Nebraska state senator proposes legal framework for pet insurance

LINCOLN — Insurers would have a clearer framework for creating pet insurance policies in the state through a proposal in the Nebraska Legislature.

State Sen. Beau Ballard of Lincoln introduced Legislative Bill 296, the Pet Insurance Act, which would establish a legal framework for the policies and consumer protections for the growing industry.

The North American Pet Health Insurance Association reported in 2022 that the industry exceeded $2.83 billion in value at the end of 2021, growing over 30% from the previous year.

The bill’s consumer protections mirror those for health insurance policies, including necessary disclosures on whether certain services are excluded from coverage, if there are any waiting periods, what the benefit schedule is for the policy, how a pet’s preexisting conditions may impact insurance and setting training requirements for insurance producers.

Pet insurance consumers may use their policies more often than other insurance types though the costs are usually lower. The average policyholder files a pet insurance claim 1.5 times per year, Ballard said.

Rising health care costs

Ballard said he adopted his cocker spaniel, Cosmo, last March and takes him on a walk every morning, which is “one of the highlights of the day.” 

He told the committee that if Cosmo required significant care, Ballard would need to decide whether to pay high costs for that care. 

“Much like other things in life, veterinarian costs are skyrocketing,” Ballard said. “And this (type of insurance) provides a little bit of ease on consumers that they can get some insurance and then pay for those unexpected occurrences.” 

Industry experts offer support

Michelle Muirhead, assistant vice president at Physicians Mutual Insurance Company in Omaha and testifying for the pet insurance association, said her company began offering pet insurance in August 2022.

Muirhead said this came after nearly three years of work with the National Association of Insurance Commissioners, Nebraska Department of Insurance, veterinarians and others on how to design the policy.

She said the bill would allow pet owners to pay for the medical treatment their veterinarian recommends, not what they can afford on a given day.

The policies, with average monthly premiums of $50 for dogs and $32 for cats, mainly cover accidents and illnesses, including cancer, infections, bone fractures, digestive issues, ear infections or allergies.

“In the end, the industry wants consumers to be happy with their purchase of pet insurance and the coverage that we provide,” Muirhead said. 

Robert Bell also testified in support for the Nebraska Insurance Federation and American Property Casualty Insurance Association and explained how pet insurance acts like a health and life policy even though pets are technically property.

This, Bell said, requires a different level of consumer protection.

“I’m just glad I can create some legislation where I get to bring him [Cosmo] up in testimony, which is always a great, great opportunity,” Ballard said.