January 28, 2022

COVID-19 Brings a Spike in Pet Insurance

Throughout the pandemic in both the U.S. and abroad, shelters, nonprofit rescues, private breeders and pet stores have reported higher demand for pet ownership than the number of pets to fill it. Not surprisingly, new pet ownership also brought higher veterinary costs and sales of other pet goods and services. One such service: pet insurance. In the U.S., according to a 2021 report from the North American Pet Health Insurance Association (NAPHIA), 3,101,956 pets were insured in 2020, 23.2% higher than in 2019, leading the pet insurance industry to surpass $2.17 billion in premiums paid. In Canada, pet insurers reportedly sold $244.6 million in premiums, a 17.2% increase since 2019. A London-based pet insurance provider increased its cat and dog policy sales by more than 150% over the last year.

The increased number of insured pets may be attributed to the growing number of new pet owners, the strengthened bond between existing pets and their owners while working from home or the rise of mental distress reported in pets during the pandemic. Unfortunately, the dramatic shift in pets’ schedules during stay-at-home orders caused many of these animals to experience stress, typically manifested in attention-seeking conduct, such as constant barking or unwelcomed bathroom behavior. Pet insurance plans covering the veterinary costs associated with diagnosing behavioral problems in pets was as an attractive solution to pandemic-related mental health concerns.

The rise in pet ownership and pet insurance sales affects yet another variable, too: employment decisions. While pet insurance sales soared this past year, employee retention rates plummeted, and the two rates may be more related than we think. According to research from the National Association of Insurance Commissioners (NAIC), the fastest growing form of pet insurance distribution is through employee benefit packages. In fact, a Nationwide Human-Animal Bond Research Study found that out of 2002 full-time employees, 72% of employees who have pet insurance through employee benefits would turn down a similar job with comparable pay at another, non-pet-friendly company, while only 44% of employees in non-pet-friendly companies reported the same. The study also found that 88% of employees who work in pet-friendly spaces recommend their employer to others compared to only 51% of employees in jobs where pets are not welcome.

Studies show that millennials prioritize their pets more than any other demographic. A Health Pocket poll reports 62% of millennials say they would put their pets’ health before their own. In terms of retaining an existing employee base as well as attracting new, young talent, employers may start to off-fur pet insurance benefits to boost employee retention and application rates, appealing to the growing number of pet owners in the workforce.

The growth in the pet insurance market sparked by the pandemic is projected to continue well after the stay-at-home orders and pet owners, pet insurers, employees and employers alike will start to position themselves according to this mewvement.

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