Feb 17, 2023 - News

State looks to tame poorly regulated pet insurance

Illustration of a cat playing with a stethoscope.

Illustration: Allie Carl/Axios

The pet insurance market is growing fast — but it remains largely unregulated in Washington state.

Why it matters: State regulators say about 3% of U.S. pets are covered by health insurance policies, a number they expect to rise rapidly.

  • Yet compared to human health insurance, few rules govern what pet insurance must cover and how companies must explain their policies to customers.

What's happening: A bill in Washington's Legislature would set new standards for pet insurance coverage, including definitions for what counts as a preexisting condition that can warrant denial of claims.

What they're saying: State Rep. Amy Walen (D-Kirkland), the bill's sponsor, told Axios that right now, companies can charge for pet insurance while providing very little in the way of coverage.

  • During a recent committee hearing, Walen noted pets do unpredictable things, like ingesting parts of toys — "and that's a risk we should be able to cover."
  • Among other changes, her bill would eliminate the waiting periods some pet insurance policies impose before covering accidental injuries.

Context: Over the past five years, Washington's Office of the Insurance Commissioner has received 159 complaints mentioning pet insurance, the agency told Axios.

  • Many recent complaints dealt with premiums increasing at renewal.
  • In other cases reviewed by Axios, pet owners were told that an animal's past medical issue constituted a pre-existing condition, which led to insurers denying their claims.

Zoom in: One Seattle pet owner appealed when his insurance company said his dog's past ear infection precluded coverage for a new bacterial skin infection on the dog's stomach.

  • After the insurance commissioner's office got involved, the company reversed its denial and paid for the treatment.

Details: Under the bill before lawmakers, insurers could deny a pet's medical coverage based on a pre-existing condition only if it is "directly tied" to the new ailment.

  • The legislation wouldn't cap annual pet insurance rate increases. But it would require companies to clearly tell customers that premiums can rise as animals age — or if owners move.

Between the lines: The Office of the Insurance Commissioner is joined by pet insurance companies — including Seattle-based Trupanion — in supporting the legislation.

  • David Forte, senior policy adviser in the insurance commissioner's office, said even though the bill is the product of negotiation between the industry and regulators, it still provides significant protections for pet owners.

What's next: Versions of the measure have passed out of House and Senate committees and could soon receive floor votes in either chamber.


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