since 2020.
The North American pet insurance market saw gross written premiums increase 21.9% in 2023 to reach a record $4.27 billion, according to the North American Pet Health Insurance Association.
More than 6.25 million pets across North America were insured this past year, the association reported.
In the U.S., gross written premiums increased 21.6% in 2023. This follows premium growth of 24.2% in 2022, 30.4% in 2021 and 27.5% in 2020. The Canadian market has witnessed similar growth in recent years and 2023’s gross written premiums increased nearly 30%.
A sharp increase in pet adoption during the pandemic, the evolution of the pet and human relationships and increasing veterinary costs are among the factors driving premium growth, according to Kristen Lynch, executive director at North American Pet Health Insurance Association.
Lynch tells PropertyCasualty360 that the pet insurance market has undergone a seismic shift compared with 10-12 years ago when most people were surprised and at times amused to learn there was insurance coverage for dogs and cats.
“Now people have very technical questions,” she says of the transition.
As the bond between people and their pets has become much stronger, the value proposition presented by pet insurance is much easier to grasp, Lynch explains.
“They say that our relationships with pets have in one generation gone from the barnyard to the backyard to the bedroom,” she says, adding: “If you go through a few serious medical conditions and have high veterinary costs, you’re going to have a different view of the value for veterinary care and the cost of protecting yourself financially.”
‘Cat conundrum’
In recent years, the household penetration rate for pet coverage has been growing alongside premiums and currently stands at 3.69% in the U.S. This is up from around 1% when the association started tracking the data.
A vast majority of U.S. pet policies — north of 78% — cover dogs, which had an average annual premium of $675.61 for accident & illness coverage in 2023. The average annual premium for cats was $383.30.
Lynch calls the discrepancy between the number of covered dogs and felines the “cat conundrum,” and there are several theories as to what causes it.
One is that cats tend to be less medicalized because most hate to leave the house, so taking them to the vet occurs less often.
Additionally, most cats are indoor pets and their owners believe this makes it unlikely they’ll be injured in an accident, which is what most people think is what drives vet visits. However, pets are more prone to experiencing serious illnesses rather than being involved in accidents, Lynch points out.
Another misconception driving lower adoption among cat owners is the fact that felines are smaller than most dog breeds, which results in owners falsely believing the vet bills will be manageably low.
Looking at data from 2023, the highest pet insurance claim was filed on behalf of a domestic shorthair cat with an intervertebral disorder. The five-year-old feline’s claim cost $59,470. For comparison, the highest dog-related pet insurance claim cost $51,133 to cover a golden retriever battling lymphoma.
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