Rising pet health costs drive growth and innovation in insurance market

Emily Jones ; 2025-12-10 04:16:19

Accident claims this year focused on lameness, fractures, as well as eye injuries and dental issues

Insurance News

By Josh Recamara

Dec 01, 2025Share

Pet health costs continue to rise, with varying factors such as breed, age, regional veterinary cost variations and workplace adoption shaping underwriting and pricing strategies.

Spot Pet Insurance's 2025 Wrapped report, based on hundreds of thousands of claims, highlighted key patterns in pet injuries and illnesses, as well as cost variations across breeds, states and types of care.

Insurance claims trends in 2025

According to the report, accident claims remained focused on lameness, fractures, eye injuries and dental issues, while illness claims were dominated by stomach problems, allergies, urinary and reproductive disorders, skin conditions and respiratory issues. The average claim cost increased to $456, reflecting rising veterinary expenses.

Notably, some claims reached as high as $34,917 for illnesses and $16,390 for accidents, underscoring the importance of comprehensive coverage, according to the report.

Preventative procedures, such as microchip implantation, were also a growing area of claims, with over 12,600 policyholders submitting requests in 2025.

The report also noted a drop in the average age of pets at enrollment from 3.6 years in 2024 to 3.2 years in 2025. Early enrollment benefits insurers by expanding lifetime policy value and engaging owners before costly claims arise. Encouraging coverage at a younger age can improve risk pools and reduce overall claims volatility, according to the report.

State and breed risk considerations

Insurance premiums are increasingly influenced by state-level veterinary costs and breed-specific risk factors. States like Idaho saw average claim costs rise by 20%, while Texas experienced a 24% decrease.

For insurers, adjusting underwriting and pricing to reflect these regional differences is critical. Similarly, high-risk breeds - including Wetter Hounds, Schiller Hounds, and Pulis - command higher premiums, while lower-risk breeds such as Olde Boston Bulldogge and Entlebucher Mountain Dogs allow for more competitive pricing.

Workplace pet insurance and customer experience

A major trend in 2025 was the 57% increase in companies offering pet insurance as an employee benefit. This presents insurers with a growing distribution channel and a way to spread risk across larger pools while attracting new csustomers.

Workplace plans also support brand loyalty and can reduce acquisition costs for individual policies, the report said.

On claims processing, Spot Pet said its processing averaged three days, with automated wellness claims completed 1.5 days. For insurers, efficient and transparent claims handling strengthens trust, encourages renewals, and can help manage claim severity.

Opportunities for insurers

Insurers can expand coverage to include routine care, preventative procedures, and wellness benefits, reflecting the evolving needs of pet owners.

Digital platforms, AI-driven analytics, and personalized policy guidance provide further opportunities to differentiate offerings and improve customer engagement. Clear communication and education about coverage options also enhance adoption and help policyholders make informed choices, the report said.