U.S. Pet Insurance Market Expands Amid Rising Veterinary Costs

The U.S. pet insurance market is experiencing rapid growth, driven by rising costs of veterinary care and increased pet ownership. Despite only a small percentage of pets being insured, consumer spending on pet insurance policies has grown by over 20% annually since 2020, reaching more than $4.7 billion in 2024. This growth correlates with a wider surge in prices for pet services such as grooming and kenneling, which have increased by 42% since 2019.

Pet insurance primarily covers accidents and illnesses but excludes pre-existing conditions, routine wellness visits, and dental care, limiting some consumers' participation in the market. Premiums for dog and cat insurance have risen steadily, with average monthly premiums now around $62 for dogs and $32 for cats. This price increase has been slower than the overall rise in pet service costs, suggesting insurance may help moderate veterinary price inflation.

The industry growth accelerated during the COVID-19 pandemic when increased pet adoptions led pet owners to view pets as family members, prompting greater willingness to invest in insurance coverage. Major insurers like Liberty Mutual and Lemonade have entered the pet insurance space, competing with pet-focused companies such as Trupanion and Healthy Paws, which highlight the expanding competitive landscape.

Private equity firms have increasingly invested in pet insurance providers, resulting in consolidation and potential risks of market concentration. Experts note that while this could raise prices, it may also improve operational efficiencies and policyholder benefits. The market is expected to continue expanding with more consumers opting for coverage amid growing awareness of pet health care costs.

For insurance professionals, this trend signals opportunities and challenges in product development, pricing strategy, and consumer education within a niche but rapidly evolving segment. Regulatory scrutiny may also increase given concerns about market power concentration. Understanding the balance between coverage limitations and rising costs is key for stakeholders aiming to capitalize on or influence this market trajectory.