Pet News

The American pet insurance landscape witnessed unprecedented expansion throughout 2025, culminating in record-high enrollment figures and financial gains. This substantial growth underscores a rising commitment among pet owners to safeguard their animal companions' health. The North American Pet Health Insurance Association (NAPHIA) published its comprehensive 2026 industry report on June 21, providing detailed insights into the market dynamics in both the United States and Canada. The findings reveal a significant increase in the number of insured pets and a notable surge in gross written premiums, even as the rate of premium growth saw a slight deceleration compared to previous years. The report emphasizes the dominant role of canine coverage within the market and highlights regional variations in pet insurance adoption and premium generation.

Surging Pet Insurance Adoption and Premiums

The year 2025 marked a new peak for pet insurance in the US, with coverage extending to approximately 7 million animals, a 9% year-over-year increase and a staggering 76% surge over the past five years. This expansion saw the overall penetration rate reach 4.3%, with dogs leading at 6% (around 5.2 million insured canines) and cats at 2.3% (roughly 1.7 million insured felines). The financial footprint of this growth was equally impressive, as gross written premiums (GWP) soared to a record $5.7 billion. While the GWP growth rate moderated to 19.7% for the year, it still signifies a substantial upward trend, driven by consistent increases in average premium costs. California emerged as a frontrunner, contributing nearly 20% to the national GWP, reflecting its large pet-owning population.

The increase in pet insurance penetration across the US in 2025 was a significant milestone, with a total of nearly 7 million pets now covered. This represents a robust 9% increase from the previous year and a remarkable 76% growth over the last half-decade. Dogs continue to be the primary beneficiaries of this trend, making up the vast majority of insured pets. The financial side of the industry also flourished, with gross written premiums (GWP) reaching an all-time high of $5.7 billion. Although the annual growth rate for GWP softened to 19.7% in 2025, it's important to note that this figure still indicates strong market expansion and is largely attributed to the steady rise in average premium costs. Regionally, California played a pivotal role in this expansion, leading the nation in both GWP contributions and pet ownership percentages, followed by states like New York, Florida, Texas, and New Jersey, underscoring the widespread adoption of pet insurance across diverse geographical areas.

Dominance of Dog Coverage and Evolving Premium Structures

In 2025, dogs solidified their position as the primary segment of the US pet insurance market, contributing an overwhelming 84.5% of the total in-force gross written premiums. Premiums for canine policies amounted to $4.8 billion, showcasing a substantial 17.6% year-over-year increase and more than doubling since 2021. Meanwhile, cat insurance premiums also saw significant growth, climbing 33.1% to reach a record $880 million, despite a slight easing from the previous year's growth rate. The analysis of average annual premiums revealed interesting dynamics. "Insurance with Embedded Wellness" policies experienced the strongest growth, with cat premiums rising 31.9% to $859 and dog premiums increasing 7% to $1,414. For "Accident & Illness" policies, premiums for cats and dogs grew by 12.6% and 11.5%, respectively, while "Accident Only" premiums remained relatively stable or slightly declined.

The robust performance of the pet insurance market in 2025 was largely propelled by the continued dominance of dog coverage. Canine policies alone accounted for an impressive 84.5% of all in-force gross written premiums, totaling $4.8 billion. This segment experienced a 17.6% increase from the previous year and an astounding 109% growth over the past five years. While cat insurance contributed a smaller share, it demonstrated considerable growth, with premiums surging by 33.1% to $880 million, marking its second-highest annual growth rate in five years. The report also delved into the nuances of average annual premiums across different policy types. Policies that include embedded wellness features saw the most significant premium increases, reflecting a growing demand for comprehensive coverage. Accident & Illness policies also recorded healthy premium growth for both species, indicating a strong market for broader health protection. In contrast, Accident Only premiums showed minimal fluctuation, suggesting a stable but less dynamic segment of the market, as pet owners increasingly seek more inclusive insurance solutions for their companions.

The United States has opted against extending the United States-Mexico-Canada Agreement (USMCA) for an additional 16-year period beyond its scheduled expiration in July 2036. Although the free trade pact, which underpins commercial relations among the three nations, is set to continue for another decade absent any member's withdrawal, this decision initiates an annual joint review process. This yearly evaluation will persist until either an extension is formalized or the agreement lapses on July 1, 2036. US trade representative Jameson Greer indicated ongoing discussions with Mexico and Canada to address perceived shortcomings and trade imbalances within the region. The USMCA, which came into effect on July 1, 2020, superseded the North American Free Trade Agreement (NAFTA) and modernized trade regulations, notably by strengthening currency manipulation disciplines and reforming food and agricultural trade, all while largely preserving tariff-free and non-tariff-free trade.

Industry groups have voiced significant apprehension regarding this development. The American Feed Industry Association (AFIA) expressed dismay, highlighting the USMCA's role as a cornerstone for growth and stability within the animal feed and pet food sectors. They contend that despite its imperfections, the agreement should not be allowed to expire in the coming decade. The AFIA further stressed that while bilateral agreements might tackle specific issues, they cannot fully replicate the efficiencies offered by a unified North American market. Constance Cullman, President and CEO of AFIA, emphasized that continuous annual reviews until 2036 would undermine the predictability essential for businesses to invest and compete effectively. Similarly, the Pet Food Institute (PFI), along with 160 other agricultural organizations, had advocated for the agreement's renewal, underscoring its importance in fostering stability, predictability, and science-based market access in Mexico and Canada for US producers. They noted that the agreement has been instrumental in enabling pet food manufacturers to confidently invest, export, and operate across the integrated North American market. In 2025, Canada and Mexico collectively accounted for nearly 60% of US pet food exports, solidifying North America as a vital hub for this trade.

The USMCA's most significant advantage for the pet food industry has been tariff-free trade among the three countries, which has enabled manufacturers to maintain competitiveness and avoid cost increases that might otherwise be passed on to consumers. Should the agreement not be extended, the immediate fallout is expected to be heightened trade uncertainty, which could introduce inefficiencies for American pet food exporters reliant on stable trade regulations to manage supply chains and uphold long-term contracts and business relationships effectively.

In an increasingly interconnected global economy, the stability of international trade agreements is paramount for fostering sustained economic growth and innovation. The pet industry's concerns underscore the ripple effects that policy shifts can have on diverse sectors, highlighting the critical need for clear, long-term trade frameworks. Ensuring predictable market conditions not only supports existing businesses but also encourages future investments, ultimately benefiting consumers through competitive pricing and product availability. A commitment to resolving trade uncertainties through constructive dialogue and renewed agreements can pave the way for continued prosperity and strengthen collaborative international relations.