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Pet Insurance - UK - September 2013

“What pet owners deem important when choosing a pet insurance policy can have a direct effect on which channel they are likely to use when buying it. Understanding this can give product providers a major edge over their competition when it comes to product design, promotional activity and of course, distribution strategies.”

– George Zaborowski, Senior Analyst – Financial Services

Some questions answered in this report include:

  • How can the value of having pet insurance be better communicated?
  • Can anything be done to get vet-related claims costs under control?
  • How can policies be made easier to understand?
  • Do product preferences have an influence on buying behaviour?

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • Pet insurance market set to keep on growing
              • Figure 1: Forecast for value of the pet insurance market, by GWP, 2008-18
            • Channels to market
              • Market factors
                • Cost of veterinary treatment continues to increase
                  • Veterinary fees make up a third of all money spent on pets
                    • The value of vet-related pet insurance claims on the rise
                      • Companies, brands and innovation
                        • Market share
                          • Brand promotion
                            • Who’s innovating?
                              • The consumer
                                • Pet ownership
                                  • Figure 2: Pet ownership, July 2013
                                • Pet insurance ownership
                                  • Figure 3: Pet insurance ownership, July 2013
                                • Pet insurance providers
                                  • Figure 4: Pet insurance brand share, July 2013
                                • Considerations when arranging pet insurance
                                  • Figure 5: Considerations when arranging pet insurance, July 2013
                                • Reasons for not buying pet insurance
                                  • Figure 6: Reasons for not owning pet insurance, July 2013
                                • What we think
                                • Issues in the Market

                                    • How can the value of having pet insurance be better communicated?
                                      • Can anything be done to get vet-related claims costs under control?
                                        • How can policies be made easier to understand?
                                          • Do product preferences have an influence on buying behaviour?
                                          • Trend Application

                                            • Improving the pet insurance value proposition
                                              • Disease and accident-specific pet insurance coverage
                                                • A pet insurance brand with a personal touch
                                                • Market Drivers

                                                  • Key points
                                                    • Dog and cat population each stand at about 8 million individually
                                                      • Figure 7: Top pets in the UK, 2010-12
                                                    • Veterinary and other services account for a third of money spent on pets
                                                      • Figure 8: Proportional annual household spend on pets, 2011
                                                    • £1.8 billion spent on veterinary and other services in 2011
                                                      • Figure 9: Annual household spend on pets, 2002/03-2011
                                                    • Rising veterinary treatment costs a double-edged sword
                                                      • The value of vet-related pet insurance claims up 58% since 2007
                                                        • Higher claims costs lead to the controversial exit of big name providers
                                                          • A rise in fraudulent claims further adding to insurer costs
                                                            • Pet insurance consumer complaints up by 50%
                                                              • More can be done to make policies easier to understand
                                                                • Squeezed household incomes a hindrance to further growth
                                                                  • Figure 10: Monthly change in RPI and average weekly earnings, January 2010-June 2013
                                                                • Charities and self-insurance the main alternatives to pet insurance
                                                                • SWOT Analysis

                                                                    • Figure 11: Pet insurance market SWOT analysis, 2013
                                                                • Who’s Innovating?

                                                                  • Key points
                                                                    • Direct Line launches ‘Pet Step’ promotional campaign
                                                                      • Confused.com creates Facebook app to promote pet insurance
                                                                        • MORE TH>N expands to four levels of cover and introduces ‘Multi Pet’
                                                                          • Dog’s Trust Lets with Pets scheme
                                                                          • Market Size and Forecast

                                                                            • Key points
                                                                              • Pet insurance gross written premiums rise by just 2.6% in 2012
                                                                                • Figure 12: Value of the pet insurance market, by GWP, 2008-13
                                                                              • Market forecast
                                                                                • Still plenty of room for growth in new premiums
                                                                                  • Figure 13: Forecast for value of the pet insurance market, by GWP, 2008-18
                                                                                  • Figure 14: Forecast for total value of pet insurance market, at current and constant prices, by GWP, 2008-18
                                                                                • Forecast methodology
                                                                                  • Fan chart explanation
                                                                                  • Market Share

                                                                                    • Key points
                                                                                      • Allianz and RSA underwrite three quarters of pet insurance policies
                                                                                        • Figure 15: Pet insurance underwriter market share, based on GWP, 2012
                                                                                      • AXA no longer offering pet insurance to new customers
                                                                                        • RSA’s rapid market share growth reflects an aggressive strategy
                                                                                          • Figure 16: Overview of proportional market share for pet insurance providers, 2009-12
                                                                                      • Companies and Products

                                                                                        • Agria Pet Insurance
                                                                                          • Company description
                                                                                            • Product range
                                                                                              • Key data
                                                                                                • Allianz Insurance Plc
                                                                                                  • Company description
                                                                                                    • Product range
                                                                                                      • Key data
                                                                                                        • Marketing and promotion
                                                                                                          • AXA Insurance
                                                                                                            • Company description
                                                                                                              • Product range
                                                                                                                • Key data
                                                                                                                  • Direct Line Group
                                                                                                                    • Company description
                                                                                                                      • Product range
                                                                                                                        • Key data
                                                                                                                          • Marketing and promotion
                                                                                                                            • Equine and Livestock Insurance
                                                                                                                              • Company description
                                                                                                                                • Product range
                                                                                                                                  • Key data
                                                                                                                                    • Royal & Sun Alliance
                                                                                                                                      • Company description
                                                                                                                                        • Product range
                                                                                                                                          • Key data
                                                                                                                                            • Marketing and promotion
                                                                                                                                            • Brand Communication and Promotion

                                                                                                                                              • Key points
                                                                                                                                                • £10.1 million spent advertising pet insurance in the year to May 2013
                                                                                                                                                  • Figure 17: Topline advertising expenditure in the pet insurance market, 2009/10-2012/13*
                                                                                                                                                • Tesco Bank the leading advertiser of pet insurance
                                                                                                                                                  • Figure 18: Top 20 advertisers of pet insurance, 2010/11-2012/13
                                                                                                                                                • More than half of advertising budgets used on TV ad campaigns
                                                                                                                                                  • Figure 19: Pet insurance adspend, by media type, 2010/11-2012/13
                                                                                                                                                • A note about adspend
                                                                                                                                                • Channels to Market

                                                                                                                                                  • Key points
                                                                                                                                                    • Large majority of policies being arranged online
                                                                                                                                                      • Figure 20: How pet insurance policy was arranged, July 2013
                                                                                                                                                  • Pet Ownership

                                                                                                                                                    • Key points
                                                                                                                                                      • Three fifths of internet users have a pet in the household
                                                                                                                                                        • Figure 21: Pet ownership, July 2013
                                                                                                                                                      • Most pet owners have just one pet
                                                                                                                                                        • Figure 22: Repertoire of pet ownership, July 2013
                                                                                                                                                        • Figure 23: Repertoire of pet ownership, by type of pet, July 2013
                                                                                                                                                      • Pet ownership is a family affair
                                                                                                                                                        • Figure 24: Pet ownership, by marital status, presence of own children and household size, July 2013
                                                                                                                                                      • Pet ownership trends vary by region and housing tenure
                                                                                                                                                        • Figure 25: Pet ownership, by region and housing situation, July 2013
                                                                                                                                                    • Pet Insurance Ownership

                                                                                                                                                      • Key points
                                                                                                                                                        • More than half of the pet population is uninsured
                                                                                                                                                          • Figure 26: Pet insurance ownership, by type of pet, July 2013
                                                                                                                                                        • Over-45s are less likely than average to own pet insurance
                                                                                                                                                          • Figure 27: Pet insurance ownership, by gender, age and presence of own children, July 2013
                                                                                                                                                        • Pet insurance ownership is strongly linked to affluence
                                                                                                                                                          • Figure 28: Pet insurance ownership, by socio-economic group, gross annual household income and financial situation, July 2013
                                                                                                                                                      • Pet Insurance Providers

                                                                                                                                                        • Key points
                                                                                                                                                          • Specialist and mainstream providers are neck and neck
                                                                                                                                                            • Figure 29: Pet insurance brand share, July 2013
                                                                                                                                                          • One in five hold a policy with Petplan, the overall market leader
                                                                                                                                                            • Dog owners tend to lean towards mainstream brands
                                                                                                                                                              • Figure 30: Pet insurance brand share, by pet insurance ownership, July 2013
                                                                                                                                                            • Mainstream providers are upgrading to better compete with specialists
                                                                                                                                                              • Mainstream and specialist insurers active on price comparison sites
                                                                                                                                                                • Figure 31: Pet insurance brand share, by how pet insurance policy was arranged, July 2013
                                                                                                                                                              • Retail brands mostly relying on direct sales
                                                                                                                                                              • Considerations when Arranging Pet Insurance

                                                                                                                                                                • Key points
                                                                                                                                                                  • Pet owners are after quality at the best possible price
                                                                                                                                                                    • Figure 32: Considerations when arranging pet insurance, July 2013
                                                                                                                                                                  • Those seeking comprehensive or lifetime cover are going to specialists
                                                                                                                                                                    • Figure 33: Type of pet insurance provider, by considerations when arranging pet insurance, July 2013
                                                                                                                                                                  • Competing with the strong brand image of specialist providers
                                                                                                                                                                    • Considerations can influence what channel is being used for purchase
                                                                                                                                                                      • Figure 34: How pet insurance policy was arranged, by considerations when arranging pet insurance, July 2013
                                                                                                                                                                  • Reasons for Not Buying Pet Insurance

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Three in ten think pet insurance does not offer value for money
                                                                                                                                                                        • Figure 35: Reasons for not owning pet insurance, July 2013
                                                                                                                                                                      • Making the pet insurance value proposition more apparent
                                                                                                                                                                        • One in five distrust insurers will honour claims
                                                                                                                                                                          • More consistency can help improve the industry’s image
                                                                                                                                                                            • Providers that underwrite their own policies have an upper hand
                                                                                                                                                                              • Reasons for not owning differ slightly between cat and dog owners
                                                                                                                                                                                • Figure 36: Reasons for not owning pet insurance, by type of pet, July 2013
                                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                                                • Figure 37: Best- and worst-case forecast for total value of the pet insurance market, by GWP, 2013-18
                                                                                                                                                                            • Appendix – Pet Ownership

                                                                                                                                                                                • Figure 38: Pet ownership, by demographics, July 2013
                                                                                                                                                                                • Figure 39: Repertoire of number of pets owned, by demographics, July 2013
                                                                                                                                                                            • Appendix – Pet Insurance Ownership

                                                                                                                                                                                • Figure 40: Any pet insurance ownership, by demographics, July 2013
                                                                                                                                                                                • Figure 41: Pet insurance ownership – Dog(s), by demographics, July 2013
                                                                                                                                                                                • Figure 42: Pet insurance ownership – Cat(s), by demographics, July 2013
                                                                                                                                                                            • Appendix – Pet Insurance Providers

                                                                                                                                                                                • Figure 43: Most popular pet insurance brand share, by demographics, July 2013
                                                                                                                                                                            • Appendix – Considerations when Arranging Pet Insurance

                                                                                                                                                                                • Figure 44: Considerations when arranging pet insurance, by pet insurance ownership, July 2013
                                                                                                                                                                                • Figure 45: Considerations when arranging pet insurance, by demographics, July 2013
                                                                                                                                                                                • Figure 46: Considerations when arranging pet insurance, by demographics, July 2013 (continued)
                                                                                                                                                                            • Appendix – Reasons for Not Buying Pet Insurance

                                                                                                                                                                                • Figure 47: Reasons for not owning pet insurance, by demographics, July 2013
                                                                                                                                                                                • Figure 48: Reasons for not owning pet insurance, by demographics, July 2013 (continued)

                                                                                                                                                                            Companies Covered

                                                                                                                                                                            • Agria Pet Insurance
                                                                                                                                                                            • Allianz Cornhill Insurance plc
                                                                                                                                                                            • Allianz Group
                                                                                                                                                                            • AXA UK plc
                                                                                                                                                                            • Churchill Insurance
                                                                                                                                                                            • Direct Line Group Limited
                                                                                                                                                                            • E&L Insurance Services
                                                                                                                                                                            • Financial Services Authority (The)
                                                                                                                                                                            • Marks & Spencer (UK)
                                                                                                                                                                            • Pet Plan Ltd. (Petplan)
                                                                                                                                                                            • Royal Bank of Scotland Group plc
                                                                                                                                                                            • RSA
                                                                                                                                                                            • RSPCA
                                                                                                                                                                            • Sainsbury's Bank
                                                                                                                                                                            • Tesco (UK)
                                                                                                                                                                            • The Kennel Club

                                                                                                                                                                            Pet Insurance - UK - September 2013

                                                                                                                                                                            £1,995.00 (Excl.Tax)