Pet insurance policies, which are not available in the United States, may be more common now that a group of state insurance officials has approved a model law on the matter.
The National Association of Insurance Commissioners (NAIC), which has 56 voting members representing 50 states, the District of Columbia and five US territories, on Saturday gave almost both thumbs-up model Pet Insurance Act. Representative of New York, where a variety of Pet insurance orders are pendinghe refused.
A model is a guide, with no control power. Acceptance by a given member of the NAIC means that the member “shall endeavor to have the model law incorporated into its state law,” unless their state has an existing law that meets or exceeds the standard set by the model, according to the agreement.
California was the first in the nation to enact pet insurance laws. That law, which began operating in 2015, focuses on meaningful disclosures for consumers. This year, Maine became the second state to introduce pet insurance laws, following the NAIC’s precedent.
Less than 3% of dog and cat owners in the United States and Canada have pet insurance, but sales have been rising steadily for a decade. As more pet owners buy the treatment, complaints will follow. It also includes frustration over rising premiums, disputes over pre-existing conditions (which most policies don’t cover), and long waits for loan repayments.
The Pet Insurance Act requires various disclosures to potential buyers, including how they make premiums, and prohibits certain practices. In short, it:
- gives consumers the right to a refund within 15 days of purchase if they are not satisfied;
- allows insurers to exclude coverage for pre-existing conditions, placing the onus on insurers to prove that the condition was pre-existing;
- prevents waiting time to find an accident;
- allows, in the new policies, a waiting period of up to 30 days for diseases or bones not caused by an accident, and requires that the waiting period be eliminated if the animal is under the supervision of a veterinarian;
- prohibits the requirement that an animal be examined by a veterinarian prior to the initiation of a procedure;
- prohibits requiring a consumer to participate in a health program, other than insurance, before being allowed to purchase insurance;
- prohibits the advertising and marketing of health programs during the sale, solicitation or negotiation of insurance; and
- require insurance brokers (known as “producers”) to be properly licensed and trained.
The model took the NAIC working group three years to complete in 25 meetings held with representatives of animal insurance companies, consumer interest groups and the American Veterinary Medical Association, among others.
In order to pursue a more consistent approach with insurance regulators across the country, the trade group North American Pet Health Insurance Association (NAPHIA) was eager to see a model, although it pushed back against some measures recommended by regulators, including limits on waiting times.
In the end, NAPHIA Executive Director Kristen Lynch said the group was “very pleased” that the model was adopted. “We look forward to working with state regulators and lawmakers to implement the model…” he said in a written statement.
Consumer advocate Birny Birnbaum, director of the Center for Economic Justice in Austin and a former Texas insurance executive, also praised the model law, although he didn’t like all of its contents.
“Although it is not as strong as we would like … the model, if adopted by the states, will change the protection of insurance consumers,” Birnbaum told VIN News Service.
As an example of the give and take that occurred, Birnbaum and a colleague from the Center for Insurance Research wanted to eliminate the waiting period for coverage, while NAPHIA was forced to maintain waiting periods that, in some cases, reached 180 days.
Consumer advocates submitted comments to the NAIC task force in 2021: “These companies say the waiting period will eliminate fraud and bad choices, but this is something that has never been done before. …
“Consumers who purchase pet insurance will expect to receive insurance that begins when they pay for the insurance and sign the policy agreement. However, according to the NAPHIA policy, consumers[s] may purchase policies that do not provide coverage until a later date, even though the insurer has already taken their first dollar.”
In the end, the drafters decided to allow a waiting period in some cases but not more than 30 days.
Which is not included
Some veterinarians with expertise in animal insurance said they did not know how the model was developed and, after learning of its expiration, regretted not knowing how to send feedback before the model was finalized.
Dr. Frances Wilkerson, a Chicago veterinarian who in 2009 started a consumer education website called Pet Insurance Universityhe said after reviewing the model, “There are some things that I appreciate are there, but there are things that I wish were included.”
For example, he said he would like to see a requirement for insurance companies to “clearly disclose what types of physical conditions, illnesses and injuries are covered by their coverage.”
These two conditions can occur anywhere in the body, such as an ear infection or a cruciate ligament injury. Some laws do not include transmission if the animal causes a problem on one side of the body that it experienced on the other side, assuming that the development represents an improvement on what already exists.
Wilkerson also worries that the existing definition of culture is too loose. The model is defined as a condition in which the veterinarian provides medical advice, the animal has received previous treatment, or, “based on information from official sources, the animal has signs or symptoms related to the condition it is intended for.”
That last measure makes him uncomfortable. “This is a term that has been used in many laws in the past, and it has led to people being turned away because of medical conditions that even a veterinarian would find inconsistent,” he said. For example, a dog may be seen at one time as having a deformity that may later be interpreted by the insurance company as a sign of a bone problem, when the dog was a temporary injury.
However, Wilkerson said he was happy to see that the model states that “Pet insurance companies have a problem proving that pre-existing condition exclusions are consistent with their intended use.”
Despite the lack of state pet insurance laws to date, Wilkerson said he believes insurance has improved over the years. They appreciate pet owners. “I think consumers are very savvy,” he said. “… [They] it has made the industry better. “
Dr. Kent Kruse, a retired Wisconsin Veterinarian who worked for many years as an executive for several pet insurers, said he would have liked to have had a say in creating the model law. He wasn’t comfortable that the pet insurance lobby had such a strong influence on the industry, since the main job of insurance adjusters is to protect consumers.
After learning that the AVMA and consumer advocates were involved in the planning process, Kruse agreed that the proposed model law seemed appropriate and appropriate. “What worries me now is what no included in the model laws, “he said. The need that worries him is that veterinarians, who usually do not have a license to sell insurance, can recommend pet insurance, including specific types or policies.
Kruse, who is known as the “pet insurance protagonist,” has been advising veterinarians to help pet owners evaluate policies to find one that takes care of their pet’s needs. “Veterinarians are the most qualified to give that advice because they know how the different systems work,” he said.
The NAIC’s pet insurance task force initially considered certification but later referred it to the different working groups, which is now in the process of reviewing the matter. His decision is based on the recommendation that pet insurance be seen as “thin lines”, such as travel insurance or car rental insurance, which have requirements to authorize dealers; admitting that it requires a general lines license, which is very relevant because it allows the licensee to sell all major lines of insurance, such as life insurance, accident insurance, property insurance and so on.
How much veterinarians should be involved in selling pet insurance is a controversial question in the industry. Others, like Kruse, say that insurance owners are better able to access care, which saves lives and improves veterinarians’ finances. Others want nothing to do with promoting third-party products.
Kruse believes that veterinarians who do their homework on insurance policies are more likely to provide more educated and unbiased buying advice than those in the insurance industry. “Which licensed insurers are required to provide advice?” he said. “The only ones I know get commissions because they work for pet insurance carriers.”