UK Pet Insurance 2011
Datamonitor, October 2011, Pages: 72
The pet insurance market has become increasingly price-competitive in the past 12 months; however the recession and changing societal trends have recently slowed growth. This report discusses current consumer attitudes to pet insurance as well as trends in market distribution, advertising and key players in the insurance line. It also provides forecasts for GWP up to 2015.
Scope:
- The latest data and market research, including information on market size and shifts in pet ownership trends.
- Insight into advertising expenditure and consumer behaviour in the market.
- An understanding of the competitive environment, and of the impact that new players and market consolidation is having on the pet insurance market.
- Forecasts of the market’s GWP growth until 2015, based on industry interviews, secondary research and in-house expertise
Highlights:
- 2011 saw universal but varying increases in claims inflation. Industry experts have reported increases of between 6% and 10% and expect this to continue for the next few years. This is primarily due to the steadily rising costs of veterinarian bills, driven by more sophisticated treatments and improvements in technology.
- In 2010 Allianz increased their GWP by 5.3%, reaching a total of £219.8m. While they continue to be the leading player in the market, they have lost 1.5% of their market share.
- The advertising budget in the pet insurance market saw a huge increase between 2009 and 2010, from £6.6 million to £10.5 million, a rise of 58.9%. A significant contribution to this increase has been the expansion of More Than's pet insurance advertising budget, more than trebling its spend in 2010 over that of 2009.
Reasons to buy:
- How has the pet insurance market changed in the last year and how is it forecast to perform in the next five years?
- Is the internet where pet owners buy their pet insurance?
- Who are the leading pet insurance providers and how have they performed in the last year?
OVERVIEW
-Catalyst
-Summary
EXECUTIVE SUMMARY
-Premium rate increases accounted for a healthier growth rate in
?Pet insurance premium income grew by 9.5% in
?Claims inflation continues to be main driver for GWP growth
?Pet insurance penetration has remained static
?Pet insurance is more profitable than private motor and travel insurance
-The advertising budget for pet insurance increased significantly between 2009 and
?The advertising budget of the pet insurance market increased by 58.9% in
?More Th>n accounted for over one-third of the pet insurance market’s advertising budget in H1
?The top four pet insurers' advertising budgets are increasingly focused on television
-The top three pet insurers – Allianz, RBSI, and RSA – account for over three-quarters of the total market share
?Allianz lost a small portion of its pet insurance market share but continues to dominate
?RSA has achieved significant growth in market share
-Market growth will largely occur as a result of premium increases driven by claims inflation
?The market is forecast to reach a value of £903.0m in 2015 as premium rates match claims inflation
MARKET CONTEXT
-Introduction
-Premium rate increases accounted for a healthier growth rate in
?Total pet insurance premium income grew by 9.5% in
?Pet population growth remains negligible, with dog ownership slightly increasing
?The market penetration of pet insurance is static, which is impacting growth
-Profitability improved in 2010 with a decreasing loss ratio
?The gross loss ratio of the pet insurance market decreased for the first time since
?Pet insurance is more profitable than private motor and travel insurance
?Veterinarian fees are the main driver of claims costs, and are continuing to rise
-The pet insurance market remains fairly resilient to recession
?Emotional attachments to pets have helped the pet insurance market through recession
?Low consumer confidence affects new business in pet insurance and the level of cover selected
?The size of UK households has an effect on the makeup of pet ownership
CUSTOMER FOCUS
-Introduction
-Pet ownership increases slightly among survey respondents
?Over half of UK pet owners have a cat
?"Handbag" dogs have been partly responsible for the 3.8% increase in dog ownership over the last year
?Ownership of pets other than cats and dogs increased by 5.3% of all respondents
-Pet insurance penetration remains static and is closely linked to household Income
?Penetration has remained static compared to
?Pet insurance penetration rises in wealthier households
?Penetration of pet insurance is less closely linked with age
-A low price is the foremost motivation in the selection of a pet insurance policy
?"Cheapest" is followed by "coverage for ongoing illness" as the leading consumer driver
MARKETING AND DISTRIBUTION
-Introduction
-The advertising budget for pet insurance increased significantly between 2009 and
?More Th>n more than trebled its advertising budget in
-More Th>n accounted for over one-third of the pet insurance market's advertising budget in H1
?The top three advertisers spent 77.9% of the market's total advertising budget in H1
?Nearly two thirds of the pet insurance market's advertising budget is spent on television
?Three of the top 10 advertisers opt to spend the most on direct mail campaigns
-Direct channels are the dominant route for arranging pet insurance
?Over half of all policies are arranged through direct channels
?The building society and bank channel increased its market share by 3.4%
?Veterinary surgeries remain influential in terms of choice of pet insurance
-Pet insurance is largely distributed via the online and telephone channels
?Seven out of every 10 policies are arranged through online and telephone services
?Telephone distribution is popular with young consumers, while the proportion using the internet increases with age
-Online aggregators are influential as research sources but not for policy purchases
?Aggregators play a marginal role as a route to policy purchase
?Half of pet insurance consumers use price comparison sites for research purposes
?MoneySupermarket.com does not offer a comparison service, yet leads the way in terms of the number of policies purchased
-The number of providers entering the pet insurance market has risen significantly
?A total of 82 providers offer pet insurance
?The pet insurance market is reasonably consolidated under a few key underwriters
?Administrators play a significant role in the pet insurance market
-Petplan policies are selected by almost one-quarter of UK pet insurance market consumers
?The 10 largest UK pet insurance distributors account for 73.3% of surveyed policy holders
COMPETITIVE DYNAMICS
-Introduction
-The top three pet insurers – Allianz, RBSI, and RSA – account for a 78.6% share of the market
?Allianz lost a small portion of its pet insurance market share but continues to dominate
?RSA achieves significant growth in market share
?RBSI maintained its share of the market, but the loss of its Tesco partnership is likely to have future repercussions
?AXA witnessed strong 2010 GWP growth after a sizable drop in
-Affinity partnerships play a significant role in achieving pet insurance market share
?There are a large number of pet insurance providers; however, the market is reasonably consolidated
?RSA has benefited from pet insurance affinity partnerships with Tesco and M&S
?Allianz has partnered with Co-operative Group to provide pet insurance
?Pets at Home, the UK's largest pet retailer, started offering pet insurance in 2011
-An evolving pet insurance market and policy products endanger some customer relationships
?More providers now offer cover for elderly pets, but premiums increase significantly
?Pet insurance providers exiting the market cause issues for policyholders
FUTURE DECODED
-Introduction
-Market growth will largely occur as a result of premium increases driven by claims inflation
?The market is forecast to reach a value of £903.0m in 2015 as premium rates match claims inflation
?The growing cost of veterinary treatments causes increases in pet insurance claims
?Premium rates expected to increase to just above the level of claims inflation
?Cat and dog population expected to continue plateau
?Pet insurance penetration will stay level, with growth dependent on the economy and consumer awareness
APPENDIX
-Definitions
?Brokers
?Bancassurers
?Brandassurers
?Economically active
?Economically inactive
?Gross written premiums
?In employment
?Lifetime cover
?Unemployed
?12-month cover
-Methodology
?Advertising and marketing spend data
?Competitor data
?Market size and profitability data
?Consumer data
-Further reading
-Ask the analyst
-Disclaimer
TABLES
-Table: UK pet insurance GWP (£m) and growth rate (%), 2006–
-Table: UK dog and cat population (millions), 2000–
-Table: Gross loss ratios by lines of business, 2006–
-Table: UK veterinarian industry employment figures and pay per hour wage inflation, 2004–
-Table: UK economic activity levels (000s), 1999–H1
-Table: UK households by size, 1971–
-Table: Pet ownership trends in UK households,
-Table: Penetration of UK pet insurance split by household income,
-Table: Penetration of UK pet insurance split by age,
-Table: Reason for selection of pet insurance policy (multiple response),
-Table: Top 10 pet insurance advertiser budgets (£), 2007–H1
-Table: Top 10 pet insurance advertisers spend by medium (£), H1
-Table: Pet insurance advertising spend by medium, 2004–H1
-Table: Method used for arranging pet insurance,
-Table: Pet insurance distribution method split by household income,
-Table: Pet insurance distribution method split by age,
-Table: Use of price comparison sites by pet owners with insurance policies,
-Table: Use of price comparison sites,
-Table: List of UK dog and cat insurance providers (as of August 2011)
-Table: Underwriters by number of providers within cat and dog pet insurance market,
-Table: Pet insurance providers by percentage of surveyed policy holders 2010-
-Table: Top 10 UK pet insurers by GWP (£000s), 2006–
-Table: Top 10 UK pet insurers by GWP market share (%), 2006–
-Table: UK pet insurance gross written premiums, 2006–15f
-Table: Key variables affecting pet insurance gross written premiums, 2011–15f
FIGURES
-Figure: Pet insurance market growth in 2010 was muted, but represented an improvement over
-Figure: Pet insurance was more profitable than travel insurance in
-Figure: In H1 2011, the majority of pet insurance marketing expenditure was allocated to television advertising
-Figure: Pet insurance market growth in 2010 was muted, but represented an improvement over
-Figure: The UK dog and cat populations have remained relatively level over the last decade
-Figure: Pet insurance was more profitable than travel insurance in 2010
-Figure: UK economic activity levels (000s), 1999–H1
-Figure: Household size plays a significant role in the consideration of pet ownership
-Figure: Over half of UK pet owners own a cat (multiple responses allowed) in
-Figure: Penetration of UK pet insurance split by household income (percentage of pet owner respondents),
-Figure: Penetration of UK pet insurance split by age (percentage of pet-owner respondents),
-Figure: Pet insurance advertising spend by medium (%), 2004–H1
-Figure: More Th>n's current television campaign highlights its "vetfone service with expert advice"
-Figure: Direct Line's current television campaign highlights a nine-months-for-the-price-of-12 deal
-Figure: In H1 2011, the majority of pet insurance marketing expenditure was allocated to television advertising
-Figure: Over half of all pet insurance is arranged through direct channels
-Figure: Pet insurance distribution method split by household income,
-Figure: Pet insurance distribution method split by age,
-Figure: Petplan simplified its pet policy range in July
-Figure: The top 10 pet insurance providers account for three-quarters of surveyed policy holders
-Figure: Pet insurance providers by percentage of surveyed policy holders 2010-
-Figure: Allianz's Exotic Direct is the leading provider for the niche exotic pet insurance market
-Figure: RSA is likely to see future growth after securing a partnership with Tesco Bank
-Figure: The top eight pet insurance distributors dominate the market with a 95.0% share of the market
-Figure: Pet insurance market growth is expected to remain level with or just above claims inflation
- Admiral Group plc
- AXA
- Hutchison 3G UK Limited
- Insurance Australia Group Limited
- J Sainsbury plc
- Marks and Spencer Group plc
- National Westminster Bank Plc
- Nectar
- Parcelforce Worldwide
- RSA Insurance Group plc
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