35,000 Clinics, 35,000 Formats: Why Pet Insurers Still Cannot Read a Vet Invoice

Every veterinary clinic in the United States writes up treatments its own way, and that chaos is quietly bankrupting pet insurance operations from the inside. Veterinary record standardization remains the unsexy infrastructure problem no one wants to fund until claims pile up, adjusters burn out, and loss ratios spiral. For MGAs entering a market that surpassed $5.2 billion in written premium in 2024, fixing this data plumbing is not optional; it is the difference between a scalable business and an expensive paper-shuffling exercise.

The irony is sharp: pet insurance is growing faster than almost any specialty line, yet the data infrastructure behind claims adjudication looks like it belongs in the 1990s. For MGAs planning to launch pet insurance programs, veterinary record standardization is not a back-office detail. It is the single largest operational risk that will determine whether your claims workflow runs in minutes or days.

This guide breaks down exactly where the data problem lives, what it costs, and how forward-thinking MGAs can solve it before it drains margins.

What Do the Latest Statistics Reveal About Veterinary Records and Pet Insurance Data?

The latest data shows a market with massive scale but primitive data infrastructure. Over 7 million North American pets are insured, yet only 55 percent of veterinary clinics use digital records, and nearly a quarter lack any practice management system at all. AI-driven verification achieves 55 to 65 percent straight-through processing, but adoption remains early-stage, with just 17.5 percent of veterinarians using AI scribes.

Metric	Value	Source, Year
North American pets insured	7.03 million	NAPHIA, 2025
U.S. pet insurance market penetration	3.9% of dogs and cats	NAPHIA, 2025
Veterinary clinics using digital records	55%	GM Insights, 2025
Practices without any management system	23.5%	AVMA, 2025
Veterinary EHR market value	$689.3 million	GM Insights, 2025
Straight-through processing with AI verification	55-65%	Insurnest Industry Data, 2025
AI scribe adoption among veterinarians	17.5%	VIN, 2025

Why Is Veterinary Record Standardization the Biggest Data Problem in Pet Insurance?

Veterinary record standardization is pet insurance's biggest data problem because no universal coding mandate exists in U.S. veterinary medicine, forcing every clinic to document treatments in its own format. This fragmentation means insurers cannot automate claim intake, benchmark costs, or detect fraud at scale. The result is a 30 to 40 percent inflation in claims handling expense compared to lines with standardized medical codes.

Unlike human health insurance, which relies on ICD-10 and CPT codes enforced by CMS, the veterinary world operates without a regulatory body requiring coded clinical data. Each of the roughly 35,000 veterinary practices in the United States may use a different practice management system, different abbreviations, and different line-item descriptions for the same procedure.

For an MGA building a claims management platform, this means every inbound invoice is essentially a unique document. Adjusters cannot simply match codes to a fee schedule. They must read, interpret, and manually validate each line, a process that consumes time, headcount, and accuracy.

1. No Regulatory Coding Mandate

Human health insurance benefits from decades of ICD and CPT standardization. Veterinary medicine has no equivalent federal requirement. The VeNom Coding Group maintains a voluntary standard, but adoption remains uneven across U.S. clinics.

2. Proprietary Practice Management Systems

Major vendors like IDEXX, Covetrus, and eVetPractice each store data differently. Export formats, field names, and procedure taxonomies vary. An MGA pulling records from five different systems gets five different data schemas.

3. Free-Text Clinical Notes

Many veterinarians still document diagnoses and treatments as narrative paragraphs rather than coded entries. Extracting structured data from free text requires NLP capabilities that most early-stage MGAs do not yet have.

How Does Veterinary EHR Fragmentation Impact Pet Insurance Claims Speed?

Veterinary EHR fragmentation directly adds two to five business days to pet insurance claims cycle times because adjusters must manually decode clinic-specific terminology, handwritten notes, and unstandardized invoices. MGAs using automated veterinary invoice verification cut this lag dramatically, but only when inbound data can be parsed into structured fields.

When a policyholder submits a claim, the attached veterinary invoice is the primary source document. If that invoice uses internal codes, abbreviations, or bundled line items that do not map to the insurer's fee schedule, the claim enters a manual review queue.

1. Manual Review Bottleneck

Step	Manual Workflow	Automated Workflow
Invoice Receipt	Email or portal upload	API or portal upload
Data Extraction	Human reads line items	OCR + NLP extraction
Code Mapping	Adjuster interprets terms	AI maps to taxonomy
Fee Validation	Manual lookup	Auto-benchmark check
Decision	3-7 days	Minutes to hours

2. Error Propagation

When adjusters interpret ambiguous records, error rates climb. A diagnosis labeled "GI issue" in one clinic might map to three different conditions with different coverage implications. Inconsistent interpretation leads to inconsistent claim outcomes, which erodes policyholder trust and invites regulatory scrutiny.

3. Scaling Impossibility

Manual interpretation does not scale. As claims volume grows, you must hire proportionally more adjusters. MGAs targeting end-to-end claims workflow automation cannot reach straight-through processing without solving the data input problem first.

Stop losing days on every claim to manual data translation. Talk to Our Specialists Visit Insurnest to learn how we help MGAs launch and scale pet insurance programs.

What Coding Systems Are Available for Veterinary Medical Records?

The primary coding system available is VeNom Codes, which released version (h) in February 2026, covering diagnoses, procedures, presenting complaints, and diagnostic tests. SNOMED-CT also provides veterinary extensions. However, neither system is mandated in the U.S., so adoption depends entirely on voluntary clinic participation and practice management software support.

1. VeNom Codes

Attribute	Detail
Maintained By	VeNom Coding Group
Latest Release	Version (h), February 2026
Coverage	Diagnoses, procedures, presenting complaints, diagnostic tests
Scope	Companion animal general and referral practice
Adoption	Primarily UK/Europe; limited U.S. penetration

2. SNOMED-CT Veterinary Extension

SNOMED-CT is the dominant clinical terminology in human medicine. Its veterinary extension maps animal-specific concepts into the broader ontology. It offers deep granularity but requires significant implementation effort and licensing considerations.

3. Internal Proprietary Taxonomies

Some large veterinary corporate groups like Mars Veterinary Health and NVA maintain internal coding standards across their networks. These are valuable within their ecosystems but do not interoperate with independent practices, which still represent the majority of U.S. clinics.

For MGAs evaluating technology stack decisions, choosing a claims platform that supports multiple coding inputs and maps them to a single internal taxonomy is essential.

How Does Poor Veterinary Data Quality Affect MGA Underwriting and Pricing?

Poor veterinary data quality forces MGAs into conservative pricing assumptions that either overprice policies and lose market share or underprice and suffer adverse loss ratios. Without standardized historical claims data broken down by condition, breed, age, and geography, actuarial models lack the granularity that breed-based predictive risk scoring demands.

Accurate underwriting requires knowing what conditions cost to treat, how frequently they occur in specific populations, and how those costs trend over time. When veterinary records arrive as unstructured text, this intelligence is locked inside documents rather than flowing into pricing engines.

1. Loss Ratio Volatility

MGAs without clean data cannot set accurate IBNR (Incurred But Not Reported) reserves. This volatility makes carrier partners nervous and reinsurers skeptical. It directly impacts an MGA's ability to negotiate favorable terms.

2. Inability to Segment Risk

Standardized records would allow an MGA to price a Labrador Retriever in Texas differently from a French Bulldog in New York based on actual regional treatment costs. Without that data, the MGA applies blanket assumptions that penalize low-risk segments and subsidize high-risk ones.

3. Competitive Disadvantage Against Incumbents

Established pet insurers with ten-plus years of proprietary claims data hold a structural advantage. New MGAs can close this gap faster by building data warehouses that normalize incoming veterinary records at the point of ingestion.

Can AI and NLP Solve the Veterinary Record Standardization Gap?

AI and NLP can close 60 to 70 percent of the standardization gap by extracting clinical entities from free-text records and mapping them to recognized codes automatically. MGAs deploying AI-driven invoice verification already achieve straight-through processing rates of 55 to 65 percent, compared to just 15 to 25 percent for manual adjudication workflows, according to 2025 industry benchmarks.

The technology stack required includes optical character recognition for scanned invoices, named entity recognition for clinical terms, and a mapping layer that converts extracted entities to the MGA's internal taxonomy.

1. NLP-Powered Entity Extraction

Modern NLP models trained on veterinary corpora can identify drug names, procedure descriptions, diagnosis phrases, and dosages from narrative clinical notes. Accuracy improves with fine-tuning on domain-specific data, which is why MGAs that invest early in labeled training sets build a compounding advantage.

2. AI Code Mapping

Once entities are extracted, AI models map them to standardized codes. A veterinary bill review AI agent can cross-reference line items against fee schedules, flag outliers, and auto-adjudicate routine claims without human intervention.

3. Continuous Learning Loops

Every manually reviewed claim becomes training data for the next iteration. Over 12 to 18 months, an MGA's NLP accuracy curve steepens, and the percentage of claims requiring human review drops steadily.

Metric	At Launch	After 12 Months	After 24 Months
Straight-Through Processing	25-35%	50-60%	65-75%
Avg. Claims Cycle Time	5-7 days	2-3 days	Under 24 hours
Adjuster Headcount per 10K Claims	8-10	5-6	3-4

What Should MGAs Prioritize When Building a Veterinary Data Integration Strategy?

MGAs should prioritize three foundational investments: open-API partnerships with the top five practice management platforms, an internal normalization taxonomy, and an NLP extraction layer for non-digital records. These three capabilities convert fragmented veterinary data into a structured, analytics-ready pipeline that supports underwriting, claims, and fraud detection simultaneously.

1. Practice Management Software Partnerships

Partner with vendors that collectively cover the majority of U.S. clinics. Negotiate API access agreements that allow real-time or near-real-time data exchange. Ensure contracts permit data use for claims adjudication and actuarial modeling.

2. Internal Normalization Taxonomy

Build or license a single coding standard that serves as your system of record. Map all incoming data, regardless of source format, to this taxonomy at the point of ingestion. This enables consistent reporting across your entire book of business.

3. OCR and NLP for Legacy Records

Not every clinic will offer API access. Many will still fax or email PDFs. Invest in OCR and NLP infrastructure that can handle scanned, photographed, and handwritten invoices. Pair this with a veterinary upcoding detection AI agent to catch billing anomalies during extraction.

4. Data Warehouse and Analytics Layer

Centralize all normalized data in a warehouse optimized for actuarial queries. This is the foundation for historical claims data analysis, loss triangles, and trend monitoring that carriers and reinsurers expect.

Build your data advantage before competitors lock in clinic partnerships. Talk to Our Specialists Visit Insurnest to learn how we help MGAs launch and scale pet insurance programs.

How Are Global Markets Approaching Veterinary Data Standardization?

Global markets are moving toward mandatory veterinary data standardization, with South Korea launching an official Animal Medical System Improvement Task Force in April 2026 specifically to unify medical codes across clinics. The UK and EU markets benefit from broader VeNom Code adoption, while the U.S. remains the largest pet insurance market with the least standardized veterinary data infrastructure.

1. South Korea's Mandatory Reform

South Korea's Ministry of Agriculture, Food and Rural Affairs (MAFRA) launched a task force in April 2026 to standardize veterinary medical data. The explicit goal is enabling a functioning pet insurance market, recognizing that without unified codes, insurers cannot price or adjudicate efficiently.

2. UK and European Adoption

VeNom Codes originated in the UK veterinary referral community and have broader adoption across European practice management systems. This gives European pet insurers a data advantage that U.S. MGAs must replicate through technology rather than regulation.

3. Lessons for U.S. MGAs

U.S. MGAs should not wait for regulatory mandates. Instead, they should build standardization into their API integration strategies and technology stack, creating de facto standards through market adoption rather than legislative action.

What Role Does Pre-Existing Condition Detection Play in the Standardization Problem?

Pre-existing condition detection is directly dependent on standardized veterinary records because identifying whether a condition predates the policy requires reading and comparing medical histories across multiple clinics, time periods, and documentation formats. Without coded records, a pre-existing condition detection AI agent cannot reliably trace a condition's first appearance in the medical timeline.

1. Multi-Clinic Record Matching

Pets often visit multiple clinics over their lifetime. When each clinic documents in a different format, matching records across providers becomes a manual, error-prone process. Standardized codes would allow automated cross-referencing.

2. Temporal Analysis Requirements

Detecting pre-existing conditions requires establishing when a condition first appeared relative to the policy effective date. Free-text records make date-condition linking unreliable, leading to disputes during claims denial and appeals processes.

3. Regulatory Compliance Risk

Incorrectly denying a claim for a pre-existing condition exposes the MGA to regulatory action and reputational damage. Standardized records reduce this risk by providing auditable, coded evidence for every coverage decision.

Turn fragmented vet records into a competitive underwriting advantage. Talk to Our Specialists Visit Insurnest to learn how we help MGAs launch and scale pet insurance programs.

Frequently Asked Questions

What is veterinary record standardization in pet insurance?

Veterinary record standardization is the process of unifying how clinics document diagnoses, procedures, and treatments so that pet insurers can read, compare, and adjudicate claims automatically. It replaces free-text notes with coded entries that map to recognized taxonomies like VeNom codes or SNOMED-CT.

Why do unstandardized veterinary records slow down pet insurance claims?

Without uniform codes, every invoice arrives in a different format. Claims adjusters must manually interpret abbreviations, handwritten notes, and clinic-specific terminology. This manual review adds two to five days per claim, raises labor costs, and increases the chance of errors or disputes with policyholders.

What coding systems exist for veterinary medical records?

The most widely adopted system is VeNom Codes, maintained by the VeNom Coding Group, covering diagnoses, procedures, presenting complaints, and diagnostic tests. SNOMED-CT also provides veterinary extensions. Neither system is mandatory in the United States, which creates fragmentation across the 35,000-plus clinics nationwide.

How does veterinary EHR fragmentation affect MGA underwriting accuracy?

Fragmented EHR data means MGAs cannot benchmark treatment costs by condition, breed, or geography with confidence. Pricing models rely on incomplete datasets, forcing conservative assumptions that either overprice policies and lose customers or underprice them and erode margins over time.

Can AI solve the veterinary record standardization problem for pet insurers?

AI can significantly reduce the impact of unstandardized records by using natural language processing to extract clinical entities from free-text notes and map them to standard codes. MGAs using AI-driven invoice verification report straight-through processing rates of 55 to 65 percent versus 15 to 25 percent with manual workflows.

What percentage of veterinary clinics use electronic health records in 2025?

Approximately 55 percent of veterinary clinics have adopted digital record systems as of 2025, according to GM Insights. However, adoption does not equal standardization. Many clinics use proprietary formats that do not interoperate with insurer platforms, and roughly 23.5 percent still lack any practice management system.

How should an MGA build a veterinary data integration strategy for pet insurance?

Start by partnering with practice management software vendors that support open APIs and coded outputs. Map incoming data to a single internal taxonomy. Layer NLP and OCR tools to handle non-digital or free-text records. Invest in a data warehouse that normalizes every claim into a consistent schema for analytics and reporting.

What is the business cost of poor veterinary data quality for pet insurance MGAs?

Poor data quality inflates claims handling expense by 30 to 40 percent through manual review, rework, and disputes. It also degrades loss ratio accuracy, delays reserve setting, and limits the MGA's ability to negotiate favorable reinsurance terms because actuarial models lack the granular, credible data reinsurers demand.

Sources

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Veterinary Record Standardization: Solving Pet Insurance Data Gaps