Table of Contents
Executive Summary
-
- The market
- The market continues to experience strong growth
-
- Figure 1: Forecast of pet insurance premiums – Fan chart, 2011-21
- Sub-sector performance
- Veterinary inflation remains a major threat…
- …being largely responsible for rising claims costs
- Companies and brands
- A heavily concentrated market…
-
- Figure 2: Market share of the top three underwrites, by gross written premium, 2015
- …but one populated with numerous distributors
- New partnerships formed over the past year
- RSA makes waves with the launch of its new referral network
- The consumer
- It’s very common to own a pet in family households
-
- Figure 3: Ownership of pets, by number of each type, June 2016
- More pet owners are taking out insurance…
-
- Figure 4: Proportion of pet owners with insurance, 2014-16
- ...most of which opt for mid-level cover
-
- Figure 5: Type of pet policy held, 2014 and 2016
- Fear of being faced with a large vet bill is the main purchase driver
-
- Figure 6: Level of concern relating to common pet problems – Dog and cat owners only, June 2016
- Pet owners favour providers that can demonstrate their expertise
-
- Figure 7: Agreement with statements about arranging pet insurance, June 2016
- Significant consumer interest in referral networks
-
- Figure 8: Provision of and interest in extra benefits/services, June 2016
- Nearly half of all policyholders might be prepared to switch at renewal
-
- Figure 9: Future consideration of switching, amending or upgrading policy, June 2016
- What we think
Issues and Insights
-
- Target parents with family-friendly policies and attractive packaged solutions
- The facts
- The implications
- Quality is as important as price
- The facts
- The implications
The Market – What You Need to Know
-
- A growing market with good expansion potential
- Dog insurance is by far the largest sub-sector
- Veterinary inflation continues to pose a challenge
- The cost of claims incurred
Market Size and Forecast
-
- Increase in subscribers boosts premium income
-
- Figure 10: Size of the pet insurance market, by exposure years, number of subscribers and gross written premiums, 2011-15
- Good potential for future market expansion
- Strong growth forecast
-
- Figure 11: Forecast of pet insurance premiums – Fan chart, 2011-21
-
- Figure 12: Forecast of pet insurance gross written premiums, at current and constant prices, 2016-21
- Forecast methodology
Market Segmentation
-
- Number of dog policy subscribers was up 11% in 2015
-
- Figure 13: Number of pet insurance policy subscribers, by type of pet, 2011-15
- Rise in popularity of multi-cat policies
-
- Figure 14: Exposure to subscriber ratio, by type of pet (cat and dog only), 2011-15
- Dog policies account for the largest proportion of pet premiums
-
- Figure 15: Pet insurance gross written premiums, by type of pet, 2011-15
- Fall in the average premium for other pet policies
-
- Figure 16: Average pet insurance premium (based on exposure), by type of pet, 2011-15
Market Drivers
-
- The UK has nearly as many pets as people
-
- Figure 17: Size of UK pet population, 2015/16
- The need to make an unexpected visit to the vets is fairly common
-
- Figure 18: Number of unexpected visits to vets within past two years, June 2014
- Veterinary costs account for nearly a third of total household spending on pets
-
- Figure 19: Average weekly household spending on pets – UK, by category, 2008-14
- The cost of claims incurred continues to rise
-
- Figure 20: Value and incidence of pet insurance claims incurred, claims ratio and average claim value, 2011-15
- Other factors driving up premiums
Companies and Brands – What You Need to Know
-
- The supply side is heavily concentrated…
- …while there are numerous distributors
- Movers and shakers
- RSA introduces a new way of dealing with non-urgent claims
Market Share
-
- Top three underwriters control around three quarters of the market
-
- Figure 21: Leading pet insurance underwriters – UK, by gross written premium, 2013-15
- Unable to compete with leading incumbents, some smaller players have exited the market
- Aviva moves up the rankings
- Markerstudy acquires Ultimate Insurance Company
- Pinnacle also achieves strong premium growth
- The market continues to attract new distributors
-
- Figure 22: Selected providers of pet insurance and their underwriting partners, June 2016
Competitive Strategies
-
- Affinity partnerships and distribution developments
- New alliances
- Markerstudy launches new affinity division
- NCI’s ambitious plans to grow its pet business
- Brightside partners with Markerstudy
- Industry innovation and new product launches
- RSA introduces preferred referral networks for non-emergency treatment
- SunLife launches ‘straightforward’ pet insurance
- Bought By Many buys Brooks Braithwaite (Sussex) and aims to become the ‘next-generation insurance intermediary’
Advertising and Marketing Activity
-
- Providers cut back heavily on above-the-line advertising
- Petplan and Animal Friends account for three quarters of the industry’s adspend…
-
- Figure 23: Top 10 pet insurance advertisers using above-the line, online display and direct mail channels, 2013/14-2015/16
- …both of which invest in TV advertising for mass coverage
-
- Figure 24: Proportional distribution of pet insurance adspend, by media type, 2013/14-2015/16
- Pet insurers’ growing use of digital media
- SunLife’s April Fool promotion
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
-
- It’s very common to own a pet in family households
- More pet owners are taking out insurance…
- ...most of which opt for mid-level cover
- Fear of being faced with a large vet bill is the main purchase driver
- Pet owners favour providers that can demonstrate their expertise
- Significant consumer interest in referral networks
- Nearly half of all policyholders might be prepared to switch at renewal
Pet Ownership
-
- Around half the adult online population own a cat or dog
-
- Figure 25: Ownership of pets, by number of each type, June 2016
- Households with children are most likely to have cover
Penetration of Pet Insurance
-
- Rise in take-up of pet insurance
-
- Figure 26: Proportion of pet owners with insurance, 2014-16
- 62% of dog owners have insurance cover
-
- Figure 27: Penetration of pet insurance, by type of pet, June 2016
- Owners with multiple pets are less likely to have cover
-
- Figure 28: Penetration of pet insurance, by number of cats or dogs owned, June 2016
Type of Cover Held
-
- Most policyholders have mid-level cover
-
- Figure 29: Type of pet policy held, June 2016
- Fall in proportion of policyholders with comprehensive lifetime cover…
- …may be linked to aggregator influence
-
- Figure 30: Type of pet policy held, 2014 and 2016
Common Concerns Facing Cat and Dog Owners
-
- 68% of dog and cat owners are worried about having to pay for expensive treatment…
- …and 64% are concerned about their pet developing a recurring or lifelong illness
- 50% are worried about losing their pet, including 20% who are ‘very concerned’
-
- Figure 31: Level of concern relating to common pet problems – Dog and cat owners only, June 2016
Attitudes towards Pet Insurance and Buying Behaviour
-
- Around one in eight policyholders fail to check excess levels and exclusions prior to purchase…
- …while 54% find the different levels of cover confusing
- Demonstrate expertise and good claims handling to win over customers
-
- Figure 32: Agreement with statements about arranging pet insurance, June 2016
Awareness of and Interest in Policy Features and Extra Benefits
-
- Only 46% of policyholders say their provider offers a multi-pet discount
- High level of interest in referral networks
- Bereavement and legal advice lines also have strong appeal
- Potential cross-sell opportunity
-
- Figure 33: Provision of and interest in extra benefits/services, June 2016
Future Buying and Switching Intentions
-
- 47% of pet policyholders would consider switching
- 29% are open to the possibility of paying more for lifetime cover
- 42% of lifetime policyholders would consider buying their pet insurance as part of a wider package of products
-
- Figure 34: Future consideration of switching, amending or upgrading policy, by type of policy currently held, June 2016
Appendix – Data Sources, Abbreviations and Supporting Information
-
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
-
- Total market forecast – Best- and worst-case scenarios
-
- Figure 35: Forecast of new pet insurance premiums – Best- and worst-case scenarios, at current prices, 2016-21
- Forecast methodology
Back to top