As the cost of owning a pet-and running a veterinary practice-rises, more pet owners are turning to insurance to keep their animals healthy.
NATIONAL REPORT — As the cost of owning a pet—and running a veterinary practice—rises, more pet owners are turning to insurance plans to keep their animals healthy.
In fact, a new study by Packaged Facts indicates that sales of pet insurance policies are actually growing faster than the sales of veterinary services.
Following a jump of 27 percent from 2007 to 2008, pet insurance sales rose 16 percent from 2008 to 2009, according to Packaged Facts. Sales of veterinary services rose 10 percent during the same year.
The growth is not expected to end, estimates Packaged Facts, which says pet insurance sales in the United States could climb toward $760 million by 2014. An earlier Packaged Facts estimate cited by the North American Pet Health Insurance Association (NAPHIA) places total pet insurance sales at $1.1 billion by 2012.
The recession may have prevented the pet insurance industry from reaching that mark, which was predicted in 2007 before the recession escalated. With only an estimated 1 percent of cats and dogs insured, the study concludes there is certainly room for pet insurance to grow as the economy improves.
Pet insurance sales grew a total of 21 percent over the four years—from 2005 to 2009—studied in the Packaged Facts' report. Total sales in the United States reached almost $303 million in 2009, more than doubling the 2005 sales of $143 million.
The Packaged Facts report suggests that more choices are helping the pet-insurance industry grow. Although pet insurance pioneer Veterinary Pet Insurance (VPI) leads the category, according to Packaged Facts, more than a half-dozen new companies have introduced insurance products to the market over the last five years. Some of these have unique strengths because of partnerships with big-name brands like Purina and American Kennel Club or retail channels such as Petfinder.com and Petco.
The report also includes data on who is buying pet insurance. Nearly 7 percent of dogs who are taken to the veterinarian three or more times per year are covered by insurance. So are 5.3 percent of dogs belonging to a household with an income of $60,000 or more, the Packaged Facts report states. About 5 percent of large-dog owners purchase pet insurance, as well as 4.5 percent of owners who spend $240 or more per year on dog-related expenses.
The full report, "Pet Insurance in North America," is available at packagedfacts.com.