Development of regulatory standards for pet health insurance

The National Association of Insurance Commissioners’ Pet Insurance Working Group is working on a model law on pet health insurance. The new model law is likely to have an impact on the pet insurance industry, depending on whether or not states adopt the model law and how, and may also change the way veterinarians discuss insurance for individuals. pets with their clients. The NAIC Working Group is currently developing the draft template and likely won’t release the final version to the public until the end of this year.

Ray Farmer, president of the NAIC and director of the South Carolina Department of Insurance, said the pet insurance industry is an emerging industry. A white paper (PDF) published in 2019 by the NAIC triggered the formation of the task force and the drafting of a model law to address regulatory issues.

“The purpose of the Model Law is to establish clear rules for the sale of pet insurance and to provide important information to pet owners who purchase this product,” Farmer said. “States should adopt the Model Law for this regulatory framework to apply to industry in their State.”

States do not have to adopt the Model Law and, even if they do, may decide to adopt only parts of the Model Law in their national statutes.

Land layout

The pet insurance industry currently includes about 20 companies in the United States and Canada, according to the North American Pet Health Insurance Association’s 2020 State of the Industry Report. The report, compiled by actuarial consultants from Willis Towers Watson, provides information on key industry metrics. For example, nearly 2.82 million dogs and cats were insured at the end of 2019 in the United States and Canada, an increase of about 19% from the previous year. In the United States, more than 2 million dogs and approximately 419,000 cats were insured in 2019, which represents about 1.7% of dogs and cats owned in the United States, according to NAPHIA.

Currently, the regulation of pet health insurance varies widely from state to state. For example, in California, a law passed in 2015 requires that policies contain clear language about coverage limits, waiting periods, deductibles and lifetime limits.

Rick Faucher, president of NAPHIA, said there were similarities between state-to-state laws at this time, but no uniformity. The model law could change that. However, Faucher said he did not anticipate it would have a significant impact on the day-to-day activities of vets.

“There will be no global change for vets,” he said. “But I think there will be better access to pet insurance. What can happen is (a change in) how far vets can recommend pet insurance without being a licensed pet insurance agent. “

Pet insurance is a growing market with continued potential to increase spending specifically on veterinary services. A survey of dog owners, conducted by individuals from AVMA and other institutions and published in the journal Animals in 2020, found that the presence of pet insurance had a positive association with spending. to the vet.

Also a study published in December 2020 by Crum and Forster Pet Insurance Group, home of the ASPCA pet health insurance program, shows that gross revenues increased and customers were more satisfied with their experience when they had pet insurance of company.

Dr Wendy Hauser, associate vice president of veterinary relations at the insurance company, said: “Overall, the benefits obtained by hospitals that have adopted a proactive education conversation about pet insurance from company with customers are strongly positive. ”

Involvement of AVMA

The AVMA has been closely associated with the working group and the group’s drafting of the model law by, for example, suggesting a definition of ‘pre-existing condition’ and participating in discussions on whether a member of the The veterinary team should be formed by an insurance company to discuss products with customers.

Isham R. Jones III, General Counsel for AVMA, said the Association is closely monitoring and deeply involved in the task force process.

“The AVMA recognizes the importance of pet health insurance and the role of veterinarians and clinical staff in providing valuable information to clients about this resource,” according to an AVMA public comment at Pet Insurance Task Force. “For these reasons, the AVMA wants to ensure that veterinary teams can continue to discuss the availability of pet insurance with their clients while minimizing any regulatory impact that could chill these discussions. Any obstacle to discussing pet insurance with our clients would likely have an overall negative impact on animal health care. “

The working group is still drafting the model law, and discussions on how the law might change the way insurance can be discussed in a veterinary clinic were underway at the time of going to press in late December. .

“We don’t know what it will look like,” Jones said.

Look ahead

One of the goals of the working group is to actually determine what members of the veterinary team are allowed to discuss with pet owners regarding pet insurance without being allowed to sell pet insurance. ‘insurance.

“People often hear about pet insurance from their vet,” said Faucher. “Usually they don’t recommend specific companies, but there may be opportunities to have better, engaging conversations. Thus, the Model Law attempts to standardize the approach of offering pet insurance and what is permitted without an insurance license. How can a veterinary practice engage pet owners about insurance, and how far can it go? “

Faucher said, further, that he hopes the model law will increase the number of pet owners who have pet health insurance, in the hope that this will also reduce economic euthanasia.

“It’s first and foremost in our minds,” he said. “No one wants to have these price-based negotiations for treatment and care. We are starting to trade our pet’s health over budget. Insurance wants to solve this problem for the consumer so that we can improve the quality of life and the conditions of our pets. We want to eliminate the economic burden of decisions about care.

“We’re aligned with vets because of this aligned goal: we want to do what’s best for the pet owner and the patients. There is a guiding purpose here, and that is to do good. “

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