The pandemic changed many things - the way we work, live, and play. And one of those was the rise in pet ownership. As we were couped up in our homes and working alone, with our co-workers only reachable via Zoom (NASDAQ: ZM) or Slack (NYSE: CRM), many were in search of a companion and an at-home office mate. Statistics show that Gen Z and Millennial generations comprise a staggering 70% of all pet owners.
And shrewd entrepreneurs are taking notice. They see an unmet need in a large and growing market and as new startups dedicated to pet insurance have begun to pop up. A few of these names might be familiar: Lemonade, Figo, Healthy Paws, Embrace, Fetch by Dodo, Waggle, Napo, PetPlan, Dalma, to name just a few of the many others. However, not all are solely dedicated to pet insurance.
Lemonade Inc. (NYSE: LMND), for instance, is one of the most popular renters' insurance companies in the U.S. The company also offers homeowners' and car insurance. Pet insurance covers everything from veterinary bills and treatment expenditures to hospitalizations, and surgeries, among other healthcare services. The average cost of pet insurance is not cheap. Monthly premiums can range from $10 to $100; however, most owners pay between $30 to $50.
Average pet insurance costs. How much you pay for pet insurance varies greatly. Monthly premiums can range from as low as $10 to higher than $100, though most pet owners can expect to pay between $30 and $50 per month for a plan with decent coverage.
It is estimated that the global pet insurance market is ~$6.2 billion as of 2021. IMARC Group expects the market to grow at a CAGR of 12.5% to reach a staggering $12.6 billion by 2027. Pet insurance is growing rapidly in popularity as the number of insured pets in the U.S. reached 4 million as of 2021, a 28% increase from the year prior. The rise in pet insurance companies has been, in part, driven by the rising costs of veterinary healthcare as well as a cultural shift from "pet ownership" to "pet parenting".
Research conducted by Shelly Volsche, an anthropologist at Boise State University, highlights this phenomenon in her research: "Fertility rates continue to decline globally amidst the second demographic transition, marked by urbanization, increased educational attainment, and most importantly, a new flexibility in life-course organization. As a result, some individuals are choosing to bring companion animals in the home rather than raising children."
Pet insurance startup, Napo, recently raised a £15 million Series A funding round, led by DN capital. The Company has stated that since launching in December 2021, it has insured over 35,000 pets. This is what companies like Napo are doing to not only set themselves apart from the competition but also target a sub-segment of the pet owner population that is willing to spend more per pet. They are penetrating the pet parenting marketing, offering not only veterinary and hospital insurance but also pet health and ownership education.
While companies are riding the pet-parenting wave, the rise in cost of living, layoffs, and general financial anxiety among many could put a damper on pet adoption rates. Expanding outside of pet insurance could just be these startups' best bet.