Key Takeaways
- U.S. pet insurance gross written premium hit $5.2 billion in 2025, up 20.8% year-over-year. Premium growth is running more than twice as fast as enrollment growth, which means the average policy is getting significantly more expensive.
- Only 4.27% of U.S. pets carry insurance policies despite a decade of double-digit industry growth; among cats specifically, the number is just 2.29%, making feline coverage the industry’s largest untapped segment.
- If you’re shopping for coverage now, the math on premium escalation matters as much as the monthly quote: carriers typically raise rates 10-30% annually as pets age, meaning a policy that costs $50/month for a 2-year-old dog will likely cost $120-150/month by age 10. Enroll early or the lifetime cost calculus shifts against you.
The North American Pet Health Insurance Association released its 2026 State of the Industry Report on June 24, showing 7.6 million pets covered across North America, a 9% year-over-year increase in the U.S. and 3.9% in Canada. The headline sounds like a success story. The data underneath it is more complicated.
U.S. gross written premium reached $5.2 billion in 2025, according to the NAPHIA report, a 20.8% jump from $4.2 billion in 2023. Policy count grew 9%. Premium volume grew 20.8%. That gap is the number the industry’s press release glossed over, and it’s the number that explains why 95.73% of U.S. pets remain uninsured despite a decade of aggressive market growth.
Premiums are rising roughly twice as fast as enrollment. The industry calls this “protection gap.” A more precise description: a pricing gap that compounds as pets age, hitting the households that most need coverage the hardest and at the worst possible time.
What the Premium Growth Number Actually Tells You
The 20.8% GWP increase is not primarily a story about more policies being sold. Policy count grew 9% in the U.S. The remaining 11-plus percentage points in premium growth reflect rate increases, age-escalation on existing policies, and a market-wide shift toward higher-cost plans. Carriers including Trupanion and Independence American Insurance Company, the underwriter behind both Pets Best and Figo, received rate approvals averaging into the double digits from multiple state DOIs in the past 12 months alone.
For context: a $50/month accident-and-illness policy for a healthy 2-year-old mixed-breed dog will typically cost $80-120/month by age 6 and $120-160/month by age 10, before factoring any inflation-driven rate actions. That trajectory is structural, not incidental. Most carriers bake annual age-rated increases into their pricing models, and those increases compound on top of any market-wide rate action. Over a 12-year pet lifespan, the lifetime premium bill for a dog runs $7,000-15,000 at current price points. The NAPHIA data reflects a market that has been raising that number faster than it has been adding new policyholders.
That is the tension sitting underneath the “protection gap” framing. The industry treats the 95.73% uninsured rate as a consumer education problem. The premium trajectory suggests it is at least partly a consumer affordability problem.
The Dog-Cat Split and What It Means for Shoppers
The species breakdown in NAPHIA’s 2026 report sharpens the picture. In the U.S., 5.99% of dogs carry insurance policies versus just 2.29% of cats. Dogs are more likely to be insured for a structural reason: expected claim values skew higher, especially for breeds with orthopedic and respiratory predispositions. A French Bulldog owner is facing a 30-50% lifetime probability of BOAS surgery ($3,000-7,000 range at most specialty centers), meaningful hip dysplasia exposure, and IVDD spine risk if it presents. For that owner, expected claims can realistically exceed lifetime premium.
Cat owners face a different math. Cats are generally cheaper to insure, less surgery-prone on average, and more likely to have claims driven by the conditions NAPHIA’s 2026 top-10 list highlights: urinary tract infections, dental disease, GI issues, and respiratory problems. These are real costs, but they’re more predictable and less catastrophic than orthopedic surgery. For cat owners, the case for insurance is genuine but the average claim profile makes the premium-versus-expected-payout calculation tighter. The 2.29% cat penetration rate likely reflects that math.
For owners of either species, the pre-existing condition window is the most consequential thing the NAPHIA data doesn’t address. When I was working the desk at a midsize independent agency, the call I dreaded most was from a new client who had waited until their dog started limping before they went looking for insurance. Carriers review vet records from the prior 12-24 months at enrollment, and any documented condition becomes a pre-existing exclusion. A diagnosed cruciate ligament issue before the policy effective date is a lifetime exclusion at most carriers. At Trupanion, historically a right-knee ACL tear has been used to exclude the contralateral knee as a bilateral condition. Embrace explicitly does not treat bilateral conditions that way. The orthopedic waiting period, typically 6 months to 12 months at most carriers, means a dog limping at enrollment won’t see coverage for the condition diagnosed in month 5 either. The NAPHIA penetration numbers count every active policy, but they say nothing about how many of those policies have orthopedic exclusions that will matter at exactly the moment the owner thought they were covered.
If you’re a dog owner who hasn’t enrolled yet, looking at our best pet insurance for dogs breakdown before your pet develops a musculoskeletal issue is the difference between having coverage and having a policy with the claim you actually need excluded from it.
The Number That Matters Most
The NAPHIA 2026 report covers 2025 claim data. The top claim drivers for dogs included gastrointestinal issues, ear infections, skin conditions, anxiety, and allergies. For cats: GI issues, dental disease, urinary tract infections, anxiety, and respiratory conditions. These are the conditions that drive the majority of paid claims. They are also, in most cases, the conditions where the premium math works most clearly in the policyholder’s favor. They’re common, they recur, and the insured population actually files on them.
The catastrophic conditions, IVDD spine surgery, cancer treatment, GDV emergency surgery, hip replacement, represent a smaller share of claim frequency but a much larger share of claim dollars. The industry’s $5.2 billion in gross written premium against the U.S. vet market’s roughly $60 billion in annual spending means coverage is still absorbing a fraction of actual veterinary expenditure. For the 4.27% of pets that are insured, the coverage works. For the 95.73% that aren’t, a GDV surgery or cancer diagnosis arrives as an unhedged event.
The practical action for anyone on the fence: enroll while the pet is young and the policy is cheap. The age-rated escalation built into most pricing structures means the premium gap between enrolling at age 2 versus age 5 compounds over the life of the policy, and the pre-existing condition clock starts running from the vet visit before the application, not from when you decided it was time to buy. For a deeper look at which carriers handle pre-existing condition definitions most favorably for long-term holders, see our best pet insurance comparison.
The NAPHIA 2026 report is honest about the protection gap. It’s less forthcoming about who created it.
