U.S. regulator inch towards new pet-insurance rules

U.S. insurance regulators are creating a legal standard for pet insurance that would address long-standing consumer complaints which will state that insurers rarely pay up when their furry friends are not well.

The National Association of Insurance Commissioners (NAIC) committee is scheduled to meet on Friday to discuss fine-print provisions about several controversial issues such as determining whether a pet’s condition is “pre-existing” and how long customers must wait after buying coverage to file claims.

This is an important development at a time when the pet insurance market is poised to grow. The pandemic had led many Americans to adopt or purchase pets for companionship during the lockdowns.

Less than 3% of U.S. pets are insured, compared to 20% in some European markets. Research firms such as IBISWorld expect pet-insurance earnings to swell from $1.6 billion last year to $2.4 billion in 2025.

Policy rates are typically based on animals’ ages and care levels. Pricier policies tend to have broader protections.

Customers who buy insurance, however, find that claims are rejected, face unexpected restrictions, or companies take aggressive stances about what should be covered.

At the Beginning of 2014, California adopted consumer-protection laws about pet insurance and has since reinforced the rules, which is now being used as a mould by NAIC.

Consumer advocates say that NAIC’s move is especially important as new entrants have flooded into the United States, hoping to get a piece of the growing pet-insurance pie.

NAIC began working on the idea in 2016, and there is no guarantee states will embrace its proposal quickly, or at all. And insurers may fight claims even with tougher rules.