What should carriers know about the Pet Insurance Model Act?

By Dan Kolakowski

Woman at home with dog

Managing producer compliance and credentialing is inherently complicated—that’s why we’re working to make it easier. In this blog series, a team of Vertafore regulatory experts address some common compliance challenges faced by carriers. Read more about licensing changes following the 2022 Pet Insurance Model Act.

View more expert perspectives

Life and health insurance provide a sense of security that is essential to our daily lives. The desire to protect the ones we love is simply human nature, which is why having proper coverage for ourselves, significant others, and children is so important.

But what about the other important family members we also want to protect? Our furry, four-legged family members have increasingly costly healthcare needs, which is why pet insurance has been a growing topic of discussion over the last decade (in case you missed this year’s SILA conference, it was a major topic there, too).

Now, state departments of insurance are finally beginning to standardize licensing requirements for agents to sell this emerging product. To offer pet insurance, carriers need to understand these changes so they can ensure their producers are properly licensed.

Questions for an emerging pet insurance industry

From the beginning, there were many questions about the way pet insurance should be classified and how it should be regulated. Is pet insurance its own product category or can it be included with an existing one? What authority does an agent need to hold in order to solicit and sell pet insurance? Would an existing accident, health, and sickness authority qualify?

There has been growing consensus that pet insurance is its own product type, but there are still questions about which specific authority a licensee must hold.

While we tend to think of pets as beloved members of the family, at the end of the day they are technically regarded as property, no matter how strongly pet parents feel otherwise. Accident, health, and sickness authority covers only humans—not the non-human members of the family. Therefore, most states that allow licensees to sell pet insurance require them to hold a property authority in order to conduct business.

Carrier considerations for the Pet Insurance Model Act

Why is this something carriers need to keep an eye on? In August 2022, the National Association of Insurance Commissioners (NAIC) passed a Pet Insurance Model Act to establish appropriate regulatory standards for the pet insurance industry. It gives guidance to address pet wellness programs, preexisting conditions, consumer protections, and training for insurance producers.

For insurance carriers, the model act provides guidance on the training requirements a licensee must fulfill in order to sell this product. The licensee should be trained on the following subject matters:

  • Preexisting conditions and waiting periods
  • The differences between pet insurance and noninsurance wellness programs
  • Hereditary disorders, congenital anomalies or disorders and chronic conditions and how pet insurance policies interact with those conditions or disorders
  • Rating, underwriting, renewal and other related administrative topics 

Similar to annuity best interest training requirements, the onus is on carriers to track licensees’ completion of this training. Reciprocity may exist across states, but it is up to each carrier to determine if the training received in one state is substantially similar in content to the training required in another.

State-specific considerations for licensees

For individual licensees, there hasn’t been much of a change to the license and authority that they must hold to sell pet insurance. Idaho, New Jersey, Rhode Island, and Virginia are currently the only jurisdictions to offer a separate limited lines authority specifically for pet insurance. Most other jurisdictions allow it to be sold under the property authority. Maine is the first state to adopt a deviation of the NAIC Model Act; it will still offer pet insurance under the property authority but will adopt the recommended training requirement effective Jan. 1, 2023.

We anticipate more states will adopt the model fully or in a modified form in 2023 and beyond.

The best compliance solution for carriers as states adopt new pet insurance regulations

It's only been a few months since the NAIC’s Pet Insurance Model Act, and it’s slowly being adopted (and adapted) across jurisdictions. As more states change regulations and implement new training requirements to sell pet insurance, Sircon Producer Central will continue to help carriers manage compliance in this emerging market.

Dan Kolakowski

Dan Kolakowski

Manager, Regulatory Compliance

Dan's entire professional career has been in insurance and financial technology. Before Vertafore, he worked for an insurance technology company focused on commercial insurance building underwriting/risk analysis platforms and policy/program benchmarking analytics. He joined Vertafore's Product Management department in 2012 and served nine years as Senior Product Owner, working on software solutions for insurance carriers, agencies, individual agents, securities firms, and state departments of insurance. Read more.