A lot of articles on pet insurance quote the APPMA's statistics on how many pet parents have pet insurance in the US. Here is an excerpt from an APPMA press release on pet trends for 2006:
"According to the Survey, pet insurance is also gaining in popularity with three percent of dogs and one percent of cats having pet insurance (up from 2002 stats showing two percent and less than one percent, respectively)."
The survey referred to is the APPMA’s National Pet Owners Survey, which is published every year and gives some excellent stats about the pet parent population that otherwise would be unavailable.
In a prior entry, I have shown that less than 0.5% of pets in the US are insured based on individual policy numbers for the different companies selling pet insurance in 2004 - a "bottom up" approach. Even with one year's growth since then, it's not nearly the numbers that the APPMA show from their survey.
Here's a "top down" approach to looking at the market based on the numbers of pets in the US.
If we use the Pet Food Institute’s numbers for the pet population in 2005, there were 63 million dogs and 81.4 million cats in the US, for a total of 144.4 million dogs and cats (in turn sourced from Datamonitor, a European market research firm).
If we use the corresponding APPMA's stats, there were were 73.9 million dogs and 90.5 million cats in the US, for a total of 164.4 million dogs and cats. The APPMA's numbers are higher by 20 million so you can see the difficulties in collecting stats on cats and dogs in the US.
If we use the lower numbers (more conservative), if 3% of dogs in the United States, or 1.9 million, have pet insurance, and each pays an average of $300 per year for pet insurance, then dogs alone would generate $567 million in premium. 1% of cats would be 814,000 cats at an average annual premium of about $275 for a total of $224 million. Note that the average premiums are pretty common, you can do online quotes yourself to see.
So taking these two numbers together, pet insurance in the United States is somewhere in the vicinity of a $791 million market, give or take $100 million (using the APPMA population numbers, the total would be even higher at $914 million).
Now, according to Packaged Facts, a research firm that reports on the North American pet insurance market biannually, they estimate that pet insurance premiums were worth $160 million in 2005 based on the companies that were selling pet insurance at that time. That’s one fifth of what we came up with from our top down calculation. The Packaged Facts numbers indicate a penetration closer to 0.4%, not much different than we estimated from adding up the individual companies' numbers.
I'm not sure why the APPMA's numbers are so different - perhaps the sample of people who answer these surveys are more likely to have pet insurance?
What the APPMA do have right, and more important for Embrace Pet Insurance, is that the market is growing, with more and more pet parents signing up for pet insurance over time. It's just that there's more room for growth than is often quoted.
