U.S. Pet Insurance Market Size, Share & Trends Analysis Report By Coverage Type (Accident & Illness, Accident Only), By Animal Type (Dogs, Cats), By Sales Channel (Agency, Broker), And Segment Forecasts, 2024 - 2030­

U.S. Pet Insurance Market Size & Trends

The U.S. pet insurance market size was estimated at USD 3.3 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 17.5% from 2024 to 2030. The expansion of this market is primarily driven by factors such as the rise in pet ownership, introduction of pet insurance in markets that are yet to be fully explored, escalating costs of veterinary care, strategic actions taken by leading companies, and the trend of treating pets like family members. In 2020, Trupanion, a key player in the market, announced that it had insured over 800,000 pets under its policies in major U.S. markets.

The COVID-19 pandemic posed numerous obstacles for the pet industry, affecting pet owners, veterinarians, veterinary clinics, and animal health firms. However, the industry quickly reacted to the crisis by implementing measures to maintain access to veterinary services and other necessities. The difficulties caused by this pandemic also heightened the understanding among pet owners about the importance of pet insurance to mitigate financial risks.

The surge in pet adoption can be attributed to three primary factors - shift to remote working, need for companionship, and increased time spent at home due to lockdown and travel restrictions. As a result, one in five pet owners expressed a greater likelihood of purchasing pet insurance. The pandemic further heightened the demand for risk mitigation among pet owners.

The market is primarily driven by the increasing occurrence of diseases in cats and dogs, coupled with a surge in pet adoption. In addition, the desire for pet insurance is growing as it helps to offset the out-of-pocket costs associated with severe health conditions like accidents and cancer, which is expected to further stimulate market expansion. The demand for veterinary healthcare services is also rising, contributing to the growing need for pet insurance. Veterinary services, which often require specialized veterinarians, trained technicians, and custom diagnostic equipment, can be costly. This can elevate the treatment expenses for pet owners, thereby escalating the demand for appropriate pet insurance policies.

According to the North American Pet Health Insurance Association (NAPHIA), approximately 3.45 million pets were insured in North America in 2020, a significant increase from the 2.81 million pets insured in 2019. This rise was largely attributed to the stay-at-home and work-from-home mandates during the COVID-19 pandemic. The market is expected to become more competitive with the entry of new players and the launch of innovative insurance products. The market is projected to mature over time with increased competition and the volume of claims being processed.

Market Characteristics & Concentration

The pet insurance sector is highly diversified and competitive. Various strategic actions such as introduction of new policies, partnerships and collaborations, mergers, and acquisitions, and regional expansions are being undertaken by market participants to secure a larger market share. The competition in pet market is predicted to escalate with the entry of larger corporations.

Market can witness high degree of innovation.Traditional insurance companies are improving their offerings by incorporating wellness programs and tailoring plans to individual needs, while new companies are using digital platforms to improve customer experiences. Partnerships with veterinary networks are enhancing the reach of services. The market is intensely competitive, with growth and transformation being driven by strategic actions such as launching new policies, forming partnerships, and undertaking mergers and acquisitions. These developments are positioning pet insurance as an essential aspect of conscientious pet ownership.

The market is characterized by a high level of mergers and acquisitions. In November 2021, AXIS Insurance, a specialty insurance business segment of AXIS Capital Holdings Limited, made its entry into the market by collaborating with Managing General Underwriter Petplan. This strategic partnership, facilitated through its Accident and Health unit, supported the company’s growth objectives.

The National Association of Insurance Commissioners (NAIC) is formulating regulations for the U.S. pet insurance industry through a model law. This law aims to set transparent rules for pet insurance sales and ensure pet owners are well-informed. For these regulations to be effective, individual states must adopt this model law. A significant aspect of these regulations is the licensing requirements for pet insurance sellers. The Pet Insurance Model Act addresses several issues, including consumer disclosures, wellness program sales practices, and insurance seller training. Insurers are required to comply with disclosure requirements, limit waiting periods, and clearly distinguish between wellness programs and insurance policies.

Regional expansion is a competitive arena involving both domestic and international companies. Each is employing different strategies to capture a larger portion of the market. Notably, Nationwide Pet Insurance and Anicom Holdings have emerged as significant players, holding substantial shares in the market, expanding from U.S. to other major countries.

Coverage Type Insights

Accident & illness dominated the market for U.S. Pet Insurance and accounted for the largest revenue share of 86.2% in 2023. It is also estimated to witness the fastest CAGR during the forecast period. The growth in this sector is primarily driven by high costs of veterinary treatments and diagnostics, an expanding population of companion animals, and heightened awareness about the benefits of pet insurance. Pet insurance companies predominantly offer accident and illness policies, which cover a wide range of conditions including both acute and chronic illnesses, medications, diagnostic tests, among others. With these policies offering extensive coverage to pet owners, it is anticipated that this segment will grow at the fastest rate in the coming years.

Accidents are expected to witness a lucrative growth during the forecast period. Key drivers of the segment include rise in incidence of accidents in animals and high veterinary health care costs. Older animals with preexisting conditions can be covered with an accident-only policy. These policies are cost effective and less comprehensive when compared with other types of pet insurance. Insurance providers are focused on increasing market penetration by targeting the customer base through various sales channels, such as banks, agencies, and brokers.

Sales Channel Insights

Direct pet insurance channel dominated this market and held the largest revenue share of over 34.9% in 2023. This distribution channel is the simplest and easiest method of buying pet insurance. The ease of obtaining insurance is a major driver for this segment. In addition, the cost of insurance is lower when compared with other distribution channels due to the absence of agents and brokers. The digital and direct channels have higher transparency compared with others, which increases consumer trust. The high reliance on direct sales strategies by leading pet insurance companies is the reason behind this. For instance, Deutsche Familienversicherung AG revealed that in 2020, 87.3% of their new business was generated through direct sales. They also witnessed a 21.4% rise in online sales compared to 2019.

The others segment comprising animal care centers, vet clinics, and more are anticipated to register the fastest growth of over 18.5% from 2024 to 2030. The rise in the number of companies engaging veterinary care providers and pet stores to connect with consumers or pet owners is anticipated to fuel the market growth.

Animal Type Insights

Dogs dominated this market and accounted for the largest revenue share of 78.8% in 2023. The primary factor propelling this segment’s growth is global rise in dog ownership. After the outbreak of COVID-19 pandemic, having pets at home become a major trend. In addition, the growing emphasis on pet health and the high costs of veterinary healthcare are anticipated to further boost the market’s growth. Major diseases and disorders reported in dogs include rabies, parvovirus, kennel cough, heartworm, diabetes, and cancer.

The others segment comprising horses, small mammals, etc., is expected to grow at the fastest CAGR of over 19.2% during the forecast period. The key driver of this segment is increase in companion animal population. Furthermore, the growing pet adoption, expansion of service offerings by insurance companies, and growing disposable income in key markets. Moreover, according to Equine Heritage Institute, population of horses in the U.S. was highest in the world.

Key U.S. Pet Insurance Company Insights

Companies in the U.S. pet insurance market is focusing on different aspects of pet illness and accidents coverage. The market is projected to mature with increased competition and claims processing volume. In addition, to established companies, new startups and insurtechs are entering the market to offer innovative pet insurance schemes. The pandemic also increased the demand for pet insurance due to heightened risk protection awareness among pet parents.

The market is witnessing significant activity including strategic initiatives such as new policy launches, partnerships, mergers, acquisitions, and regional expansions to gain a larger market share.  For example, Chewy, Inc., an online pet store, collaborated with Trupanion, Inc. in December 2021. They offered a variety of pet health insurance and wellness plans to more than 20 million Chewy customers. This partnership expanded the access of pet owners to affordable and high-quality healthcare services for their pets.

Recent Developments

• In January 2024, Nationwide Pet Insurance and Petco Health and Wellness Company, Inc. have introduced a new pet health insurance product that can be tailored to individual needs on petco.com. The goal of this collaboration is to offer cost-effective and comprehensive solutions for pet health, wellness, and protection.

• In February 2023, Embrace Pet Insurance revealed a renewed brand image, which mirrors the firm’s dedication to promoting pet health and enhancing the experience of pet owners. The company states that Embrace’s updated appearance is rooted in genuineness and motivated by the aspiration to articulate reinforced principles that align more intimately with the brand.

• In November 2021, AXIS Insurance, a specialized insurance division of AXIS Capital Holdings Ltd., has declared its entry into the pet insurance sector through its Accident and Health unit, in a strategic partnership with the managing general underwriter, Petplan. AXIS Insurance will offer underwriting capabilities for all-inclusive pet insurance policies for dogs and cats in the U.S. and Canada.

• In June 2020, Trupanion entered a partnership with Vetter Software, a firm that offers technology solutions for pet healthcare. This collaboration involved integrating Vetter Software’s cloud-based veterinary practice management platform with Trupanion’s software, which facilitates direct payment to the vet at the time of check-out.

U.S. Pet Insurance Market Report Scope

U.S. Pet Insurance Market Report Segmentation

This report forecasts revenue growth in the U.S. market and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the U.S. pet insurance market report based on coverage type, animal type, and sales channel:

• Coverage Type Outlook (Revenue, USD Billion, 2018 - 2030_­)

  • Accident & Illness

  • Accident only

  • Others

• Animal Type Outlook (Revenue, USD Billion, 2018 - 2030­)

  • Dogs

  • Cats

  • Others

• Sales Channel Outlook (Revenue, USD Billion, 2018 - 2030­)

  • Agency

  • Broker

  • Direct

  • Bancassurance

  • Others