Regulatory Standards for Pet Insurance Passed by NAIC

The National Association of Insurance Commissioners (NAIC) recently approved the Pet Insurance Model Act. This new regulation was created in response to a substantial increase in annual premiums totaling around $2.8 billion in 2021, along with the introduction of new policies in the United States.

The law now includes guidelines for the sales process and specific disclosures for potential policyholders. Insurance agents selling pet insurance must be aware that the new regulations consider four key factors:

  1. Protections for consumers: The model law provides various protections for consumers regarding policy renewals, waiting period disclosures, policy limits, conditions, benefit schedules, and more. It mandates that insurance brokers offer complete information to customers for informed decision-making.

  2. Preexisting conditions: The law regulates how insurers can reject pet insurance claims based on preexisting conditions of covered animals. It places the burden of proof on the insurance company to demonstrate the applicability of preexisting condition restrictions.

  3. Wellness programs: To avoid customer confusion, the model law requires clear differentiation between pet wellness programs and insurance policies by insurance agents and carriers.

  4. Standards for training: Training requirements have been implemented to ensure that agents are adequately prepared to provide customers with the necessary information.

It is important to note that NAIC does not have legislative authority but serves as a regulatory support group comprised of chief insurance regulators from all 50 states, the District of Columbia, and five U.S. territories. While NAIC can propose model legislation, states have the authority to regulate insurance-related products and services, allowing them to adopt, modify, or forego such regulations.

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