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Chewy Chases Share of Growing Pet Insurance Market With Trupanion

E-commerce pet products company Chewy plans to begin selling pet health insurance plans from pet insurer Trupanion to its 20 million customer base. The insurance will be sold under the Chewy Health brand that includes wellness products beginning in Spring 2022.

Chewy said the insurance and wellness plans will be tailored to individual Chewy customers. Chewy will also use Trupanion’s software to pay veterinarians directly.

“The launch of customized care plans specifically designed for our customers is an important enhancement to the Chewy Health ecosystem, advancing our mission to make pet healthcare more affordable and accessible for all pet parents,” said Mita Malhotra, head of Chewy Health.

Trupanion’s policies are issued in the United States by its wholly owned insurance entity American Pet Insurance Co., and, in Canada, by Omega General Insurance Co. Chewy is controlled by PetSmart LLC, which is owned by a consortium including private investment funds.

According to the North American Pet Health Insurance Association (NAPHIA), North America’s pet health insurance sector exceeded $2.174 billion in 2020, up 26% over 2019 and the industry’s sixth consecutive year of double-digit growth. There are more than 3.4 million pets insured across North America. The US accounts for $1.99 billion of that premium and 3.1 million of the insured pets.

“Last year, we saw the stay-at-home and work-from-home measures introduced during the pandemic create even closer bonds between pet owners and their pets,” said Kristen Lynch, executive director of NAPHIA. “We believe these strong human-animal relationships are driving pet owners’ desire to address financial uncertainty by mitigating unexpected veterinary costs, contributing to our record 2020 results, in a year that also saw new pet purchases and adoptions reach record levels.”

Pet insurance is classified as inland marine insurance, a diverse category that also includes insurance for cargo, communications equipment, event cancellation, fine art and personal watercraft. This inland marine industry experienced a “significant downturn in profitability” in 2020, with its loss ratio deteriorating by nearly 16 percentage points amid the COVID-19 pandemic, according to AM Best report. However, the report adds, pet health insurance was among the bright spots in 2020 and helped mitigate some of the segment’s premium decline.

AM Best said it expects the pet health insurance market to continue growing and maintaining a relatively stable loss ratio.

As the pet insurance market continues to grow, it is attracting attention from investors, insurers and regulators.

Specialty insurer AXIS Insurance has just entered the market with managing general underwriter Petplan. AXIS Insurance will provide underwriting capacity for comprehensive pet insurance policies for dogs and cats in the US and Canada. Petplan insurance policies are administered by Fetch Insurance Services.

Independence Pet Holdings (IHC), the US pet insurance platform for JAB Holding Co. and its platform PetPartner, a German conglomerate based in Luxembourg, is acquiring Chicago-based pet insurance provider, Figo. Figo’s products and services are offered online through Pet Cloud app, a cloud-based platform that provides 24/7 access to live veterinarians, customer support, claims processing, digital pet record management, and a social network for pet owners. Plans are administered by Figo Pet Insurance.

Last February, insurtech carrier Lemonade announced plans to offer pet insurance.

In late 2019, MetLife agreed to acquire PetFirst Healthcare, a pet insurance program administrator that distributes through animal welfare agencies, direct-to-consumer channels and employers. In April 2019, program specialist NSM Insurance Group acquired Embrace Pet Insurance, a Cleveland-based national provider of pet health insurance for dogs and cats.

In June, California-based Odie Pet Insurance closed on more than $3 million in new funding to accelerate its growth and invest in technology. Odie sells pet insurance plans underwritten by PrimeOne Insurance Co. Inc. and ClearBlue Insurance Group. It is also served by Thorson Specialty Insurance Services, the managing general agency for PrimeOne.

The premium growth and entry of new players have caught the attention of state insurance regulators who cite long-standing consumer complaints over pet insurers’ failures to pay claims. The National Association of Insurance Commissioners (NAIC) has been weighing a model law for states to adopt that would address pert insurance issues. The issues include a pet’s “pre-existing” conditions, the waiting period after policy purchase to file claims, how to handle advertising of insurance policies and wellness programs together and insurance producer licensing and training.

An NAIC pet insurance working group passed a draft law in October. It held a meeting on Dec. 1 at which members were to discuss pet insurance data collection.

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