Americans are spending more and more on their pets. Animal owners continue to spend money for their companions whether it's for food, medicine or veterinary care. Since 1994, the pet industry has consistently risen with expenditures reaching at $72.56 billion in 2018, according to the American Pet Products Association. The total market revenue is predicted to keep growing rapidly in the following years.
Americans love pets. In 2018, about two out of every three U.S. households owned a pet. Dogs and cats are the two most popular companion animals in U.S. homes. The number of cats and dogs in the United States is forecasted to increase at a faster rate in the U.S. population from 2019 to 2024. More pets mean a bigger market for pet insurance industry.
There are two main reasons to investing in pet insurance companies:
1. There is an animal humanization mindset among pet owners. The human pet relationship has changed significantly over the last 30 years and brought humans and animals far closer together. Humans and animals’ relationship have become more intense and responsible, recognizing that they're not just an animal, but that they're an important individual within the family. To that end, pet owners are purchasing indulgent items like premium pet food, clothing and insurance just like people buying things for their babies. Because of the advanced understanding of animal welfare, people want their pets to live longer and healthier lives, which creates a tremendous opportunity for pet insurance companies.
2. Pet insurance industry is also a fast-growing business with huge potential. The sector has grown at an average rate of 20% since 2014, yet only 1% to 2% of dogs and cats are insured in the U.S. For comparison purposes, penetration in Europe ranges from 25% to 40%. In Sweden, for example, 30% of pets have insurance policies. In the United Kingdom, about 23% of pets are insured. However, this figure will rise in the U.S and provides the basis for industry growth. IBISWorld noted that total industry revenue increased at an annualized rate of 16.8% over the past five years, totaling $1.6 billion in 2020.
So, who are the top players in U.S? The companies holding the largest market share in the Pet Insurance industry include Nationwide Pet Insurance, Trupanion, Petplan Pet Insurance and ASPCA Pet Health Insurance. The chart below offers more details.
Detailed information (2015 data)
Note: The majority of these companies are private, thus their estimated revenues vary wildly between Olwer and Hoover's (as demonstrated by Nationwide's Owler and Hoover's profiles)
All in all, medical care for pets is going to be more and more advanced and frequent. There is tremendous opportunity in the pet care industry. Investors have surged in the pet market to participate in the booming trend where animal insurance stocks have risen 208% from 2014 to 2019, with future growth expected to expand in the future.