Embrace planning to charge pets 5x more based on prior claims
The short version: If American Modern's new CA filing is approved, Embrace's 80,000 California customers will see their rates increase by 29.7% on average, before accounting for age increases. The hardest hit are older pets with recent claims. A pet aged ten or older who was paid $500 or more in claims in each of the last three years will pay 5× what the same pet pays with no claims.
Embrace is replacing its small 5-10% claims free discount with a new Claim History penalty. At each renewal the company looks back three policy years and marks each one: a year with $500 or more in paid, closed claims counts against the pet, and a year under $500 doesn't. The multiplier depends on how many of the three years count, and on the pet's age.
| Pet's age | No claim years | One | Two | Three |
|---|---|---|---|---|
| Under 5 | 0.95× | 1.09× | 1.37× | 1.84× |
| 5 to 9 | 0.95× | 1.25× | 1.84× | 2.99× |
| 10 and older | 0.95× | 1.44× | 2.48× | 4.77× |
Accident & illness policies only. A year counts once paid claims reach $500. New pets, with no history, are rated at 1.00×.
The penalty lands hardest on old pets with ongoing conditions, the ones whose owners can't move them, because any other insurer would exclude those conditions as pre-existing. A single $500 year is enough to put a ten-year-old's renewal 52% above a claim-free pet's.
Embrace argues that claims predict claims. Few would disagree. However, that doesn't mean penalizing claims makes sense in pet insurance. Unlike in auto insurance, where drivers can take steps to avoid accidents like slowing down or using their blinkers, pet owners have little control over their pets' health. The vast, vast majority of customers don't have a way to avoid claims. They're responsible pet owners doing everything they can to care for their pets. Chronic illnesses don't have a magical fix.
Adding insult to injury, when many of these customers enrolled with Embrace, Embrace proudly stated they do not increase premiums due to claims. It's an incredibly unfair situation for Embrace's customers. Many of them never would've chosen Embrace to begin with, had they known about these claim penalties.
From the claims FAQ on Embrace's website, captured April 7, 2024.
Today, these large claim penalties are still awaiting approval from the California Department of Insurance. If Embrace has its way, these penalties will begin February 1, 2027. This filing is Embrace's second try at a California increase: I petitioned the Department to challenge the first one, and here is what happened.