Two analyses of the pet insurance market have been published this week, which together suggest that veterinary practices may be starting to price themselves out of the market.
Both reports are titled Pet Insurance 2014. In the first, published by Key Note Ltd, authors highlight a 35.4% increase in gross claims incurred on cat and dog insurance policies between 2009 and 2013, which is more than 5 times the increase in the volume of claims over the same period. It is the degree to which the value of claims has outstripped the volume which the report describes as 'undeniably the greatest factor affecting the UK market for pet insurance.
At the same time, there has been a relatively modest growth in the percentage of adults that own a cat or dog (around 1.5 percentage points). Consequently, premiums increased by 38.9% between 2009 and 2013 as insurers responded to the growing cost of claims.
Meanwhile, the other Pet Insurance 2014 report, this time from YouGov, has shown that the main factors limiting the uptake of pet insurance are poor value for money and the high cost of premiums. In 2012, 31% of owners without insurance said it was not good value for money, and that was the main reason for not taking out cover. By 2014, that figure had risen to 39% of the uninsured and 26% said they just cannot afford premiums.
According to the YouGov report, the words that uninsured pet owners most associate with pet insurance are 'expensive' (68%) and 'waste of money' (30%). Even 57% of those with insurance deem it expensive.
YouGov also highlighted that the number of uninsured pet owners who say they can afford to pay for veterinary treatment out of their own pockets (without setting money aside each month) has increased 4 percentage points from 15% in 2012 to 19% in 2014. YouGov hypothesises that this may be down to the improving economic situation in the UK, but it could equally be explained as just the way hard-pushed people self-justify their decision to discontinue insurance.
James McCoy, Research Director, YouGov Reports said: "Although social grade is important to being able to afford to take out pet insurance, our research suggests that those at different ends of the financial spectrum share the opinion that cover is not necessarily always a sound financial option.
"More affluent pet owners find insurance poor value because they can afford to pay for treatment up front; for less affluent pet owners, while pet insurance is perceived as offering good value for money, the cost of premiums is prohibitive, leading some to save money instead."
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That's always been the case. If you're one of the Rothschilds, it's pointless taking out insurence - you make your millions from other peoples insurence premiums. As for the ones who save money by not insuring ( and whinge if the veterinary surgeon can't cure everything within their budget - well these tend to be the same lot who think they have a right to demand taxpayers feed, clothe and house their brats.
Wynne
I agree with Wynne - people who say they can't afford insurance premiums shouldn't have pets. I can't afford Sky TV subscription fees or a swimming pool so I have neither.
If you look at the text of the article, rather than the headline, the pet insurance companies are pricing themselves out of the market, not vets. The increase in premiums was about 10% greater than the increase in value of claims (38.9% vs 35.4%).
According to the YouGov report, poor value and high cost are the main factors limiting uptake, and the percentage of people able to afford treatment without insurance and without prior savings has increased. The logical inference to draw from that is that veterinary services are not overpriced, but that insurance policies are.
The insurers have been moaning about the price of veterinary fees since the mid 1990s at least, but they are still in the market. A couple of years ago there were some articles in the press about how insurers were finding the cost of veterinary fees particularly at referral centres insupportable. Having heard similar bleats repeatedly over the years, I took a look at the annual shareholders report of one of the largest insurers. Oddly, they told the shareholders that everything was going marvellously - more policies sold and higher profits per policy. According to a Datamonitor report, the market average loss ratio in 2012 was 70%, i.e. £70 paid out for every £100 collected in premums. According to Wikipedia (en.wikipedia.org/.../Loss_ratio)loss ratios for property and casualty insurance (e.g. motor car insurance), range typically from 40% to 60%.
Looking at those figures, I would agree with those who consider pet insurance is overpriced and poor value.