Pet insurance industry optimistic for growth over next five years
The outlook for UK and North America pet insurers remains positive over the next five years, according to insurance technology specialist, Aquarium Software and its clients. Recent industry analysis suggest that over the period 2008-2012 the UK market has increased by 35%. Despite the recessionary environment and the squeeze on household incomes, pet insurance has been the fastest growing category in insurance sales.
This trend is set to continue for the foreseeable future according to Aquarium’s Sales & Marketing Director, Mark Colonnese: “With market penetration running at around 35% in the UK and gross written premium forecast to hit $1.5 billion per annum by 2017, compared to less than 2% penetration in the US, it is easy to appreciate the commercial opportunity the North American markets represent - even in the UK there is plenty still to go at!”
The UK is rightly known as a nation of pet lovers – and in insurance terms - the US and Canada are lagging behind for a variety of reasons. “It’s the economic drivers that are helping to grow the market,” says Aquarium USA’s David Goodnight. “The rising cost of veterinary care being a key factor,” he adds. “As an industry, the main challenge for us is to raise consumer awareness and educate the consumer about the true cost of caring for a pet when they become sick or injured,” says Goodnight.
Here in the UK, Aquarium’s Colonnese agrees and also cites the increased marketing initiatives of the mainstream insurers including the supermarkets like Tesco and Asda, “We do love our pets and with the potential price of major surgery for cats and dogs rocketing, both the general public and the industry at large seem to have woken up to the reality that pet insurance is the way forward. Pets are also living longer – just like humans – so the risk that at some point an owner’s pet will require expensive treatment is becoming more widely understood. Pet insurance can provide the consumer with the peace of mind they are looking for, and at Tesco you can pick up pet insurance with your weekly groceries, which is extremely convenient,” he comments.
Colonnese adds: “From the insurer side, a recent Datamonitor report shows an average 2012 market loss ratio at about 70%. However, we have seen some underwriters struggle and attempts at increasing book performance via crudely hiked premiums across the board have caused some negative PR and have not served the industry well as a whole. From a revenue perspective, it’s a pity as the pet insurance model is stable and predictable – there are no flooding or hurricanes in pet! The most successful insurers are the ones who continue to work hard to get a handle on their risk portfolio, and don’t treat an eight year old Jack Russell the same as an eight year old Labrador. Aquarium is helping underwriters every day to get their arms around this challenge, with valuable MI that will help drive profitable pet insurance policy underwriting in the future,” Colonnese concludes.