UK Pet Insurance: Market Dynamics and Opportunities 2018
This report analyzes the UK pet insurance market, looking at market size as well as changes in premiums, claims, medical costs, pet ownership, and opportunities. It discusses competitors in the market, how the market is likely to change due to rising costs and emerging technology, and provides future forecasts of market size up to 2022.
The UK pet insurance market experienced another year of growth in 2017, with total market gross written premiums (GWP) of £1,190m - an increase of 13.8% compared to 2016. The number of policies also grew considerably by 10.9% to reach 3.76 million. Yet there is still considerable potential for further growth as the majority of pets in the UK remain uninsured. Medical inflation remains one of the main driving forces behind the increase in GWP, with insurers passing on the cost to policyholders. The sustainability of premium increases endures as this market’s greatest challenge and threat.
- The dog insurance market represents the largest percentage of the total pet insurance market. With the UK population of cats and dogs estimated to be similar in size, product uptake appears to be lowest in the cat market, while premiums are higher in the dog market.
- The increasing cost of pet healthcare is likely to drive growth within the market. Uninsured owners will feel the squeeze, resulting in an increase in uptake as owners begin to realize the benefits of insurance.
- Insurers could look to other markets such as health insurance in order to develop solutions to combat the rising cost of claims. Technological developments such as wearable devices offer a major opportunity.
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Table of Contents
1. EXECUTIVE SUMMARY 2
1.1. Market summary 2
1.2. Key findings 2
1.3. Critical success factors 2
2. THE PET INSURANCE MARKET 7
2.1. The UK pet insurance market continued to grow in 2017 7
2.1.1. UK pet insurance GWP reaches its highest point 7
2.1.2. Another year of growth for the number of policies written 9
2.2. The gross cost of claims continues on its upward trend 12
2.2.1. Further advancements in treatments are fueling an increase in the cost of claims 12
2.2.2. Veterinary salaries have had little impact on the cost of claims 14
2.2.3. The average claim varies considerably depending on the type of pet 15
2.3. Summary of the current market 16
2.4. The UK pet population has increased in 2018 18
2.4.1. The number of households with at least one pet has also risen 18
2.4.2. Obesity within the UK pet population is a hidden problem 20
3. COMPETITOR PROFILES 22
3.1. There has been little change in terms of the dominant players 22
3.1.1. Allianz and RSA remain the main players in the market 22
3.1.2. Bought By Many brings a new approach to the market 23
3.1.3. Animal Friends also aims to streamline the claims process 24
3.2. The market leaders have the greatest marketing expenditure 24
4. THE FUTURE MARKET 26
4.1. The market is set to continue growing 26
4.1.1. Total market GWP is forecast to reach Â£1.7bn in 2022 26
4.1.2. Policy numbers will continue rising 27
4.2. The claims landscape will become increasingly challenging 29
4.2.1. Dog insurance claims are forecast to increase through to 2022 31
4.2.2. Cat insurance 33
4.2.3. The number of claims is expected to fall for other pet-related claims 34
4.3. Other markets could hold the answer to reducing claims 36
4.3.1. Health insurance products could be replicated by pet insurers to reduce claims 36
4.4. Different avenues could be utilized to increase product uptake 37
4.4.1. Pet insurance in the US is becoming an increasingly popular employee benefit 37
4.4.2. Social media could allow insurers to target the uninsured and educate owners 37
5. APPENDIX 38
5.1. Abbreviations and acronyms 38
5.2. HHI 38
5.3. Forecasting methodology 39
5.4. Bibliography 39
List of Tables
Table 1: UK pet insurance market GWP, 2013-17 8
Table 2: Indicators of competition within the pet insurance market 9
Table 3: Historical claims data, 2013-17 13
Table 4: Average claims cost by pet, 2013-17 16
Table 5: Breakdown of the pet insurance market by product, 2017 18
Table 6: More Than’s pet insurance products 23
Table 7: The size of the pet insurance market (£m), 2018f-22f 27
Table 8: Number of policies by pet type, 2018f-22f 28
Table 9: The cost and number of claims within the total pet insurance market, 2018f-22f 30
Table 10: The cost and number of claims within the dog insurance market, 2018f-22f 32
Table 11: The cost and number of claims within the cat insurance market, 2018f-22f 34
Table 12: The cost and number of claims within the other pet insurance market, 2018f-22f 35
List of Figures
Figure 1: UK pet insurance GWP continues to grow 8
Figure 2: The total number of policies written grew again in 2017 10
Figure 3: There were over twice as many dog insurance policies written as cat policies in 2017 11
Figure 4: Dog insurance accounted for over three quarters of total market GWP in 2017 12
Figure 5: The gross cost of claims increased by £252m over the review period 13
Figure 6: In 2017 the number of claims increased at the fastest rate of the last five years 14
Figure 7: Cats have the lowest average claims cost 15
Figure 8: Dog insurance accounts for over 60% of all four statistics 17
Figure 9: There is considerable potential for growth throughout the pet market 19
Figure 10: Owners are open to using technology to monitor their pets 21
Figure 11: Animal Friends spends over twice as much as its nearest rival on marketing 25
Figure 12: The market will exceed £1.5bn in the next two years 26
Figure 13: The number of policies is forecast to increase by over 500,000 in the next five years 28
Figure 14: The total cost of claims is forecast to continue rising 30
Figure 15: The dog insurance claims landscape is set to become increasingly challenging 32
Figure 16: Cat insurers will be faced with an increasingly costly market 33
Figure 17: The average cost of “other” pet claims will rise despite a decreasing number of claims 35
Figure 18: Forecasting methodology 39
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.
The market engineered data is verified and validated by a number of experts, both in-house and external.
REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.