Table of Contents
OVERVIEW
EXECUTIVE SUMMARY
- The pet market grew substantially in 2008 due to higher premium rates and
greater policy volume
- Pet insurance premium income grew by 13.1% in 2008
- Premium rates continued to increase into 2009
- High claims inflation continues to be a concern for insurers, keeping
profit margins low
- The pet insurance market' s gross loss ratio is less volatile compared to
other personal insurance lines
- The top issue for the market is the ever growing claims bill
- The economic conditions are challenging to potential pet insurance
subscribers
- Societal trends overall tend to favor pets which require less time
commitment
- The current recessionary economy challenges pet insurance customers
- Most pet owners form close attachments to their pets, setting this
market apart from other lines of insurance
- The market continues to be highly consolidated
- Allianz, through Allianz Animal Health and its leading brand Pet plan,
is the clear market leader for UK pet insurance
- Direct Line, More Th>n, Sainsbury' s bank and Pet Plan outspent the
market in H1 2009, focusing on TV and direct mail advertisement
- Pet insurance penetration and premium rates are forecast to rise steadily
over the forecast period
- The market is forecast to reach £726.3m in 2013 as both product
penetration and premium rates increase
MARKET CONTEXT
- Introduction
- The pet market grew substantially in 2008 due to higher premium rates and
greater policy volume
- Pet insurance premium income grew by 13.1% in 2008
- Pet policy numbers are up though dog and cat numbers are estimated to
have declined in 2008
- Premium rates continued to increase into 2009
- High claims inflation continues to be a concern for insurers, keeping
profit margins low
- Claims costs were estimated to have grown by 10.6% in 2008
- The pet insurance market' s gross loss ratio is less volatile compared to
other personal insurance lines
- Veterinary costs continue to be the main driver behind higher claims
costs
- The economic conditions are challenging to potential pet insurance
subscribers
- Societal trends overall tend to favor pets which require less time
commitment
- The current recessionary economy challenges pet insurance customers
- Britons are now more likely to live in smaller groupings, making caring
for animals more difficult
- London has the lowest pet ownership in the UK, which is directly related
to its high population density
- Insurers are using a variety of means to combat high claims inflation and
keep the product affordable
- The top issue for the market is the ever growing claims bill
- Lower prices could be used to increase product penetration, widening the
risk pool
CUSTOMER FOCUS
- Introduction
- Pet insurance consumers are very attached to their animals, with many
having more than one pet
- Most pet owners form close attachments to their pets, setting this
market apart from other lines of insurance
- Dogs and cats account for over half the pets in the UK and the bulk of
the pet insurance market
- Many insurance providers offer discounts when purchasing cover for
multiple pets
- The top four advertisers spent 87. 7% of the market' s total advertising
spend in the first half of 2009
- Direct Line, More Th>n, Sainsbury' s bank and Pet Plan outspent the
market in H1 2009, focusing on TV and direct mail advertisement
- Direct Line stepped up its advertising in the first half of 2009, while
others appear to have held back
- More cost intensive TV advertising pushed up the marketing outlays for 2008
- Sainsbury' s Bank outspent the market in 2008, showing it had a clear
appetite for additional pet business
- TV became increasingly popular for pet insurance advertising in 2008 and
the first half of 2009
- Online sales form a large portion of many insurers' books, though
aggregators remain a minor element of distribution
- Internet distribution has quickly become an important route to market
for many insurers
- Supermarkets as a distribution channel are expected to grow the most
rapidly, though vets are still popular
- Aggregators are growing in their presence in the pet insurance market,
though they account for relatively minor sales volume
COMPETITIVE DYNAMICS
- Introduction
- Red Sands, Pethealth and QBE entered the UK pet insurance market, fueling
competition
- Red Sands entered the pet insurance market in mid 2008
- QBE entered the market by underwriting Pethealth' s newly acquired Pet
Protect business
- Pinnacle launched its direct brand in 2008
- The market remained consolidated with the top five insurers controlling
90.2% market share
- Allianz, through Allianz Animal Health and its leading brand Pet plan,
is the clear market leader for UK pet insurance
- RBSI, RSA and LV were the only three insurers to grow their market share
in 2008
- In 2008 the rest of insurers reduced their market share, although some
grew their GWP
- Pet insurance specialists such as Thornside allow smaller underwriters
into the market
- Due to the complex nature of the product, it is sometimes difficult to
underwrite profitably without a large book or long exposure
- Thornside is the leading pet insurance administrator in the UK
FUTURE DECODED
- Introduction
- Pet insurance penetration and premium rates are forecast to rise steadily
over the forecast period
- Rising pet insurance product penetration will fuel the growth in GWP
- Rising claims inflation will compel insurers to increase premium rates
- Social trends are likely to continue constraining pet population growth
- Exotic pets insurance business will remain a minor element of the pet
insurance market
- The market is forecast to reach £726.3m in 2013 as both product
penetration and premium rates increase
APPENDIX
- Definitions
- Methodology
- Advertising and marketing spend data
- Competitor data
- Market size and profitability data
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
TABLES
- Table: UK Pet Insurance GWP, 2005-08 (£m)
- Table: UK dog and cat population, 1999 - 2008e (m)
- Table: Gross loss ratios by line of business, 2005 - 08 (%)
- Table: UK veterinarian industry numbers and pay inflation, 2003 - 08
- Table: UK economic activity levels, 1998 - 2007 (000s)
- Table: UK households by size, 1971-2007
- Table: Pet ownership by region, average figure, 2008 - 09 (% of
households)
- Table: Trends in pet-ownership in UK households, 2009
- Table: Top 10 pet insurance advertisers by medium, 2009 H1
- Table: Top 10 UK pet insurance advertisers ranked by 2008 expenditure,
2005 - 09 H1 (£)
- Table: Top 10 pet insurance advertisers by medium, 2008
- Table: Pet insurance advertising spend by medium, 2004 - 09 H1
- Table: Top UK pet insurers by premium income, 2005 - 08 (£000s)
- Table: Top UK pet insurers by market share, 2005 - 08 (%)
- Table: Key variables affecting pet insurance GWP, scenario one, 2008e - 12f
- Table: Forecast UK pet insurance GWP, 2005-13f
FIGURES
- Figure: Pet insurance gross loss ratios have been below the unprofitable
lines of private motor but above profitable lines such as travel and home
- Figure: Unlike most other pet insurance advertisers, Direct Line invested
in costly TV adverts in the first half of 2009
- Figure: The UK pet insurance market continued to grow in 2008, rising by
13.1%
- Figure: Both cat and dog populations are estimated to have contracted in
2008
- Figure: Pet insurance gross loss ratios have been below the unprofitable
lines of private motor but above profitable lines such as travel and home
- Figure: The number of people unemployed has grown dramatically over the
past year
- Figure: The prevalence of smaller households has made it more difficult to
keep a large animal
- Figure: Population density: by country and government office region, UK,
2007
- Figure: The majority of pet insurance providers are offering discounts to
compete
- Figure: Most dogs and cats owners are closely attached to their pets
- Figure: Dogs and cats are still the most popular pets for UK families
- Figure: Many insurance provide discount on purchasing multiple insurance
policies
- Figure: Unlike most other pet insurance advertisers, Direct Line invested
in costly TV adverts in the first half of 2009
- Figure: Direct Line has been targeting the market with new pet insurance
TV advertisements
- Figure: A few top pet insurance advertisers have caused the proportion of
marketing devoted to TV to increase dramatically in recent years
- Figure: Gocompare.com was the only price comparison site to fully compare
policies while most pet insurance providers only advertise on the comparison
site
- Figure: Gocompare.com allows pet owners to tailor their cover and compare
policies by price and feature
- Figure: The details of Red Sands' UK pet insurance partners
- Figure: BNP Paribas launched its direct brand “Helpucover” in
April 2008
- Figure: The pet insurance market is dominated by few big insurers
- Figure: UK pet insurance GWP, 2005-13f (£m)
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