Best’s Market Segment Report: Pet Insurance Business Showing Growth as US Inland Marine Results Remain Strong

Despite growing pains, there are early indications that insuring family pets is evolving into a meaningful niche business line for the U.S. inland marine insurance segment, according to a new AM Best report.

While specific full-year results on pet insurance won’t be available until March 2025, data available through the third quarter of 2024 indicates that the premium level could eclipse the $4 billion mark by year end and potentially reach as high as $4.5 billion. The new Best’s Market Segment Report, titled, “Mixed Early Pet Insurance Results but Inland Marine Remains Strong,” notes that 2024 marked the first year that pet insurance results have been separated out from the U.S. inland marine segment’s premium and loss data.

The report states that the loss ratio for pet insurance through the first nine months of 2024 was higher than for the rest of inland marine insurance line, due possibly to growing demand for insurance to help cover rising veterinary costs. Including pet insurance, the inland marine line’s loss ratio for the period remained in the post-COVID-19 pandemic range of 44-49%. In addition, the top 10 pet insurers account for 90% of the pet insurance market, making it a highly concentrated market.

Pet insurance is just one part of the inland marine insurance market, which serves as a catch all and largely includes products and materials that are shipped over land. Results have been very consistent over the past 10 years for the inland marine market, with 2020 being an anomaly owing to the pandemic. “Overall, inland marine remains profitable, outperforming the entire property/casualty insurance industry by a wide margin and doing so with steady growth, buoyed by growing construction and increasing travel,” said Christopher Graham, senior industry analyst, AM Best.

Some of the report’s other findings include:

• Inland marine business remains profitable, with a direct loss ratio more than 20 points better than that of the property/casualty industry overall. Inland marine’s loss ratio has been worse than the P/C industry’s only once in the past 14 years—in 2020, when contingency claims (event and travel cancellations) spiked due to the pandemic shutdowns.
• Direct premium written continues to grow for inland marine, rising 6.9% in 2023, with the calendar year total more than double the amount of a decade earlier. Overall inland marine premium, absent pet insurance, is still growing, albeit at a slower rate.
• Inland marine’s net combined ratio results and profitability have been consistent, with even less variance than direct loss ratio results. Even in 2020, the net combined ratio for inland marine was at least marginally better than that of the P/C industry.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=350776.

A video discussion with Graham and David Blades, associate director, Industry Research & Analytics, AM Best, is available at http://www.ambest.com/v.asp?v=inlandmarine0125.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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