Pet insurance is the next big upsell for retailers like PetSmart, Sam’s Club

Such deals have been emerging over the past few years. In 2020, Walmart started selling pet insurance from Petplan, allowing Walmart customers to save up to 10% on insurance policies. In 2021, Walmart began offering a pet prescription program — now, Nationwide pet insurance members can purchase commonly prescribed pet medications at Walmart pharmacies by showing an insurance card. Two years later, the retailer began offering Nationwide pet insurance through its website. Petco also began offering pet insurance through Nationwide in 2024, and Costco has offered pet insurance through Figo for several years at a discounted price.

At the end of 2024, just over 7 million pets were insured in North America, a 12.2% increase from a year before, according to the North American Pet Health Insurance Association. While the industry is growing at a fast pace, it still touches just a sliver of all pets. NAPHIA estimates that only 3.92% of the 163.5 million dogs and cats in the U.S., and 3.6% of 17.2 million pets in Canada, were insured in 2024. Therefore, there is a big incentive for pet insurers to pair with retailers to reach a wide base of potential policyholders. The retailers, on the other hand, get another service that broadens their offerings to a growing base of pet owners.

“It’s really interesting how many people say that they care for and love their pet but aren’t prepared to actually do so when it comes down to the financial implications of owning or maintaining a pet,” said Jim Tax, president of Independence Pet Group, which includes pet insurance brands such as ASPCA Pet Health Insurance, AKC Pet Insurance, Figo, Pets Plus Us and PetPartners. The company insures more than 800,000 pets across the U.S. and Canada.

“We try and meet customers wherever they’re doing research, wherever they’re shopping for their pets and wherever they’re showing that passion,” Tax added. “That’s ultimately where we’re going to start to build brand awareness as an industry.”

Growth in pet ownership during the pandemic, rising vet costs and growing expectations that pet care should be similar to human medical treatments — like treating cancer, repairing ACLs, or treating allergies, diabetes and broken bones — have led to the growth in the industry, said Scott Taylor, president of Spot Pet Insurance.

“The expectations of pet parents are very much similar to what you would want for your children,” Taylor said. “Years ago, the labs didn’t need to be as sterile as they are today, and the equipment didn’t need to be as cutting-edge — now, there are [higher standards]. That comes with a significant cost, as well.”

For retailers, offering pet insurance allows them to deepen their relationships with pet owners, who, according to the American Pet Products Association, represent about half of U.S. households.

“By providing simple, convenient shopping and affordable solutions to take care of pets across all areas — including food, treats, toys, apparel, durables and services — Walmart delivers real value, especially during this inflationary time,” a Walmart spokesperson told CNBC in 2023. At that time, the company partnered with veterinary telehealth provider Pawp to offer Walmart+ members a year of free access to virtual veterinarians. That was alongside the retailer’s pet insurance and prescription offerings, as well as the membership’s other services like delivery, streaming and fast-food discounts.

PetSmart’s pet insurance partnership was also started in an aim to offer all the products and services pet owners need under one roof, the company told Modern Retail.

“We have long offered expert services, including grooming in every store, veterinary care, pet training, Doggie Day Camp and PetsHotel, but we did not have a pet insurance partner,” Rob Pace, svp of veterinary health services at PetSmart, said in an email. “By teaming up with Healthy Paws, we can connect pet parents with trusted coverage options, further positioning us as the go-to retailer for comprehensive pet care solutions.”

Spot’s Taylor said the increasing number of pet insurance companies and the growing amount of advertising dollars that have come into the market have created more awareness around the sector and likely were behind why it caught the attention of retailers.

“The continued awareness … of pet insurance has grown exponentially,” Taylor said. “[Retailers] see the increase in interest in their pet categories and are looking for ways to — in Sam’s Club’s case — delight their members and provide something innovative in the marketplace,” Taylor said.

The differentiation Taylor is referring to is that the partnership with Spot not only allows Sam’s Club members to save up to 15% on customizable pet insurance, but it also offers access to more than 110 common pet medications at Sam’s Club pharmacies. As part of this program, the retailer is also offering a flea, tick and heartworm preventative for cats and a heartworm preventative for dogs for no out-of-pocket cost.

“Typically, with pet insurance, you might get prescribed something, then you have to submit a receipt to the insurer, and they’ll maybe send you a check afterward — you might not be sure that everything is covered,” Sherri Keeth, vp and divisional merchandise manager of health care and over-the-counter at Sam’s Club, told Modern Retail in an interview in July. “We worked with Spot to create something really unique in the market, where we have a full list of covered drugs, and you know how much they’re going to cost right out of the gate.”

From the insurance companies’ perspective, it’s all about visibility at scale. Figo — which is part of Independence Pet Group — has had a partnership with Costco in the U.S. for almost four years, according to Tax. Tax said the insurer had reached out to Costco to see if it had interest because the retailer had just started rolling out its Kirkland dog food brand. Independence Pet Group also has a partnership with GOVX to provide discounts to its members and with telecom provider Telus in Canada.

Tax said the company found a need to position its products as relevant where pet owners are already shopping: at the pharmacy picking up pet medications, looking at a dog bed as they’re passing through Costco or getting dog food via an e-commerce website.

“If you had asked me 15 years ago if any level of insurance had a place in retail, I would have looked at you cross-eyed,” Tax said. “There’s no way I would have seen that overlap coming, but I think consumers are really blending the lines of where they shop for things. … We need to be more dynamic.”