Good news has been scarce lately when it comes to the costs of medical care for dogs and cats. But now there are signs that pet insurance premiums are trending down. This could change the calculations on whether to get or keep this health coverage for your dog or kitten.
The variation in premiums is not huge. But it comes after a steady rise in the cost of typical vet bills and pet insurance premiums. Now, according to the Kansas City-based trade group MO North American Pet Health Insurance Association (NAPHIA), the average cost of insuring a pet cat for accidents and injuries fell, increasing from $ 349 per year in 2019 to $ 341 in 2020.
Premiums for dogs did not get cheaper between 2019 and 2020, but they have increased at a much more modest rate than in any other year since at least 2016, according to NAPHIA. Between 2018 and 2019, the annual premium increase for insuring an average dog was $ 26.47. From 2019 to 2020, the same number only increased by $ 8.75, about a third of the increase from the previous year.
Advisor Smith, an industry research group, published data consistent with the general trend NAPHIA documented. It also showed persistent significant differences between companies in the cost of insurance.
“New pets are the reason” average premiums have declined, says Rick Faucher, CEO and Co-Founder of The Connected Pet Company and President of NAPHIA. “We saw double-digit growth in gross written premiums, which increased 25.5%, as well as double-digit growth in the number of animals insured, which increased 22.5%. When a market grows this quickly, you see a unit cost flatten out because you have a larger pool to spread the risk. “
Here is more information on the numbers and what they mean if you are considering implementing a policy for your pet or wondering if you want to continue the one you already have.
More affordable pet insurance could continue
Enough other factors are at play in pet insurance prices that Faucher says it’s unclear whether the 2020 numbers represent a trend. Still, it’s possible that prices will continue to fall, he says.
One reason is that the pool of insured pets may continue to expand. Even with strong growth in the number of insured pets, only 2.5% to 3% of pets have health insurance through NAPHIA member companies, Faucher says. This leaves a lot of room for the industry to grow, which could drive premiums down further. Competition could also mean lower prices. “If companies are looking to buy market share, you might see the average premium go down,” he adds.
Then there are the upcoming changes in the way pet insurance is regulated and sold, which could moderate prices further. A new model law regulating the pet insurance industry is in the works, and it could ultimately mean that consumers see a more standardized product when purchasing health insurance for their pets. But this law is 18 months to three years from its implementation, believes Faucher.
A stronger argument for insuring a pet?
The promise of lower premiums is good news for any type of insurance. But they’re especially welcome for coverage, like pet insurance, which only pays off in rare cases when the worst happens.
Money analysis concluded that pet insurance only makes financial sense if and when your dog or cat develops a serious illness in which you rack up vet bills in the thousands, if not tens of. thousands of dollars. And such a gain is very likely if you insure your pet for years, in order to be insured before such a disease develops – and a ban on pre-existing condition coverage goes into effect to prevent you from getting a policy.
Pet insurance premiums are a relatively large expense. On average, you will pay around $ 700 per year to insure a dog and around $ 350 to cover a cat. Even moderation of premium increases in recent years could result in spending hundreds of dollars less over your pet’s life than it could have been. And that in turn could reduce the risk of having pet insurance that rarely, if ever, pays off, as our analysis suggests, most dog and cat owners will.
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Shopping around matters more than ever
Even as pet premiums continue to decline, significant company-to-company cost differentials persist and could even increase, data from the 2021 Advisor Smith survey suggests. The company priced premiums for comparable coverage in the same city for a sample of dog and cat. For cats, the premiums of the most expensive companies were more than four times higher than those of the lowest, a difference of more than $ 700 per year. From company to company, premiums for dogs were even more varied – a range of five times, for an annual cost difference of over $ 1,000.
Money also saw significant differences in cost per business when we also surveyed premiums last year, but they were less dramatic than Advisor Smith’s. The gap between the cheapest and most expensive insurers was around 100%, saving about $ 180 per year for cats and $ 360 for dogs by choosing the cheapest insurer. While the coverage we priced in our survey was a bit more similar from company to company than with Advisor Smith, both surveys suggest that it is no less worth shopping for pet insurance from company than it was, and it could be more.
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