Pet Insurance Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Global Pet Insurance Market Trends and Insights

Rising Pet Adoption and Pet Humanization Trend

United States pet ownership remains elevated and continues to expand in 2026, with approximately 94 million households owning at least one pet, as younger households add dogs and cats at a faster rate and sustain higher per-pet spending than older cohorts. The dog population reached about 87.3 million and the cat population about 76.3 million in 2025, reflecting both growth and the narrowing gap between species. Pet owners increasingly treat pets as family members, spending an average of USD 1,700 per household annually on pet-related expenses, with veterinary services accounting for about 32% of these expenditures ^{[2]PetfoodIndustry, “Chart: Cats and dogs lead US pet ownership growth 2023 2025,” petfoodindustry.com}. This mindset drives prioritization of premium foods, preventive care, and timely specialist interventions, supporting consistent veterinary utilization even when budgets tighten, which preserves demand for insurance coverage that caps exposure to surprise bills and smooths cash flows across a pet’s lifespan. While insurance adoption in the United States still trails sentiment, steady gains in awareness and digital purchase journeys are narrowing the gap with more mature European markets. Insights from Japan further demonstrate that higher penetration and convenient direct-settlement options can accelerate uptake when owners perceive clear value at the point of care.

Escalating Veterinary Costs Outpacing CPI

Veterinary prices have risen faster than general inflation, putting pressure on household budgets and intensifying the need to manage the volatility of medical bills for pets. Practices face wage inflation and higher costs for advanced diagnostics, which raises fee schedules at large chains and independent clinics alike. The result is a measurable decline in routine wellness visits among some segments as owners defer care, coupled with a rise in emergency episodes that carry higher costs and create stress for uninsured households. Insurers absorb these pressures through pricing and product design, while households with constrained liquidity report rising anxiety around unexpected invoices and increasing difficulty meeting pet-related expenses. Select carriers have adjusted portfolios to address high-cost segments and rebalance risk exposure, which aligns underwriting with observed cost trends as veterinary services expand their share of total pet spending.

NAIC Model Act Rollout and Regulatory Advancements

The Pet Insurance Model Act provides standardized definitions and consumer disclosures in the United States, including clarity on pre-existing conditions, waiting periods, and wellness programs. By 2025, multiple states enacted similar statutes, reducing variability across jurisdictions and encouraging carriers to streamline policy terms to a model that is easier for consumers to understand and compare. Key consumer safeguards include a defined free-look period, rules for waiting periods, and obligations on insurers to demonstrate proof when applying exclusions, which collectively support trust and policy retention^{[3]NAIC, “Pet Insurance Model Act,” National Association of Insurance Commissioners, content.naic.org}. Early adopters who align product and disclosure with the model have seen durable retention benefits as transparency lowers the frequency of coverage disputes. Standardized regulatory frameworks also aid data interoperability and benchmarking, which strengthens actuarial tools and speeds iteration for new product features.

Embedded Insurance in Pet-Care Ecosystems

Embedded distribution integrates enrollment within retail, e-commerce, and veterinary workflows, which lifts conversion by presenting coverage when health decisions are top of mind. Retailers and clinic networks that control frequent touchpoints can bundle coverage into service subscriptions and checkout experiences, making enrollment a simple and timely step rather than a separate task. The model aligns incentives to keep pets healthier and to reduce friction in claims through direct connections with care providers and pharmacy services. Carriers prioritize these integrations because they reduce customer acquisition costs and extend channel reach beyond traditional intermediated sales. Embedded strategies also complement mobile-first claims and telehealth offerings, creating a unified experience from enrollment to reimbursement.

High Premium Inflation Versus Disposable Income

Premium adjustments respond to rising veterinary costs, and some consumers face affordability constraints that lead to policy lapses and delayed care decisions. Select carriers disclosed price increases to keep pace with claim severity, while monitoring retention and new business quality to avoid adverse selection that erodes risk pools. Demand elasticity emerges in lower-income segments as owners ration wellness visits, which in turn can increase emergency episodes and worsen health outcomes for uninsured pets. Households report higher financial stress tied to pet care, including balances carried for veterinary bills and constraints that limit the ability to pay premiums regularly. Carriers continue to refine product design and discounts to cushion the impact on price-sensitive segments while preserving coverage breadth in the pet insurance market.

Lack of Unified Global Veterinary Procedure Coding

Claims automation and pricing sophistication depend on structured clinical data, yet veterinary medicine often relies on free-text notes and heterogeneous descriptors that resist aggregation. The absence of widely adopted coding norms complicates benchmarking outcomes, estimating costs by condition, and calibrating deductibles to reflect breed and age risk across geographies. Integrations with practice software and labs remain fragmented, adding cost and delay to insurer data pipelines that support adjudication and risk analytics. Without consistent codes and interoperability, carriers fall back on manual review and conservative pricing assumptions that can blunt competitiveness. Markets that advance EHR adoption and common taxonomies will enable better automation, fairer ratings, and faster claims in the pet insurance market.

Segment Analysis

By Policy Type: Comprehensive Plans Drive Adoption, Wellness Add-Ons Build Stickiness

Accident & Illness led with 82.36% of the pet insurance market share in 2025, while Wellness and Preventive-Care add-ons are forecast to expand at a 15.39% CAGR through 2031. Accident & Illness coverage accounted for the largest policy-type share in 2025, reflecting owner preference for broad protection against injuries and diseases, and Wellness and Preventive-Care add-ons are projected to grow the fastest through 2031 as routine care gets bundled with catastrophic coverage. This pattern supports higher retention as reimbursement for exams, and vaccines sustain frequent touchpoints and normalize filing claims during the policy year. Clear separation between insurance and wellness plans under the United States model reforms improves disclosure and avoids confusion when customers compare products with similar names but different coverage scopes. The pet insurance market benefits when wellness riders lift perceived value for monthly premiums, especially for younger pets that file routine claims even if major incidents are rare in early years. As embedded retail and clinic channels expand, packaging wellness at checkout or intake increases conversion in the pet insurance market by aligning financial protection with immediate care needs.

Accident-only policies remain a niche for price-sensitive owners and older pets that no longer qualify for comprehensive underwriting, yet the momentum resides with combined Accident & Illness plus wellness bundles that meet both preventive and unexpected needs. Direct links with veterinary information systems shorten reimbursement cycles and improve customer satisfaction, which in turn raises renewal rates for plans that deliver visible value at each visit. Carriers also refine deductibles and annual limits to better match expected spend by age and breed, making core packages more competitive at the point of comparison. Embedded partnerships with major retailers and clinics provide marketing scale and trusted environments for upsell to wellness-enhanced options, where engagement is higher, and cancellations are lower. With these trends, the pet insurance industry continues to shift from standalone catastrophic policies toward integrated health and wellness propositions that strengthen lifetime value for both customers and carriers.

Note: Segment shares of all individual segments available upon report purchase

By Animal Type: Dogs Anchor Revenue, Exotics Unlock Targeted Niches

Dogs captured 74.82% of the pet insurance market share in 2025, and other pets recorded the fastest momentum with a 13.95% CAGR projected to 2031. Dogs represent the majority of insured pets and policy revenue in 2025 and remain the primary focus for product design given their higher clinical complexity and per-policy premiums relative to cats. Feline penetration is rising as cat ownership grows among younger urban households, though per-policy economics differ due to lower visit frequency and claim severity. Exotics and other pets are projected to expand from a smaller base as select carriers extend underwriting to avian and small-mammal species, which requires specialized clinical knowledge and tailored coverage language. The pet insurance market experiences steady growth in canine policies as breed-specific risks shape pricing ladders and as owners prioritize comprehensive protection for orthopedic and hereditary conditions. Over time, better data on feline chronic conditions and indoor-lifestyle risk will support more precise segmentation and messaging that raise take-up among cat owners.

Dog-heavy books of business tend to scale faster, and investments in claims automation and direct payment at clinics can remove friction and boost satisfaction metrics for canine and feline owners alike. Product education remains important for exotics since coverage features need to reflect species-specific conditions, and underwriting must account for different morbidity profiles. The pet insurance market responds to these dynamics by adjusting distribution, content, and plan builders to match the expectations and budgets of each owner segment. Partnerships with specialty clinics and associations in exotics can improve product credibility and accelerate adoption among enthusiasts who know their species’ care requirements well. As data on cross-species outcomes improves, carriers can refine benefits and price points that align risk and value across dogs, cats, and other pets in the pet insurance market.

By Provider Type: Traditional Carriers Lead, Digital Players Scale Through Automation

Traditional carriers held 69.96% of the pet insurance market share in 2025, while insurtech and digital providers are set to grow at a 16.45% CAGR through 2031. Traditional carriers hold the largest provider-type share in 2025 due to brand recognition, multi-line cross-sell capacity, and established compliance operations across jurisdictions. Insurtech and digital providers grow faster as AI models compress loss-adjustment expenses and enable rapid policy binding without manual underwriting for standard risks. Full-stack providers that integrate direct payment to clinics deliver value through immediate adjudication, which strengthens retention by removing the reimbursement burden on owners. As automated adjudication expands, leaders apply hybrid human-in-the-loop models to handle complex claims and suspected fraud while granting instant decisions on routine submissions. These operating advantages, coupled with embedded distribution partnerships, enable digital players to capture younger demographics in the pet insurance market.

Traditional providers continue to modernize core systems and pursue partnerships to match the speed and user experience of newer entrants, including integrations at retail checkout and veterinary front desks. They also leverage underwriting capacity and risk management to offer broader benefit options and limits for high-cost procedures, which helps retain long-tenured customers. The pet insurance industry is converging on best-of-both approaches as incumbents buy or partner with insurtechs and as digital challengers add depth in compliance and reinsurance relationships. In this environment, scale advantages come from data, automation, distribution reach, and the ability to connect to practice systems for fast payment in the pet insurance market. As growth continues, both cohorts refine product governance to align with evolving United States model law standards and consumer expectations.

Note: Segment shares of all individual segments available upon report purchase

By Sales Channel: Embedded Distribution Outpaces Intermediated Models

The intermediated model accounted for 48.66% of the pet insurance market share in 2025, and embedded models are expected to expand at an 18.66% CAGR through 2031. Intermediated channels still account for the largest share in 2025, although their growth decelerates as digital and embedded distribution absorb more of the incremental expansion. Embedded partnerships at retail, e-commerce, and veterinary clinics lift conversion by presenting offers during adoption, purchase, and appointment flows when willingness to enroll is high. Direct-to-consumer websites and aggregators continue to funnel informed shoppers, yet the most powerful conversion effects now come from checkout and point-of-care experiences. Employers add a complementary channel by enabling payroll deduction and streamlined enrollment, which integrates with benefits platforms as a voluntary option for employees. As these channels mature, the pet insurance market sees declining acquisition costs and higher retention, where distribution controls frequent engagement with the pet-care journey.

Intermediaries continue to serve complex cases and cross-sell within multiline personal lines, while embedded partners negotiate revenue shares that align incentives around long-term renewals rather than one-time commissions. Integrations into vet-practice software and retail POS reduce friction for quoting and enrollment, which raises attach rates for wellness-enhanced plans. The pet insurance market benefits from channel diversity that meets owners where they research, shop, and receive care, thereby increasing accessibility and convenience. Over time, embedded and employer channels are expected to drive a larger share of incremental premiums as product placement becomes a standard feature of the pet-care ecosystem. This shift supports the long-run expansion in the pet insurance market by aligning distribution with high-intent interactions.

Geography Analysis

Europe holds the largest regional position with 45.23% share in 2025, driven by a long-standing insurance-buying culture, high veterinary cost baselines, and consistent consumer familiarity with claims processes and benefits. The United Kingdom sustains elevated penetration as veterinary bills and standardized policy terms keep coverage relevant to households, while Sweden’s historically high participation reflects a cultural norm around responsible ownership that includes financial protection. Product clarity has improved in major European markets alongside consumer protection initiatives, which helps owners compare reimbursement levels and exclusions when choosing plans. Embedded partnerships across retail and clinic networks strengthen attachment rates at checkout and in appointment flows and support ongoing migration from intermediated models. With higher awareness and stable regulatory frameworks, Europe remains the anchor of the pet insurance market while new channels expand reach into underpenetrated segments.

North America ranks second by revenue and continues to grow as awareness rises and product experiences become faster and simpler through digital claims and direct payment with select providers. Written premiums expanded in 2025 on the back of higher enrollments and premium normalization to veterinary costs, though penetration varies sharply by state and urban density. The model law adoption across multiple states improves clarity on pre-existing conditions, waiting periods, and wellness programs, which reduces friction at renewal and supports retention. Employer channels add momentum by making payroll deduction available for voluntary coverage, while retail and clinic partners integrate quotes directly into point-of-sale and appointment workflows. The pet insurance market in North America benefits from operational advances like instant adjudication and hybrid AI-human claims models, which compress payout cycles and improve customer satisfaction.

Asia-Pacific is the fastest-growing region with a projected 14.89% CAGR through 2031, supported by urbanization, rising disposable incomes, and digital-first distribution that lowers barriers to enrollment. Japan’s direct-settlement infrastructure and wellness innovation create a blueprint for convenience and preventive outcomes that other markets seek to emulate as penetration increases. Australia, China’s tier-one cities, and select Southeast Asian markets are building on mobile-native behaviors and embedded digital ecosystems to introduce coverage at scale. As EHR adoption and standardized claims data improve, underwriting precision will increase and support more tailored offerings by breed and age across the region. Together, these shifts reinforce Asia-Pacific’s role as the global growth engine for the pet insurance market while Europe anchors total revenue and North America gains on improving awareness and product experience.