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NAIC Passes Pet Insurance Model Act
The National Association of Insurance Commissioners (NAIC) members pass a Pet Insurance Model Act to establish appropriate regulatory standards for the pet insurance industry, which has annual premiums of approximately $2.8 billion in total in-force premiums in 2021 (up over 30.5% from $2.175 billion in 2020) and over 4.41 million insured pets across North America, up 27.7% from over 3.45 million pets insured in 2020, according to the North American Pet Health Insurance Association.
"This model law establishes clear rules for the sale of pet insurance and provides important disclosures to pet owners interested in purchasing this product," said Beth Dwyer, Superintendent of Insurance for the Rhode Island Department of Business Regulation. "Now, it is up to the states to see if they would like to adopt or modify the model law for this regulatory framework to be in effect."
Key elements of the model include:
Consumer Protections: The model codifies several consumer protections related to policy renewals, required disclosures of waiting periods, policy limits, conditions, benefit schedules, and more. Robust disclosures allow consumers to affirmatively choose the policy that is best for them in a world with dozens of available options.
Preexisting Conditions: The model limits how insurers can deny pet insurance claims related to preexisting conditions of covered pets. And the onus is put on the insurer to prove those preexisting condition limitation applies.
Wellness Programs: The model explicitly requires insurers and their producers to clearly differentiate pet wellness programs from insurance policies to help eliminate consumer confusion between insurance policies and non-insurance wellness programs.
Training Requirements: The model codifies training for insurance producers to ensure that producers are appropriately prepared to present information to consumers.
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.