Though pet insurance premiums in the United States have grown from approximately 500 million in 2013 to over 1.5 Billion in 2019, as of 2020, the pet insurance industry remains largely unregulated. Source, Statista.Com. Unlike automobile, health, homeowners, life, and other types of insurance, the pet insurance industry, due to its relatively small size and newness, doesn’t have any dedicated model of laws or guidelines to abide by. It is essentially in the “wild wild west” stages of development as far as insurance law is concerned.
One of the biggest challenges for regulators in getting a handle on pet insurance is that data relating to pet insurance is not reported separately from other types of coverage. For example, while pet insurance is predominately accident and health insurance, or accident-only insurance, for pets, it is classified as property and casualty insurance. It is reported on line 9 of the NAIC property and casualty annual financial statement which is inland marine. Because the bulk of pet insurance premium is reported together with other inland marine coverage, it is difficult for regulators to determine the exact premium volume for pet insurance. Further, pet insurance is not separately identified in most state complaint databases which presents an obstacle to tracking trends in consumer complaints relating to pet insurance. The inability to analyze data isolated to pet insurance industry makes it more difficult for regulators to understand the current state of the pet insurance industry. Source, National Association of Insurance Commissioners (NAIC) White Paper, A Regulator’s Guide to Pet Insurance, 2019.
This lack of regulation has unfortunately led to many abuses within the pet insurance industry. For example, the 2019 NAIC white paper on the pet insurance industry identifies some major problems:
- Frequent Use of Brand Names In Marketing Pet Insurance: Pet insurers’ use of brand names imply that the branding company is an insurance company, which creates confusion for consumers, agency employees, TPAs, partners such as veterinary clinics and hospitals as well as regulators. Such practices, including failing to prominently identify the underwriter, are ripe for violations under a state’s unfair trade practices act;
- Lack of State Registration: Some pet insurers may fail to register as an insurance company in the state in which they are doing business. This may lead to issues with court jurisdiction issues over them and enforcement and collection of any court judgments which may imposed;
- Use of Unlicensed Producers to Market and Sell Pet Insurance: Pet insurers often use producers which are licensed but such producers use unlicensed, unappointed call center employees. Further, pet insurers often partner with unlicensed veterinary clinics and their staffs to market pet insurance. Their activities often cross the line into licensable activities in violation of state producer licensing laws;
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- Use of Unfiled or Unapproved Policy Forms: Some of the branding entities used by pet insurers to sell their products are using unfiled policy language and rates. Additional concerns have been express by regulators about “premium waivers, unfiled discounts, and satisfaction guarantees” and pre-dispute arbitration clauses: and
- Insufficient, Confusing, or Ambiguous Consumer Disclosures: In marketing the pet insurance policies, there is frequently insufficient, confusing, or ambiguous disclosure with respect to pre-existing conditions, congenital conditions, exclusions, and annual and lifetime limits. Fortunately, with years of experience under our belts, the Attorney at Babinsky Legal, LLC know what the insurance is allowed to do and what they can’t.
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