Americans love pets, and it's estimated that over 48 million households have a dog and over 31 million households have cats as pets. Many people consider their pets to be family members, and like any other family member, medical care is sometimes needed. In the early 1980s pet insurance was developed and has since grown significantly. 

Recently the Delaware Department of Insurance issued a Bulletin addressed to all insurance companies and licensed insurance producers authorized to conduct business in Delaware, relaying information on the passage of House Bill 156 on August 31, 2023. The Bill adds new Chapter 88 to Title 18 of the Delaware Insurance Code, titled the "Pet Insurance Act".

The Act is an adoption of the NAIC's Pet Insurance Model Act, which was passed by its members on August 1, 2022 to establish appropriate regulatory standards for the relatively new and growing pet insurance industry. Like any other insurance product, states want to ensure that consumers are treated fairly for any type of coverage they might purchase.   

Some key elements included in the Delaware Act are:

Disclosure requirements

  • A pet insurer must disclose coverage exclusions due to preexisting or chronic conditions or other disorders.
  • 30 day "free-look" period for consumers: the insured has the right to examine and return the policy within 30 days of its receipt and have the premium refunded if they are not satisfied with the policy for any reason, unless they have filed a claim.
  • A waiting period must be clearly and prominently disclosed to consumers prior to the policy purchase. 

Policy conditions

  • The pet insurer has the burden of proving that a preexisting condition exclusion applies for a claim being made.
  • Insurers may impose a 30-day waiting period before coverage starts for an illness or orthopedic condition not resulting from an accident. The waiting period can be waived upon completion of a medical examination. A waiting period cannot be applied to a renewal of existing coverage.

Sales practices for wellness programs

  • A pet insurer or insurance producer may not market a wellness program as pet insurance. If a pet insurer or insurance producer sells a wellness program, the purchase of the program must not be a requirement to the purchase of pet insurance. 
  • If a wellness program undertakes to indemnify a loss from a certain specified contingency or peril, they are determined to be transacting in the business of insurance and are subject to the Insurance Code.

Insurance producer training

  • A producer may not sell pet insurance until after the producer is appropriately licensed and has completed the required training
  • An insurer must ensure that their producers are appropriately trained
  • Training must include information on all of the following:
    • A preexisting condition and waiting period
    • The difference between pet insurance and a noninsurance wellness program
    • A hereditary disorder, congenital anomaly, or disorder and chronic condition and how a pet insurance policy interests with them
    • Rating, underwriting, renewal, and any other related administrative topic

 

Insurers will have until December 1, 2023 to refile any currently-approved pet insurance policy forms to bring them into compliance with the Act. 

 

The Delaware DOI Bulletin can be found here.

 

Related articles: