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šŸ’€ Death to Pet Insurance?

The nation's largest insurance provider made a big move. How will the industry respond?

Author

Chris Equale
June 27, 2024

Is the pet insurance industry shifting?

Is your pet covered by health insurance? You may need to check again after Nationwide ruffled feathers this week. after cancelling pet insurance policies for approximately 100,000 animals across the nation.

The reason: rising veterinary costs.

The cancellation of the thousands of coverage plans will take place between now and next summer as part of the companyā€™s efforts to ā€œmaintain long-term viability and profitability,ā€ Nationwide said in a statement Friday.

This is a seismic shift as Nationwide is the largest insurance provider in the country.

ā€œAs pet lovers ourselves, we understand the emotions connected to the protection of our family pets. Inflation in the cost of veterinary case and other factors have led to recent underwriting changes and the withdrawal of some products in some states ā€” difficult actions that are necessary to ensure a financially sustainable future for our pet insurance line of business,ā€ it added.

Nationwide said the cancellations will not be based on a petā€™s age, breed or prior claims, and those impacted will be notified in writing ahead of time.

Policyholders will still have the same protections through their current term, the company said.

This comes at a time when the industry is gaining steam.

There are nearly 5.7 million cats and dogs insured in the U.S. in 2023, according to the ā€œState of the Industry 2024ā€ report by the North American Pet Health Insurance Association. Thatā€™s a 17.1% increase from the number of dogs and cats that were insured the previous year.

Pet insurance costs an average of $51 a month for dogs and $27 a month for cats, according to the associationā€™s analysis. Thatā€™s for a policy with $5,000 in annual coverage, a $250 deductible and 80% reimbursement level.

The conclusion: pet owners are taking better care of their pets. Pair this with rising vet costs, and your result is an insurance policy disaster.

Since 2018, the number of insured pets in the U.S. has risen almost 23% a year, on average. Roughly 80% of insured pets are dogs, with cats making up the rest. As pet insurance has increased in popularity, consumer criticisms have risen as well. They fall into three main categories, veterinarians say ā€” long waits for claims reimbursement, denial of claims for pre-existing conditions and premium increases.

Costs of goods and services are up everywhere and pet care is no exception. Government data shows the costs of veterinary services rose 10.6% in July, year over year. 

Nationwideā€™s decision to cancel over 100,000 insurance policies is unprecedented, and time will tell if this becomes an unfortunate trend.

The CDC is changing dog import laws to prevent the return of canine rabies

Starting Aug. 1, the Centers for Disease Control and Prevention is implementing new restrictions around the importation of dogs to the United States.

A spokesperson for the CDC said the new rules ā€œwill bring the US in line more closely with the World Organization for Animal Healthā€™s standards for the international movement of dogs from rabies-endemic countries.ā€

Were we not up to par?

Canine rabies, according to the CDC, had been eliminated in the US as of 2007. But between 2015 and 2021, four dogs with rabies were imported into the country and sent to owners where they became sick and had to be quarantined while the people who came into contact with the dogs were treated. That prompted the CDC to suspend importations of dogs from over 100 countries listed as high risk for rabies in 2021.

The order was renewed several times but is set to expire on Aug. 1, when the new regulation becomes effective.

Prior to the CDC suspension, approximately 1 million dogs were imported into the United States annually. A certificate of rabies vaccination was required for dogs imported from one of the high-risk countries, but no such documentation was required for dogs originating from low-risk or rabies-free nations.

Is it really that bad?

Rabies is a fatal but preventable virus. It is generally spread to people and pets through bites or scratches from an infected animal. The virus primarily affects the central nervous system. If it is left untreated before the onset of symptoms, it leads to severe brain disease and death.

The CDC said the arrival of the infected animals represented a public safety issue as well as a costly response to deal with the situation.

The new August 1st CDC rules are lengthy, and part of the new regime is that:

  • all dogs, regardless of where they originate, must be at least six months old to enter the US.

  • They must also have been vaccinated against rabies and the importer or owner must be able to show the rabies vaccine meets with USDA and CDC requirements.

  • all animals must be implanted with an International Organization for Standardization (ISO) microchip.

Is there any collateral damage that could stem from this?

Ulrich and members of other dog-rescue organizations believe the CDC should look at the situation on a per country basis, especially where countries have a low to nonexistent rabies risk.

Rescue organizations believe that despite the CDCā€™s efforts to protect people in the country from rabies, thousands of dogs that previously were able to enter the country could end up being euthanized based on the new regulations.

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