On August 1, 2022, following a multi-year process which began in 2019, the US National Association of Insurance Commissioners’ (“NAIC”) Property and Casualty Insurance (C) Committee adopted the Pet Insurance Model Act (“Model Act”) that had been drafted by its Pet Insurance (C) Working Group to set industry standards for pet insurance coverages, sales practices, and other consumer protections. On August 13, 2022, at the Summer 2022 National Meeting, the NAIC Executive (EX) Committee and Plenary adopted the Model Act as an official model act of the NAIC.
As the demand for pet insurance has continued to grow exponentially over the past decade or so, the NAIC identified a need for laying out a clear regulatory framework for pet insurance. The Model Act focuses on the following key areas with respect to pet insurance: consumer protections, preexisting conditions, wellness programs, and training requirements for insurance producers who sell pet insurance.
The key features of the Model Act with respect to consumer protections focus on policy limits, policy benefits and conditions, policy renewal standards, and disclosure of waiting periods for coverage. Further, the Model Act requires that insurers and producers selling pet insurance clearly distinguish between pet insurance policies and pet wellness programs in order to eliminate any confusion for consumers when deciding which products to purchase. In addition, the Model Act limits the extent to which insurers can limit or deny coverage due to preexisting conditions of covered pets and places the burden on insurers to establish the basis on which a preexisting condition limit shall apply.
At the end of 2021, the Producer Licensing Uniformity (D) Working Group discussed options for a uniform producer licensing standard for pet insurance and conducted a survey of its members to gather their views on what the appropriate license should be. The results of the survey showed that there was no consensus, or even a majority view, on this issue. Therefore, the Pet Insurance (C) Working Group concluded that the Model Act was not the appropriate document in which to set forth what type of insurance producer licenses should be required to sell pet insurance—instead, the Model Act leaves that determination to the individual states. This means that the appropriate producer license for selling pet insurance will vary state by state, leaving nationwide licensing more complicated than if there were a uniform standard in place. However, the Model Act codifies various standards for insurance producer training to ensure that producers are adequately prepared to interact with pet insurance consumers.
To view additional updates from the US NAIC Summer 2022 National Meeting, visit our meeting highlights page.