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Liu Lijun, who lives in Tianjin, has a Border Collie. A few years ago, a small dog accidentally fell off a step while playing in the yard and broke its leg. It cost about 12000 yuan from examination, surgery to hospitalization.

 

I didn't expect my pet to spend so much money on getting sick once. After this experience, Liu Lijun began to pay attention to pet insurance. She insured a pet medical insurance for her dog on the Internet platform, with a monthly premium of less than 40 yuan. The medical expenses incurred by accidents and most diseases can be reimbursed according to the agreed proportion. Although she has not yet applied for compensation, in her opinion, an insurance policy can at least provide a buffer for family expenses when a pet suddenly falls ill.

 

Medical expenses stimulate the demand for security

 

The "2026 White Paper on China's Pet Industry (Consumption Report)" shows that by 2025, the number of urban pets (dogs and cats) in China will reach 126 million, and the consumption market size of urban pets (dogs and cats) will be 312.6 billion yuan, a year-on-year increase of 4.1%. Among them, pet medical consumption accounts for 27.6%, about 86.3 billion yuan. The total proportion of pet owners born in the 1990s and 2000s is close to 70%, and young consumers are gradually becoming the main force in the pet consumption market.

 

The market demand continues to grow, but pet insurance is still in its early stages of development. On one hand, consumers hope to reduce their medical burden through insurance, while on the other hand, some insurance companies are facing pressure such as high payout ratios and pricing difficulties. To truly move from niche products to stable operations, pet insurance needs to overcome multiple challenges such as diagnosis and treatment standards, risk identification, and consumer trust.

 

Pet medical expenses are relatively high, which is related to the industry's own cost structure. Liu Lang, Vice Chairman of the National Companion Animal (Pet) Standardization Technical Committee and Vice President of the Chinese Veterinary Association, introduced that the research and development cost of veterinary drugs is relatively high, but the market size is relatively small, and the unit drug price is often higher than that of ordinary people's medication. At the same time, the CT, MRI and other equipment used in pet hospitals require significant investment and have limited actual usage frequency. Equipment depreciation and operating costs will ultimately be reflected in the diagnosis and treatment prices.

 

From the consumer perspective, pet diseases have strong uncertainty. Daily expenses such as deworming and vaccines are relatively controllable, but in the event of fractures, tumors, urinary system diseases, etc., the related costs may rapidly increase. For young consumers whose income is still in the accumulation stage, a sudden expenditure of tens of thousands of yuan is not easy.

 

Pet insurance thus gains development space. In 2020, the premium scale of pet insurance in China was only about 50 million yuan, and by 2025 it has grown to over 3 billion yuan. According to incomplete statistics, more than 50 property insurance companies have launched pet insurance products, with a total of about 500 products, mainly including medical insurance, accident insurance, liability insurance, and consignment insurance.

 

Among them, pet medical insurance is the main product in the market, generally covering the outpatient, examination, medication, and surgical expenses incurred by pets due to illness or accidents. The person in charge of the Product Operations Department of Da Tong Insurance Sales and Service Co., Ltd. introduced that most of the current products focus on medical treatment for diseases and provide basic protection for accidental injuries. Some products have expanded to third-party liability and surgical protection. The annual coverage of mainstream products mostly ranges from 7000 yuan to 30000 yuan, and different compensation ratios are set according to whether they are treated in designated hospitals.

 

From the perspective of insurance companies, pet insurance is not only a new business growth point, but also helps to expand the young consumer group and enrich the family risk protection scene. Some insurance companies cooperate with Internet platforms and pet hospitals to incorporate online consultation, vaccines, insect repellent, drug discounts and other services into their products. Pet insurance is gradually extending from a simple 'one-time compensation' to the full lifecycle health management of pets. Insurance is not just about compensating for expenses after illness, but can also become an entry point connecting pet owners, insurance institutions, and medical services, "said the person in charge.

 

However, pet insurance does not cover everything. When I bought insurance, I saw that the annual coverage amount was 20000 yuan, and I felt that the protection was quite high. But upon closer inspection of the terms, I realized that both outpatient and surgical services have a single payout limit, and the reimbursement ratio for medical treatment at designated and non designated hospitals is also different. Therefore, when buying pet insurance, we cannot only look at the total coverage amount, but also need to figure out how much can be reimbursed per time, how much can be reimbursed, which hospital to go to for medical treatment, and under what circumstances it is not reimbursed, "said Liu Lijun.

 

Blind box opening for medical treatment affects the claims experience

 

I feel like seeing a doctor for a pet is like opening a blind box, "which expresses the helplessness of many consumers. Ordinary consumers often find it difficult to judge whether diagnosis and treatment are necessary and whether the fees are reasonable. Even if they have already purchased insurance, they may still have a gap in their claims expectations with the insurance company due to the diagnosis and treatment items not being covered, the cost exceeding the single claim limit, or the hospital not meeting the agreement.

 

The person in charge of the Product Operations Department of Datong Insurance Sales and Service Co., Ltd. stated that pet medical fees are not transparent enough, the diagnosis and treatment process is not unified, and the popularity of electronic medical records is not high, which brings three challenges to insurance operations: firstly, there is a large difference in the cost of the same disease in different hospitals, which increases the difficulty of actuarial pricing; Secondly, the inconsistency between medical record writing and medical project coding has increased the cost of claims review; Thirdly, excessive medical treatment and false claims have increased the difficulty of risk identification.

 

This uncertainty also brings operational pressure to insurance companies. The premium for pet insurance is usually only a few hundred yuan, while single medical expenses can reach thousands or even tens of thousands of yuan. Once there are too many examination items, non-standard treatment plans, and abnormal cost increases, the insurance company's compensation costs may rapidly increase.

 

In addition, pet identification is also a challenge faced by the industry. Pets do not have a unified identification document, making it difficult for insurance companies to determine whether the insured pet and the visiting pet are the same. How to determine past medical conditions, whether medical expenses are true, and whether there is duplicate insurance also directly affect the efficiency of claims.

 

In the case of an increase in payout ratio, some insurance companies may control risks by raising premiums, reducing payout ratios, narrowing hospital coverage, or adjusting coverage responsibilities. Consumers may think that the product is "easy to insure but difficult to claim". In the long run, this situation is not conducive to consumers forming stable expectations, nor is it conducive to the continued operation of insurance companies.

 

Medical insurance collaboration solidifies the foundation for development

 

The key to solving the development problems of pet insurance lies in promoting more standardized and transparent pet medical and insurance services. At present, some insurance companies and Internet platforms have begun to strengthen cooperation with pet hospitals to improve risk identification and service capabilities by unifying diagnosis and treatment standards, establishing electronic medical records, and sharing claims information.

 

Based on over 5 million pet insurance claims cases, the Ant Insurance platform selects partner hospitals from multiple dimensions such as diagnosis and treatment experience, treatment ability, and cost performance, and displays information such as average diagnosis and treatment prices and specialties to consumers. According to platform data, after applying unified diagnosis and treatment standards in some cooperative hospitals, the average single diagnosis and treatment amount for users decreased from 1830 yuan to 1448 yuan, a decrease of about 21%.

 

Reasonable reduction in medical expenses can not only alleviate the burden on consumers, but also help reduce the compensation pressure on insurance companies, creating space for optimizing product liability, reducing premiums, or expanding coverage. At present, the platform has directly connected claim materials with more than 2000 pet hospitals across the country, and 98% of pet insurance claims can be completed within 3 days.

 

The relevant person in charge of the Product Operations Department of Datong Insurance Sales and Service Co., Ltd. believes that insurance institutions can strengthen cooperation with large chain pet hospitals, promote the interconnection of medical records, inspection reports, and fee data, and carry out joint modeling and dynamic pricing based on real diagnosis and treatment data. At the same time, it is possible to explore the establishment of a hierarchical diagnosis and treatment network, guide common diseases to seek medical treatment in community pet hospitals, and refer complex diseases to specialized hospitals to improve the efficiency of medical resource utilization.

 

From the perspective of industry development, pet insurance still needs to further solidify its data foundation. Pet breed, age, weight, medical history, as well as the incidence, treatment methods, and average costs of different diseases, are all important criteria for insurance pricing. However, the development time of pet insurance in China is relatively short, and the accumulation of historical data is relatively limited, making it difficult for insurance companies to establish mature risk models like car insurance.

 

Insurance institutions can strengthen pet identity authentication and health record construction, and promote the application of technologies such as chips, nose print recognition, and image recognition in the insurance and claims process. At the same time, relying on electronic medical records and claims data, analyzing the risk differences of different varieties, ages, and diseases, gradually forming a more refined pricing system. For pets with good health, continuous insurance coverage, and fewer claims, it is possible to explore offering renewal discounts; For pets with a higher risk of illness, the risk can be controlled through differentiated premiums, deductibles, and health management services.

 

For consumers, they should truthfully inform their pets of their age, breed, and health condition before purchasing insurance, carefully read the waiting period, past medical conditions, hospital scope, deductible, and single claim limit agreements, etc; Keep medical records, examination reports, and expense receipts when seeking medical treatment to avoid incomplete materials affecting claims. (Economic Daily reporter Wu Yadong)

 

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