Beyond the Fine Print: How Pet Insurance Changes in California Reflect a Larger Push for Transparency

Written by Cady Wolf

Pet insurance has grown a lot over the last several years. While not quite as widespread as health or auto insurance, pet insurance is being purchased by more and more pet owners in order to help cover the costs of surgeries and medications for their furry friends.??

Much like other kinds of insurance, pet insurance companies aren’t known for being the most straightforward with their customers. Pet insurance is especially profitable, with premiums growing by at least 20% every year, making quite a dent in the pockets of pet parents. A newly passed law, however, just might change that.??

Senate Bill No. 1217 was recently enacted in California, requiring pet insurance companies to be more transparent with consumers. Among these requirements are:???

• Mandatory Disclosures:?Insurers are required to disclose all exclusions upfront and cannot introduce new ones at renewal.?

• Policy Details:?Waiting periods, deductibles, coinsurance, and limits must be clearly disclosed, with no waiting periods for renewals.?

• Premium and Coverage Changes:?Insurers are required to inform policyholders about changes resulting from pet age, claims, or address updates.?

• Claim Payment Calculations:?Insurers must explain how claim reimbursements are calculated.

• Veterinary Exam Requirements:?Any required pre-policy veterinary exams must be disclosed and cannot be required at renewal.?

• Benefits Schedules:?Policies that utilize benefits schedules must include a written list of covered conditions.?

But what does this mean for pet parents, and how does this affect the pet industry as a whole???

?Navigating Pet Insurance in a Changing Industry??

Pet insurance is an essential expense for many pet owners. According to the North American Pet Health Insurance Association (NAPHIA), more than 4 million dogs and 1.2 million cats across the United States are insured, and those numbers continue to grow significantly year after year. However, rising inflation and increasing premiums have left many other pet owners unable to afford pet insurance, and over half of Americans report that they cannot pay for emergency medical treatment for their pets. This results in heartbreaking situations where pet owners must choose between going into debt for their pets or euthanizing them because the cost of treatment is too high, a practice known as economic euthanasia.??

This new California law may be just the nudge the pet insurance industry needs to help pet owners feel more confident about spending their hard-earned money to insure their furry companions. Recalls, Highly Pathogenic Avian Influenza (HPAI), and inflation all place pressure on the pet industry, increasing the value—and scarcity—of pet owners' trust. California’s recent legal action indicates a wider shift toward increased transparency that applies to the pet industry as a whole. Given this context, pet companies should leverage the passing of S.B. No. 1217 and evaluate their own transparency practices.??

Since nearly 20% of insured pets in the country live in California, it wouldn’t be surprising if other states pass similar legislation. But what can pet companies do to show a comparable level of transparency to their customers??

Be Upfront About Ingredients and Manufacturing Processes?

As HPAI continues to be a concern for pet parents, providing them with information about your products is more critical than ever. Listing ingredient details on your website or making your production process more transparent are effective ways to show your commitment to honesty and openness with pet parents.??

You can also communicate the specific health benefits of your ingredients and formulas. Since pet insurance is still inaccessible to some pet owners, showcasing how your products can be used preventively gives you more credibility and has the potential to increase brand loyalty.??

Don’t Oversell Your Sustainability Efforts??

If you are genuinely making an effort to be sustainable, that’s fantastic! Share this with your customers. However, avoid labeling a product or process as sustainable when it isn’t: that’s called greenwashing, and you risk losing your consumers’ trust if they discover they’ve been misled. Instead, be transparent about where your business excels and where you may be lacking. Acknowledging past mistakes and taking steps to address them demonstrates accountability, and consumers will appreciate your honest communication.?

Answer Your Customers’ Questions and Listen to Their Feedback??

Without customers, you don’t have a business. Answering your customers' concerns and questions strengthens your relationship with them and gives you insights into what your target demographic is looking for. In addition, your customers will feel heard, which is a win-win situation for both parties.?

Best for Customers, Best for Business??

At BSM Partners, we’re committed to doing what is best for both businesses and consumers. One of the most effective ways to cultivate a healthy relationship with your shoppers is to be transparent about your actions. Learn from California’s lawbook and inform your customers about what’s happening and why. This approach will distinguish you from other businesses, which will resonate with consumers and give you a competitive edge.

About the Author?

Cady Wolf is an Analyst Intern at BSM Partners. She graduated magna cum laude with a degree in English from Brigham Young University-Idaho, and she currently lives in Rexburg, Idaho with her husband, their two cats, and pet tortoise. She loves animals and learning about how to help pet brands and pet parents alike.???

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