UK Pet Insurance 2009

UK Pet Insurance 2009 published by Datamonitor in November, 2009. This report consists of 54 pages and the price starts from US $ 2795.

Introduction

Abstract

Introduction

The UK pet insurance market continued to experience strong growth in premium income and policy numbers in 2008. This report discusses the current consumer attitudes to pet insurance as well as the trends in market distribution. It also provides forecasts for GWP up to 2013, making it essential reading for those with an interest in pet insurance.

Scope of this research

• The latest data and market research, including information on market size and shifts in pet ownership trends
• Insight into the effects of the recession and other market issues including methods to tackle high growth in claims costs
• An understanding of the competitive environment, and of the impact that new entrants and market consolidation is having on the pet insurance market
• Forecasts of the market' s GWP growth until 2013, based on primary research and in-house expertise

Research and analysis highlights

In 2008 the market grew at a slightly reduced rate of 13.1%, which is only marginally below its recent compound average annual growth rate of 14.5%. The increased GWP was a result of both higher premium rates and increased market penetration of the product.

With the economy in recession, the number of unemployed people has increased by 26.1%, as of H1 2009, compared to the 2008 average. This has led to many consumers cutting their expenditures and adopting a personal fiscal stance that is more careful with discretionary spending, such as pet insurance.

Key reasons to purchase this research

• Understand the competitive dynamics of this competitive niche market.
• Gain insight into the future direction of the sector, including market size and the major issues affecting the market.
• Benchmark your company against your competitors based on current and past performances in the market.

Table of Contents

OVERVIEW

• Catalyst
• Summary

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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