The Challenge of Rising Pet Insurance Costs
The COVID-19 pandemic has led to pet ownership soaring in the UK, yet growth of the pet insurance market is lagging due to prices. Price is proving the main barrier to uptake.
The pets most commonly insured are dogs and cats, but the vast majority of these are uninsured. According to GlobalData’s 2021 UK Insurance Consumer Survey, 41.6% of dog and cat owners have not insured their furry friends because they believe insurance is too expensive. A further 19.5% of individuals did not do so because they hold a health plan from the vet for their animal.
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A big challenge for insurers is expanding their customer base in a market where prospective customers do not always understand the benefits of pet insurance or the differences between competing health plans offered by vet surgeries. While pet insurance offers protection against unexpected vet bills in the event the animal falls ill or is injured, health plans typically cover vaccinations, parasite treatments, and routine health checks but not veterinary treatment. As such, health plans tend to have a lower price tag attached to them. Ultimately, it is important for insurers to convey to pet owners the benefits of holding pet insurance and make them understand that such policies can complement health plans.
In addition, a significant proportion of pet parents (10.5%) feel that it is not cost-effective insuring their pets because they are young. While young animals are less likely to suffer from severe illnesses than older pets, enrolling them from a young age still makes sense because young pets are often more adventurous, making them more likely to suffer accidents. In addition, insuring a pet without any clinical conditions means that if they develop any health conditions in life they will be covered by their policy. In contrast, only a small number of insurers offer cover for pre-existing conditions – and these policies are comparatively expensive. Indeed, pre-existing conditions was among the other reasons cited for not taking out pet insurance.
The Pet Food Manufacturers’ Association estimates that 3.2 million households in the UK acquired a pet since the start of the COVID-19 pandemic, bringing total pet-owning homes in the country to 17 million. Many took the opportunity to raise kittens and puppies while they worked from home, while social isolation prompted others to look for a furry companion.
Meanwhile, further data from the Association of British Insurers shows that while the pet insurance market experienced a 6.4% increase in gross written premiums to £1.3bn in 2020, the number of subscribers increased by just 1.0%. Thus, there are good growth opportunities for insurers to secure new business upon tackling market barriers.
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