Nationwide to End 100,000 Pet Insurance Plans Amid Inflationary Pressure

A veterinary technician vaccinates a dog at a drive-through pet vaccine clinic at Mission Viejo Animal Services Center amid the COVID-19 pandemic in Mission Viejo, Calif., on June 23, 2020. (Mario Tama/Getty Images)

Insurance firm Nationwide will end a sizable portion of its pet insurance policies, citing inflation and the product’s financial stability.

Nationwide will not renew roughly 100,000 of these policies between this spring and the summer of 2025, according to a June 14 press release.

“These measures, being taken at a state level, comply with the law and our contracts, and are not associated with the pet’s age, breed, or prior claims history,” the statement reads.

Nationwide blamed rising veterinary care costs due to inflationary pressure and other factors for the decision. Some pet insurance products have been withdrawn from certain states.

These are “difficult actions that are necessary to ensure a financially sustainable future for our pet insurance line of business,” the company states.

“Impacted policyholders will be notified in writing well in advance according to state law,” it says. Nationwide will continue providing insurance protections for these customers through the end of the current term.

The company made the decision amid persistent elevated inflation. According to the Consumer Price Index, in January 2021, inflation was at 1.4 percent. It jumped to 9.1 percent in June 2022 and then declined. Beginning June 2023, inflation has remained at or above 3 percent every month.

According to data from the North American Pet Health Insurance Association (NAPHIA), average annual accident and illness premiums for dogs in the United States rose from $594.64 in 2019 to $675.61 in 2023, an increase of 13.6 percent over the four years.

Comparatively, during the same period, accident and illness premiums for cats increased by 4.75 percent, from $365.89 to $383.30.

Data from pet insurance firm Pets Best show that the average dog insurance currently costs $36 to $58 per month for comprehensive accident and illness coverage. For cats, monthly insurance is around $22 to $34.

Premiums are affected by multiple factors, like the pet’s age and breed. “Purebred animals with a higher likelihood of illnesses and breed-specific conditions are typically more expensive to insure than their mixed breed counterparts,” the company states.

“Similarly, large breed dogs tend to have shorter lifespans than small dogs, making the risk of illnesses and injuries possible over a shorter time.”

Industry Growth

Even though Nationwide is slashing its pet insurance policy numbers, the industry has seen strong growth, according to a NAPHIA report.

In 2023, the North American pet insurance industry’s revenues exceeded $4 billion for the first time to hit a record $4.27 billion in premiums sold. This was a 21.9 percent increase from the $3.5 billion premiums sold in 2022.

Rick Faucher, president of NAPHIA, pointed out that the North American market grew by over 20 percent for the fifth consecutive time. Roughly 3.69 percent of pet owners in the United States are estimated to have taken pet insurance.

In 2023, more than 6.25 million pets were insured across North America, more than 20 percent higher than the previous year.

“At a time when households are experiencing growing financial pressures, pet insurance provides owners with financial protection to cover the rising costs of veterinary care,” said NAPHIA Executive Director Kristen Lynch in a statement.

“Our industry’s strong growth is evidence that North American pet families recognize the value of pet health insurance coverage and appreciate the certainty it offers in those instances when their pet has an unexpected illness or injury.”

A February survey from personal finance firm NerdWallet found that 24 percent of American pet owners had taken insurance. Among survey respondents, 38 percent stated they would spend more than $1,000 on lifesaving medical care for their pets.

A quarter of the respondents were willing to go into debt for their pet’s lifesaving medical care, and 57 percent of pet owners have taken insurance for “peace of mind.”

There are exclusions for pet owners to consider when buying insurance. For instance, an accident-only policy does not cover emergency care for illnesses.

Moreover, having insurance doesn’t mean the owner will not need to pay cash when getting their pets treated. Some veterinarians are paid directly, with the owner filing a claim for reimbursement.