Your pet insurance claims could come back to haunt you at renewal time. An increasing number of pet insurers are implementing claims history penalties. The hardest hit customers are seeing their renewal rates increase by over 5x, oftentimes without any knowledge that their insurer uses such penalties. In some cases, the insurer even tells customers they won't increase their rates based on their claims, but do so anyway.
Claims history penalties work by tracking the total amount of claims you've submitted over a certain period (usually 1-3 years). If the total exceeds certain cutoffs, your renewal rates are increased.
The beloe table contains all of the pet insurers I know of using claims history penalties, but don't think you're safe just because your insurer hasn't implemented these penalties yet or because they're currently minor. There's no guarantee they won't change in the future. For example, Embrace is going from a 1.1x maximum multiplier to a 5.0x maximum multiplier.
Claims history impacts more than just the rate you pay. These penalties twist the incentives for when insurers pay claims. If a customer is already over the threshold, it makes sense to delay paying the claim until after renewal. The reverse also applies. When a claim will cross the threshold resulting in a higher renewal rate, insurers are motivated to pay the claim quickly, making sure their customers pay the highest rates possible. It would be very easy for an insurer to implement such a system.
The best way to fight these penalties is to self-insure or use an insurer who does not use claims history penalties, but if you find yourself stuck, there's a few things you can do.
Currently, all of the insurers using claims history penalties are using fixed cutoffs, meaning even teeny, tiny claims can make a difference. Before these penalties, it always made sense to file claims. But now, if it's a small claim and you're near a cutoff, not submitting it could ultimately save you money. e.g. at Embrace, if you're at $290 in claims this year, it might make sense to pay for a $50 vet bill out of pocket rather than submitting the claim and pushing you over the $300 threshold. Of course, once you're over the highest threshold, submitting additional claims won't make things worse, so it's best to submit any claims you have at that point. You should also be able to request only partial reiumbursement. Continuing with Embrace examples, if you have only one claim for the year and it's for $300, you could submit it for $299.99. Your insurer should be able to tell you exactly how filing a claim will impact your rates.
The timing of claims also becomes important. If you have plenty of room before you hit a threshold, file the claim as soon as possible. However, if you're close to a threshold, you might want to wait until your renewal rate is set to file the claim, so that your rates aren't needlessly higher next year. Make sure not to wait too long though! Most insurers have a rather short time limit on when claims can be filed.