Facts on the US Pet Insurance Market

There are multiple sources of data for much of the pet insurance market. We've collected these together here with references so that you can draw your own conclusions.

How Big Is the US Pet Insurance Market?

Embrace estimates that at the end of 2006 there were around 520,000 pet insurance policies in force with total direct written premium across the industry of $163 million¹. Written premiums grew at a compounded rate of 22% between 2000 and 2006.

Our calculated written premium figure is substantially lower than the $230.2 million that the independent research firm Packaged Facts predicted in its 2005 report Pet Insurance in North America: The Market and Trends in the US and Canada. The difference between the numbers stems from us basing our estimate on more recent reported statutory or regulatory data that Packaged Facts did not have access to at the time.

How Many Pets Are There in the US?

Embrace estimates there to be 147 million cats and dogs in the United States at the end of 2006. Read more about pet facts and figures.

How Many Pets Have Pet Insurance?

Embrace estimates that just 0.3% of the cat and dog population was insured in 2006. This calculation is very simple to do - it is the number of policies in force at the end of the year divided by the total cat and dog population. So 520,000 divided by 147 million gives 0.3%.

This figure is higher than the 3% of dogs and 1% of cats that others such as the American Pet Products Manufacturers Association estimate². Embrace believes that these numbers are overstated by survey biases because passionate pet parents respond to surveys at a higher rate than others surveyed.

At a high level though, it just isn't possible for 3% of the dog population and 1% of the cat population to be insured as this would imply a pet insurance industry far larger than reported data indicate.

How Fast Is the Pet Insurance Market Growing?

Historically, pet insurance has grown 22% compounded annually from 2000 to 2006 while Packaged Facts assumes 25% going forward. At a 25% growth rate the pet insurance market will grow to around $400 million by 2010.

What Is the Market Share of Each Pet Insurance Company?

We estimate the market share of the four largest pet insurance companies to be VPI (80%), PetHealth Inc. (12%), The Hartville Group (5%), and Pets Best (2%). These market shares are based on written premium, not policies in force.

How Many Companies Sell Pet Insurance?

Embrace knows of eight companies actively selling pet insurance in the US.

1. Embrace Pet Insurance (Mayfield Village, Ohio)
2. Hartville Group (Canton, Ohio)
3. PetFirst Healthcare (Jeffersonville, Ind.)
4. PetHealth Inc. (Toronto, Canada)
5. PetPartners (Raleigh, N. Carolina)
6. Petplan USA (Philadelphia, Penn.)
7. Pets Best Insurance (Boise, Idaho)
8. Veterinary Pet Insurance (Brea, Calif.)

How Quickly Are Veterinary Fees Increasing?

The Bureau of Labor Statistics has collected monthly data on veterinary fee costs in metropolitan areas for nearly a decade. Veterinary fees rose 64% from January 1998 to December 2006. Over the last 5 years veterinary fee inflation has averaged 5.5% per year, roughly double the consumer price index. At this rate veterinary fees will double about every 13 years. That's faster than our salaries can catch up.

Footnotes

¹ The policy in force (PIF) numbers are drawn from our internal estimates. The written premium numbers are taken from NAIC Yellow Book data, SEC filings, and SEDAR filings for the large pet insurance companies and from our best estimates for the small companies.

² See press release APPMA Announces Top Six Pet Industry Trends for ’06.