The pet insurance category posted a compound annual growth rate (CAGR) of 7.5%, expanding from GBP645.2 million in 2010 to GBP861.8 million in 2014. Timetric forecasts the category to reach GBP1.1 billion by 2019, at a CAGR of 5.5%. Advances in veterinary medicine are pushing up the cost of vet treatment, which is expected to contribute to growth in the pet insurance category. Despite rising costs, pet insurance market penetration remains low, offering opportunities for new market entrants and mainstream insurers looking to diversify their portfolios.
“Pet owners in the UK have increased their spending on pets; however, the cost of treatment might still be a cause of concern. As for now, pet insurance is seen by many owners as a way to protect themselves against unexpected and often expensive vet bills should their animal fall ill or suffer an injury,” comments Laura Balkarova, insurance analyst at Timetric.
Claims inflation is a challenge as vet costs continue to rise
Technology making its way into the veterinary surgery is helping many pets to recover and live with conditions that would have previously proved fatal. Pet owners can now expect improved diagnosis and treatment for their pets. However, these advances led to an increase in the cost of claims in the pet insurance category, with an average claim now exceeding GBP600.
Furthermore, the rise in pet obesity and pet insurance fraud is yet another factor contributing to the increase in claims. Over 5.5 million pets – more than 3.3 million dogs, 2 million cats and 168,000 rabbits in the UK – are being fed “treats” every day, putting them at risk of having a shorter lifespan, with 80% of vets expecting that there will be more overweight pets than healthy ones by 2019.
|
