Pet Insurance - UK - December 2007

Table of Contents

• Issues in the Market
• Key Issues
• Abbreviations
• Market in Brief
• Market value continues to grow steadily
  • Figure 1: Estimated value of the pet insurance market, by GWP, 2000-07
• Allianz and RBS dominant pet insurance underwriters
  • Figure 2: Pet insurance market share, 2006
• Pet health-related costs continue to grow
  • Figure 3: Average household expenditure on pets, 2005/06
• Rapid growth in cat ownership expands the market for pet insurance
  • Figure 4: Dog and cat-owning households in the UK, 1994-2004
• Growth in smaller households favours low-maintenance pets
• Families with young children more likely to have pets...
• ...but most pet owners do not see the value of pet insurance
• Internal Market Environment
• Key Points
• Rapid growth in cat ownership expands the market for pet insurance
  • Figure 5: Dog and cat-owning households in the UK, 1994-2004
• 30% of household pet expenditure health-related
  • Figure 6: Average household expenditure on pets, 2005/06
• Premium and cost inflation could start to become an issue
• Common pet lifespans and cover for pets
  • Figure 7: Average lifespan of common and exotic pets
• External Market Environment
• Key Points
• Steady income growth projected
  • Figure 8: Total PDI, consumer expenditure and PDI per capita, at constant 2003 prices, 2003-12
• Implication
• Growth in one- and two-person households favours low-maintenance pets
  • Figure 9: UK household size, 2003-12
• Family lifestage important to pet ownership
  • Figure 10: Trends in UK lifestage groups, 2003-12
• Households with young children more likely to have pets
  • Figure 11: Trends in the UK child population, 2003-12
• Competitive Context
• Key Points
• Alternatives to pet insurance
• Alternatives available in the UK
• Self-insurance
• Credit
• US innovations with potential in the UK
• Pet Discount Programs
• CareCredit
• Alternatives for those on low incomes
• Strengths and Weaknesses in the Market
  • Figure 12: Strengths and weaknesses in the UK pet insurance market, 2007
• Strengths
• Weaknesses
• Market Size and Forecast
• Key Points
• Market value approaching £400 million in 2007...
  • Figure 13: Estimated value of the pet insurance market, by GWP, 2000-07
• ...but could be worth over £1 billion if more pets were insured
  • Figure 14: Ownership of pet insurance among dog and cat owners, November 2007
• Dogs the most likely pet to be covered...
  • Figure 15: Proportion of pet insurance policies, by type of pet, November 2007
• ...but cats are the key to future growth in pet insurance market
• Forecast
• Market value to exceed £500 million by 2012
  • Figure 16: Forecast of the value of the pet insurance market, by GWP, 2007-12
• Factors used in forecast
• Market Share
• Key Points
• Allianz and RBS dominant pet insurance underwriters
  • Figure 17: Pet insurance market share, 2006
• AXA and Aviva gaining market share
  • Figure 18: Illustration of top pet insurance underwriters' market shares, 2005 and 2006
  • Figure 19: Pet insurance gross written premiums, 2005 and 2006
• Company Profiles
• Allianz Insurance plc
• Royal Bank of Scotland Group
• AXA Insurance
• Royal & SunAlliance
• Aviva (Norwich Union Insurance)
• Brand Communication and Promotion
• Key Points
• Overall adspend on pet insurance has decreased since peak in 2004
  • Figure 20: Top ten advertisers of pet insurance, 2002/03-2006/07
• Close to 75% of adspend used for direct mail and TV advertising
  • Figure 21: Advertising expenditure on pet insurance, by media type, 2006/07
• Scope for growth in online activity
• Channels to Market
• Key Points
• Connecting with pet owners to sell cover
  • Figure 22: Distribution channels for pet insurance, November 2007
• Majority of pet owners buy cover from specialist providers
  • Figure 23: Channels used to buy pet insurance, November 2007
• Completing the transaction -- more sales likely to move online
• The Consumer -- Product Ownership
• Key Points
• 45% own at least one pet
  • Figure 24: Pet ownership, November 2007
• Family lifestage key target group for pet insurance products
  • Figure 25: Pet ownership, by gender, age, marital status, lifestage, age of own children in household and household size, November 2007
• Level of affluence useful in targeting type of pet owner
  • Figure 26: Pet ownership, by socio-economic group, working status, gross annual household income, household tenure, ACORN group and TV region, November 2007
• Only 22% of pet owners have cover for their pets
  • Figure 27: Ownership of pet insurance, November 2007
• When it comes to pet insurance, it' s raining cats and dogs
  • Figure 28: Ownership of pet insurance, by pet ownership, November 2007
• Implications and opportunities
• Women most open to the idea of pet insurance in the future
  • Figure 29: Ownership of pet insurance, by gender, age, marital status and lifestage, November 2007
• Implications and opportunities
• More than a third of ABs already own pet insurance
  • Figure 30: Ownership of pet insurance, by socio-economic group, gross household income, working status and tenure, November 2007
• Implications and opportunities
• Premium pets?
• The Consumer -- Attitudes and behaviour
• Key Points
• Over 50% have not taken pets for emergency treatment over last two years
  • Figure 31: Number of unexpected or emergency pet visits in last two years, November 2007
• More frequent vet visits increase the perceived value of pet insurance
  • Figure 32: Ownership of pet insurance, by number of emergency vet visits in last two years, November 2007
• Implications and opportunities
• Moral hazard?
• Owners of more than one pet are visiting the vet more frequently
  • Figure 33: Number of unexpected or emergency pet visits over last two years, by pet ownership, November 2007
• Implications and opportunities
• Female pet owners more likely to take pets in for unexpected treatment
  • Figure 34: Number of unexpected or emergency pet visits over last two years, by gender, age, marital status, lifestage and age of children, November 2007
• Implications and opportunities
• Affluent and wealthy pet owners have visited the vet more frequently
  • Figure 35: Number of unexpected or emergency pet visits over last two years, by socio-economic group, working status, gross household annual income and tenure, November 2007
• Implications and opportunities
• Taking a look at TV region
  • Figure 36: Number of unexpected or emergency pet visits over last two years, by TV region, November 2007
• Consumers demand low-cost life cover for their pets
  • Figure 37: Factors important to consumers when choosing pet insurance, November 2007
• Pet ownership and choosing pet insurance
  • Figure 38: Factors important to consumers when choosing pet insurance, by pet ownership, November 2007
• Implications and opportunities
• People considering pet insurance looking for added perks
  • Figure 39: Factors important when choosing pet insurance, by pet insurance ownership, November 2007
• Implications and opportunities
• Vet recommendations may persuade those in the pre-/no family and family lifestages
  • Figure 40: Most important factors when choosing pet insurance, by gender, age, marital status, lifestage and age of children, November 2007
• Implications and opportunities
• Affluent and wealthy most likely to consider several factors
  • Figure 41: Most important factors when choosing pet insurance, by socio-economic group, working status, gross annual household income and tenure, November 2007
• Implications and opportunities
• Shoppers of more exclusive supermarkets consider more factors
  • Figure 42: Most important factors when choosing pet insurance, by TV region and supermarket usage, November 2007
• Implications and opportunities
• Media usage and attitudes towards pet insurance
  • Figure 43: Most important factors when choosing pet insurance, by daily newspaper readership, technology usage, Internet usage, commercial TV viewing and TV received, November 2007
• Implications and opportunities
• Older consumers most likely to consider third-party liability coverage
  • Figure 44: Next most important factors when choosing pet insurance, by gender, age, marital status, lifestage and age of children, November 2007
• Implications and opportunities
• More affluent more likely to consider third-party liability cover
  • Figure 45: Next most important factors when choosing pet insurance, by socio-economic group, working status, gross annual household income and tenure, November 2007
• Implications and opportunities
• Appendix -- Detailed Demographics
• Pet insurance ownership
  • Figure 51: Ownership of pet insurance, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car usage, detailed lifestage groups and age/socio-economic group, November 2007