Berkshire, Aetna Jump Into Pet Insurance Market

WASHINGTON (TheStreet) -- While ranting and raving continues unabated over health care reform, that debate has focused on the needs of humans. But what about pets?

The health insurance market for animals is set to expand as veterinary costs rise and consumers spend more on their pets. While less than 1% of owners own health insurance policies for their pets, those in the marketplace see it as a profitable niche that's likely to grow.

Even Warren Buffet has jumped into the game. On Oct. 1, Central States Indemnity of Omaha, a Berkshire Hathaway(BRK.A Quote) company, announced a partnership with Nestle(NSRGY Quote) to market pet-centric insurance options.

Purina, a unit of Nestle, launched a pet health insurance division in June 2008. Central States will underwrite its plans. Other big companies have jumped into the market.

In July, Aetna(AET Quote) joined forces with pet insurance provider Pets Best Insurance Services to provide 50,000 businesses and 79 working Chambers of Commerce in Connecticut and Western Massachusetts discounted rates on pet insurance plans. Progressive(PGR Quote) has promoted a policy perk that covers pets injured in auto accidents up to $1,000.

While interest in pet insurance has been weak in the U.S. until recently, the plans have been more popular in Europe. In Sweden, half of pet owners insure their animals. In the U.K., 20% of owners hold such plans. Spending trends suggest that Americans are poised to catch up.

According to the American Veterinary Medical Association, approximately 60% of U.S. households have at least one pet and there are more than 72 million dogs and nearly 82 million cats in the U.S. Pet-related expenditures in 2009 are expected to reach $45 billion, $25 billion of which will be spent on veterinary medicine. There are approximately 850,000 active pet health insurance policies in this country.