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Pet Insurance - UK - December 2003

INTRODUCTION AND ABBREVIATIONS
Aims of the report
Consumer research
ACORN
Abbreviations
EXECUTIVE SUMMARY
Just under half of the population currently own a pet
Veterinary inflation continues to rise
There are now around 1.85 million pet insurance policies in force…
…and the total market is worth around £245 million
Petplan remains market leader, but Direct Line and RSA have gained share
Over half of pet owners made unplanned visits to the vets in last two years
Four in ten pet owners cannot easily afford their vets’ bills
Nearly half of all pet owners think pet insurance is worth the money
The research suggests penetration could rise to over a fifth of pet owners
MARKET FACTORS
Just under half of all households in the UK own a pet
The dog population has been in decline for the last ten years…
Figure 1: Total population of household cats and dogs in the UK, 1992-2002
…but the cat population has risen over the last decade
Changing lifestyles are having a big impact on patterns of pet ownership
The increase in one-person households has affected pet ownership
Figure 2: Marital status, England and Wales, by gender, 1971-2001
Changes in employment patterns have also affected pet ownership
Figure 3: Female participation in the labour force, 1984-2003*
A fall in the number of children could restrain the pet population
Figure 4: Number of children in the UK population, by age group, 1997-2007
Economic backdrop should remain favourable for pet insurers
Figure 5: Households’ real disposable income, 1997-2007
Households are spending around £3.5 billion a year on their pets
Figure 6: Household spending on pets, 2001-02
More vets are spending a greater portion of time on small animals
Figure 7: Total number of vets and proportion of time spent on activities, 1998-2002
Veterinary inflation has encouraged take-up of pet insurance
Figure 8: Veterinary fees for initial consultation, by region, 2000-03
Further medical advances are likely to see vets’ fees rise even further
Increasing consumer awareness could provide a boost to sales
Consumers need to be aware of what cover they are buying
MARKET SIZE
There are now around 1.85 million pet insurance policies in force
Figure 9: Number of pet insurance policies in force, by type of pet, September 2003
Around six in ten pet insurance policies cover dogs
The pet insurance market is now worth around £245 million
Figure 10: Value of the pet insurance market, by gross premium income, 1997-2003
KEY PLAYERS
The number of pet insurance providers has increased sharply
The top four companies account for over 70% of the market
Figure 11: Pet insurance market share, by number of policies in force, 2003
Petplan remains the clear market leader
Direct Line and More Th>n are gaining market share
Pet Protect’s market share has slipped in the last few years
Other providers account for three in ten policies
PRODUCT AND PRICING DEVELOPMENTS
Most products cover a range of different benefits
Lifelong cover versus fixed contract policies
Figure 12: Comparison of pet insurance premiums, November 2003
The industry is likely to see a further shift to risk-based pricing
Multiple pet discounts could become increasingly important
DISTRIBUTION AND PROMOTION
Pet insurers use a variety of partners to distribute their products
Veterinary practices remain a key channel of distribution
The supermarkets have also become important distributors
The Internet has developed into an important access point
Advertising will play a crucial role in future market growth
Pet insurers spent over £5 million on advertising in last 12 months
Figure 13: Total adspend on pet insurance, by media type, October 2002-September 2003
TV advertising accounted for almost 40% of total adspend
Direct Line tops the pet insurance adspend table…
Figure 14: Major pet insurance advertisers, October 2002-September 2003
…while More Th>n has also invested heavily in advertising
Top six advertisers accounted for 93% of adspend in last 12 months
THE CONSUMER
Almost one in 15 consumers own a pet insurance policy
Figure 15: Ownership rates for selected insurance products, September 2003
Just under half of all households own at least one pet
Figure 16: Proportion of adults living in households with pets, September 2003
Dogs and cats are the most common pets
Most dog and cat owners have more than one pet in their household
Figure 17: Pet cross-holdings, September 2003
35-54-year-olds are the most likely to own a pet
Figure 18: Proportion of adults living in households with pets, by gender, age and socio-economic group, September 2003
The presence of children has a major impact on pet ownership
Figure 19: Proportion of adults living in households with pets, by lifestage, presence of children, marital status and working status, September 2003
Figure 20: Proportion of adults living in households with pets, by TV region and ACORN categories, September 2003
Figure 21: Proportion of adults living in households with pets, by technology usage and newspaper readership, September 2003
Figure 22: Proportion of adults living in households with pets, by commercial TV viewing and supermarket usage, September 2003
One in seven pet owners hold a pet insurance policy
Figure 23: Penetration of pet insurance, by type of pet, September 2003
Dog owners are the most likely to take out pet insurance
A fifth of ABC1 pet owners hold insurance cover
Figure 24: Penetration of pet insurance, by gender, age, socio-economic group and TV region, September 2003
Ownership of pet insurance lowest among heavy television viewers
Figure 25: Penetration of pet insurance, by supermarket usage and commercial TV viewing, September 2003
Over half of pet owners made unplanned visits to the vets in last two years
Figure 26: Frequency of unexpected visits to the vets, by gender, age and socio-economic group, September 2003
AB pet owners are more likely to make unforeseen trips to the vets
Pet insurance policyholders visit their vets more often
Figure 27: Frequency of unexpected visits to the vets, by ownership of pet insurance, September 2003
Dog owners are the most frequent visitors to the vets
Figure 28: Frequency of unexpected visits to the vets, by type of pet, September 2003
Four in ten pet owners cannot easily afford their vets’ bills
Figure 29: Perceived affordability of vets’ bills, by gender, age, socio-economic group and lifestage, September 2003
Almost half of 35-44-year-old pet owners struggle to pay vets’ bills
Marks & Spencer’s shoppers most likely to be able to afford vets’ bills
Figure 30: Perceived affordability of vets’ bills, by supermarket usage and commercial TV viewing, September 2003
Pet insurance holders are less likely to be able to afford vets’ bills
Figure 31: Perceived affordability of vets’ bills, by ownership of pet insurance, September 2003
Nearly half of all pet owners think pet insurance is worth the money
Figure 32: Perceived value for money of pet insurance, by gender, age, socio-economic group and lifestage, September 2003
18-34-year-olds are more likely to feel pet insurance is worth the money
Heavy television viewers see pet insurance as good value
Figure 33: Perceived value for money of pet insurance, by supermarket usage and commercial TV viewing, September 2003
More than eight in ten policyholders feel pet insurance is good value
Figure 34: Perceived value for money of pet insurance, by ownership of pet insurance, September 2003
More than three quarters of policyholders expect to renew their cover
Figure 35: Proportion considering arranging or renewing pet insurance, September 2003
Overall penetration could rise to more than one in five pet owners
Over a quarter of 35-54-year-old pet owners intend to take out cover
Figure 36: Proportion considering arranging/renewing pet insurance, by gender, age, socio-economic group and TV region, September 2003
Medium television viewers most likely to be considering taking out pet insurance
Figure 37: Proportion considering arranging/renewing pet insurance, by supermarket usage and commercial TV viewing, September 2003
THE FUTURE
Considerable potential to increase ownership of pet insurance
Pet insurance could develop into a mainstream product offering
The impact of veterinary inflation could hinder market growth
The shift to risk-based pricing is expected to gather pace
The next few years should see a substantial growth in Internet sales
FORECAST
A healthy future for the pet insurance sector
Figure 38: Forecast of the UK pet insurance market, by value, 2003-07
An innovative market
More pets mean more policy sales
Internet sales will continue to grow
Factors incorporated

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