What you need to know

The pet insurance market is growing strongly and there remains good potential for further expansion. However, it is also a heavily concentrated market, in which the three largest underwriters are responsible for around three quarters of total premium income. Rising veterinary inflation and tight margins mean it is difficult for smaller players to make significant inroads and, thus, a decent profit. Hence, some insurers have chosen to exit the market and others to join forces via merger and acquisition.

Despite the challenges, pet insurers are not short of distribution partners. There are numerous companies selling policies in the UK, most of which are from the general insurance, veterinary and retail sectors. They compete for business in a fairly crowded marketplace, but also benefit from having a large target audience. Mintel’s online survey shows that 59% of UK adults have at least one pet in their household, most commonly a cat or a dog.

Mintel’s consumer research also reveals what proportion of pet owners have insurance and what type of policy they have taken out. It identifies the main concerns shared by pet owners, and assesses policyholder attitudes and buying behaviour. Lastly, it explores the level of interest in certain policy features and benefits, including preferred referral networks, and assesses future buying and switching intentions.

Products covered in this Report

Pet insurance is designed to cover medical expenses if the insured pet becomes ill or is injured in an accident. Policies will not normally cover routine visits to the vet or events that could have been anticipated, such as routine vaccinations and neutering. Most products cater for cats and dogs, although there are policies available for rabbits, horses/ponies and more exotic pets.

Policies fall into three main categories:

  • High-level/lifetime policies – provide the most comprehensive cover, paying out a set amount for veterinary treatment (which may be a total amount per year or a set amount per condition), which renews each year in line with the renewal of the policy. They cover ongoing and recurring illnesses for the lifetime of the pet, providing the policy remains active (ie the premiums keep being paid). As a result, lifetime policies are often the most expensive option. Moreover, premiums will rise with the age of the pet, and as a result of any claims made.

  • Mid-level/‘per condition no time limit’ policies – provide cover for conditions up to a set amount but there is no time limit placed on how long the policyholder can claim for. Once the amount has been reached the condition is then excluded from any future payouts.

  • Basic-level/time-limited policies – provide cover up to a maximum amount per condition for a limited period of time (usually 12 months). After this time, the condition is excluded, even if the policy is renewed. Any further treatment needed after the 12-month period would need to be self-funded. These policies tend to be the cheapest, but offer the lowest level of cover of the three main types.

In addition, there are low-cost accident-only pet policies, which only provide cover for accidents and exclude cover for illnesses.

Few pet insurance policies on the market will cover pre-existing conditions. Those that do typically only cover historic conditions, ie those that have not been treated nor had any symptoms within the past two years. This can make switching provider difficult for policyholders.

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