Pet Insurance - UK - August 2018

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
GWP increased by 14% in 2017, reaching £1.2 billion and set for further growth
Figure 1: Forecast of pet insurance gross written premiums – Fan chart, 2013-23
Dog and cat policies’ premiums continue to rise
Figure 2: Average pet insurance premium (based on exposure), by type of pet, 2013-17
UK pet population continues to grow
Gross written premiums growing faster than claims incurred
Figure 3: Gross claims incurred, written premiums and claims ratio, 2013-17
Average pet claim unchanged but remains at its highest
Figure 4: Number of claims notified and average claim value, 2013-17
Companies and brands
Petplan remains the largest pet insurer in the UK
Figure 5: Pet insurance provider, May 2018
Market developments pointed at increasing convenience
Above-the-line advertising: Animal Friends accounts for 40%
Figure 6: Total above-the-line, online display and direct mail advertising expenditure on pet insurance, 2013/14-2017/18
TV is the dominant advertising channel, but radio bounces back
Figure 7: Total above-the-line, online display and direct mail advertising expenditure on pet insurance, by media type, 2017/18
The consumer
55% of pet owners have pet insurance
Figure 8: Penetration of pet insurance, by type of pet, May 2018
70% of policyholders have lifetime cover
Figure 9: Type of pet policy held, May 2018
18% of policyholders have switched provider in the last 12 months
Figure 10: Pet insurance switching activity, May 2018
Personalisation in payment options could prove popular
Figure 11: Attitudes towards pet insurance, May 2018
Value is the biggest reason not to buy insurance
Figure 12: Reasons for not having pet insurance, May 2018
What we think
ISSUES AND INSIGHTS
Realising the market’s full potential: beware of the dog
The facts
The implications
From expanding to enhancing
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
GWP reach £1.2 billion, a growth of 14% in 2017
Dog and cat policies’ premiums continue to rise
Dog and cat populations rise, while spending on pets continues to grow
Gross written premiums growing faster than claims incurred
MARKET SIZE AND FORECAST
Pet insurance premiums grew to £1.2 billion in 2017…
Figure 13: Value of pet insurance gross written premiums, 2013-18
…driven by an 11% increase in the number of subscribers
Figure 14: Size of the pet insurance market, by exposure, subscribers and gross written premiums, 2013-17
Pet insurance premiums forecast to continue showing strong growth
Figure 15: Forecast of pet insurance gross written premiums – Fan chart, 2013-23
Figure 16: Forecast of pet insurance gross written premiums, at current and constant prices, 2013-23
Forecast methodology
MARKET SEGMENTATION
The number of policyholders returned to double-digit growth in 2017
Figure 17: Number of pet insurance policy subscribers, by type of pet, 2013-17
Exposure growing more slowly than number of subscribers
Figure 18: Exposure* and exposure to subscriber ratios**, 2013-17
Dog policies account for 76% of pet insurance GWP
Figure 19: Pet insurance gross written premiums, by type of pet, 2013-17
Dog and cat policies’ premiums continue to rise
Figure 20: Average pet insurance premium (based on exposure), by type of pet, 2013-17
MARKET DRIVERS
Dog and cat population continues to grow
Figure 21: Size of UK pet population, average of 2017 and 2018
Households with children more likely to have pets
Figure 22: Proportion of households with children that have pets, 2017 and 2018
Households now spend £5.40 per week on pets
Figure 23: Average UK weekly household expenditure on pets, by component, 2013-17
Gross written premiums growing faster than claims incurred
Figure 24: Gross claims incurred, written premiums and claims ratio, 2013-17
Average pet claim unchanged but remains at its highest
Figure 25: Number of claims notified and average claim value, 2013-17
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Petplan remains the largest pet insurer in the UK
Market developments pointed at increasing convenience
Above-the-line advertising: Animal Friends accounts for 40%
PET INSURANCE PROVIDERS
Petplan remains the largest pet insurer in the UK
Figure 26: Pet insurance provider, May 2018
Pet specialists’ appeal is clear
Figure 27: Type of pet insurance provider, May 2018
Retailers could be shaking things up
Opportunities for insurers and charities to work together
COMPETITIVE STRATEGIES
Bought By Many introduces Snap Claims tool for a speedy claims process
Figure 28: Bought By Many’s Snap Claims Tool
24/7 vet nurse chat as a valuable extra for policyholders
Figure 29: PawSquad 24/7 advice line via chat and video chat
Direct Line and Pet Drugs Online launch new medicine delivery service
Pets at Home phases down its insurance products, directing new customers to Petplan
Homebase stops offering pet insurance
Compare Cover adds pet insurance to its site
Health subscription box Protect My Pet to partner with insurance providers
Figure 30: Protect My Pet Plus Health subscription box
Pet insurance as an increasingly attractive employee benefit
Opportunities for insurance to cover travelling pets in times of uncertainty
PRODUCT CASE STUDY: PET HEALTH CASH PLANS
What are they?
Advantages
Prospects for expansion
Health Cash Plans and Insurance
Connection with insurers
Examples
ADVERTISING AND MARKETING ACTIVITY
Above-the-line advertising expenditure decreased in the last year
Figure 31: Total above-the-line, online display and direct mail advertising expenditure on pet insurance, 2013/14-2017/18
Animal Friends accounts for 40% of adspend
Figure 32: Top 10 pet insurance advertisers using above-the-line, online display and direct mail channels, 2015/16-2017/18
TV is the dominant advertising channel
Figure 33: Total above-the-line, online display and direct mail advertising expenditure on pet insurance, by media type, 2017/18
Sponsorships and partnerships
Cashback sites
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
55% of pet owners have pet insurance
70% of policyholders have lifetime cover
18% of policyholders have switched provider in the last 12 months
Personalisation in payment options could prove popular
Value is the biggest reason not to buy insurance
PENETRATION OF PET INSURANCE
Pet ownership continues to increase
Figure 34: Ownership of pets, May 2018
55% of pet owners have at least one of their animals insured
Figure 35: Penetration of pet insurance, by type of pet, May 2018
Millennials are significantly more likely to buy insurance
Figure 36: Penetration of pet insurance, by generation, May 2018
LEVEL OF COVER HELD
70% of policyholders have lifetime cover
Figure 37: Type of pet policy held, May 2018
Pet specialists preferred for higher-cover policies and retailers for cheaper alternatives
Figure 38: Type of policy held, by type of pet insurance provider, May 2018
Accident-only and third-party liability covers could find a niche in the sharing economy
SWITCHING ACTIVITY
18% of policyholders have switched provider in the last 12 months
Figure 39: Pet insurance switching activity, May 2018
Policyholders more likely to be loyal to pet specialists
Figure 40: Switching activity, by type of pet insurance provider, May 2018
Price comparison sites have a role to play
ATTITUDES TOWARDS PET INSURANCE
Owners are confident that they understand what their policy covers
Figure 41: Attitudes towards pet insurance, May 2018
Personalisation in payment options could prove popular
Health-monitoring kits have huge potential but providers need to integrate them into fairer pricing
Figure 42: Link AKC smart collar and app
Increasing costs as pets get older are an opportunity to reassure owners
Age of owner related to concerns over age of pet
Figure 43: Agreement with the statement “I am concerned about the cost of pet insurance increasing as my pet ages” – CHAID – Tree output, May 2018
REASONS FOR NOT HAVING PET INSURANCE
Value is the biggest reason not to buy insurance
Figure 44: Reasons for not having pet insurance, May 2018
Uninsured owners tend to have one main reason for not buying a policy
Figure 45: Reasons for not having pet insurance, by number of reasons given, May 2018
APPENDIX – DISTRIBUTOR/UNDERWRITER RELATIONSHIPS
Figure 46: Selected providers of pet insurance and their underwriting partners, August 2018
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 47: Forecast of value of gross written pet insurance premiums, 2018-23
Forecast methodology