Abstract
Pet insurance penetration levels among UK pet owners remain low but the potential market continues to expand as the number of pet owners continues to grow. In conjunction with the growth in pet ownership veterinary fees have risen sharply and continue to take a greater proportion of pet-related expenses. Despite these factors that should bode favourably for the uptake of pet insurance, a large majority of pet owners still fail to see the true value of providing cover for their beloved pets.
The greatest challenge for pet insurance providers therefore is to convince pet owners that taking out cover is worth their time and will actually save them money in the long term. According to the findings in this report pet insurance has not gained wide acceptance by the majority of pet owners because it is seen more as an added luxury with little immediate or tangible benefit. A significant factor behind this is that only a small proportion of pet owners are frequently incurring expensive vets' fees that would make pet cover much more appealing.
In this report Mintel investigates the past and potential future development of the UK pet insurance market. This includes an examination of internal and external market dynamics as well as exclusive trade and consumer research. Mintel also takes a look at the underwriters operating in the pet insurance business and how many providers have been promoting their products. Finally, detailed market size data are presented with growth projections until 2012.
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
