Pet Insurance Blog

NAPHIA Director Kristen Lynch On Pet Insurance Market Penetration

Kari Steer, Licensed P&C Insurance Agent at Pawlicy Advisor
Kari Steere
Licensed Insurance Producer - Pawlicy Advisor
woman on computer next to dog

September is National Pet Insurance Month, bringing awareness to an industry that’s on a double-digit growth streak for the sixth consecutive year. According to the latest State of the Industry Report 2021 published by the North American Pet Health Insurance Association (NAPHIA), the total number of insured pets in the U.S. is increasing by 23.4% on average every year since 2016.1

The pet insurance industry surpassed its $2.174 billion growth trajectory — despite the pandemic and its impact on the economy. Kristen Lynch, NAPHIA’s Executive Director, explains the “stay-at-home and work-from-home measures introduced during the pandemic create even closer bonds between pet owners and their pets”.2

And yet, in a year that saw record-high levels of pet ownership and expenditures, less than 3% of the U.S. dog and cat population — estimated to be between 135 million and 184 million — have pet health insurance. So, is the market as strong as the numbers would suggest, or is the low penetration rate a potential sign of poor health?

In honor of National Pet Insurance month, here’s a look at how experts weigh in on the data, with unique insight on the obstacles standing in the way of providing affordable access to veterinary care for all pets and their families.

Problem #1: Inability to choose

As the industry continues to grow, so does the number of companies entering the market space. There are now more pet insurance providers than ever before. NAPHIA — which represents 99% of all coverage in North America — is now more than 20 members strong, comprised of several entities who underwrite insurance policies for multiple brands beneath their umbrella.

We’ve seen well-established brokers (such as Geico, State Farm, and Progressive) expand their suite of policies to include four-legged family members alongside homes, cars, lives, and travel plans. Other corporate giants, including Walmart and Petco, and insurtech companies, like Lemonade, have also entered the scene.

On the one hand, an abundance of options is a good thing, as it allows consumers to compare pet insurance plans so they can find the solution that best suits their unique needs. But on the other, it may lead to a perceived information overload in which too many choices prevent consumers from making any choice at all.

Lynch explains “the inability to decide which policy to buy” is one of the top reasons why many pets go uninsured.3 As more providers cater solutions to more pet parents, consumers will need to know how to compare all of the different options before them.

Problem #2: Lacking consistency

Complicating matters further are the laws and insurance regulations that vary by jurisdiction. Where you live affects the policies available to you, as well as the terms that apply to them (for example, Nationwide’s Pet Wellness Plan is not available in all 50 states). This could lead to a confusing experience for folks asking for pet insurance reviews from friends or family whose experience is outside of the area.

Insurance jurisdiction is based on the zip code you live in. Therefore, it’s possible for someone to receive a very different price on the same quote for pet insurance in New York compared to a quote on pet insurance in Texas, for example.

Factor in the many other variables that can impact the cost of pet insurance — including the pet’s breed, age, and medical history — and one can easily see how unreliable online customer reviews can be. The shopping experience often becomes quickly frustrating by not knowing which sources of information you can trust, let alone how to get the best insurance plan, causing some potential customers to pass on the product altogether.

Problem #3: Uncertainty about how it works

Another recent trend in the pet insurance industry is the integration with HR departments. In pursuit of top talent, many employers have begun to offer pet insurance included with their employee benefits package, thereby bolstering recruitment efforts by catering to the concerns of an evolving Millennial workforce. In fact, a recent study conducted by Nationwide4 found that more than 6,000 U.S. companies and nearly half of all Fortune 500 companies offer Nationwide Pet Insurance as a perk of the job.

The ability to easily enroll with the company’s provider and pay reduced-rate premiums through seamless paycheck deduction has a significant effect on pet insurance penetration — and we haven’t yet seen the complete picture since Nationwide’s figures exclude many other companies that offer free or discounted pet insurance for employees through different providers. But while easy access and automatically-paid or entirely free premiums can certainly be a positive benefit for some, their ripple effects may have negative outcomes for others.

There are several reasons why:

  • Not only are most general managers and HR representatives uninformed about how pet insurance policies work, but they legally cannot offer any advice unless they are licensed insurance brokers. Note: Veterinarians are in a similar position and must be very careful about what they say, even though pet insurance is endorsed by the American Veterinary Medical Association (AVMA).5
  • As a result, new policyholders might walk away with questions unanswered (about deductibles, reimbursement rates, degree of coverage, etc.), from an attempted conversation with someone they consider a trustworthy resource. If the company’s chosen insurance provider has poor customer support, they might not receive the information they need to use their insurance policy confidently, or at all.
  • When pet insurance is used incorrectly or paid for in waste, the negative experience can result in a poor outlook of the product as a whole. Frustrated customers may cancel their policies and share their negative experiences, potentially deterring others from protecting their pet’s health, as well.

Unlike car insurance or home insurance, Lynch explains, “Pet insurance is designed to be used. Typically, people make multiple claims a year. If you are an active, engaged pet parent, you use your coverage, so read it. Understand it.”6 That message should be clearly understood by everyone who signs up to ensure they get the most value from their pet insurance plan.

The path to higher pet insurance penetration rates

So, what’s the solution? NAPHIA will continue its push for consistent policies available to all pet owners. Executive Director Kristen Lynch** plans to promote a better quality of life for pets and their families by spreading awareness of the wide variety of pet insurance options available** in today’s innovative marketplace.

The President of NAPHIA’s Board of Directors, Rick Faucher, isn’t concerned about the low penetration rate. Instead, he sees it as an opportunity, stating, “With only a fraction of the potential market realized, we are confident the North American pet health insurance market can continue on this steady pace of growth for the foreseeable future.”

As for us, we’re on a mission to help pet parents do the right thing by simplifying the pet insurance experience. Pawlicy Advisor is the best pet insurance comparison tool and the only marketplace actively endorsed by veterinarians. Our proprietary tool helps pets, families, and veterinary professionals by customizing insurance recommendations based on their unique needs. We make it easy to find and compare plans while empowering vets and their teams to build more meaningful connections.

If you also believe pets are people, join us on our journey — during National Pet Insurance Month and beyond — as we innovate the industry. Follow along for the latest pet insurance news as it breaks, from the newest leader in the pet insurance market.


  1. NAPHIA, “State of the Industry Report” Accessed Aug. 27, 2021.
  2. NAPHIA, “Pet I
  3. Vet Tech Colleges, “Is Pet Health Insurance Worth It? Interview with an Expert” Accessed Aug. 31, 2021.
  4. PR Newswire, “Pet Health Insurance: One of the Fastest Growing Workplace Perks” Accessed Aug. 27, 2021.
  5. AVMA, “Pet Health Insurance” Accessed Aug. 31, 2021.
  6. AAHA, “Pet Insurance: Cases and Clarity” Accessed Aug. 27, 2021.

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Kari Steer, Licensed P&C Insurance Agent at Pawlicy Advisor

Kari Steere
Licensed Insurance Producer - Pawlicy Advisor

Kari Steere is a licensed P&C insurance agent in all 50 states and has focused entirely on pet insurance since 2019. As an animal lover with a rescued Terrier named Barry, when she's not helping pet owners find the perfect plan on Pawlicy Advisor, she runs a ranch in Oregon and rehabilitates any animals that come across her path.

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