By FintechOS · April 05, 2022
8 minute read

Healthy pet, healthy owner: bundling health and pet insurance

SocGen Transformation

Analysts are predicting the pet insurance boom could see the market valued at nearly USD 17 billion in the next 10 years. Could embedded insurance be an easy way into the pet cover market for health insurers? 

After all, the psychological health benefits of being a pet owner have long been established. 74% of people with a pet say that it’s improved their mental health. 

Yet, this benefit also applies to physical health. Some pets act as a personal trainer by demanding you join them for regular exercise you might otherwise avoid.  

Not to mention, certain studies suggest that having a pet in the home actually increases your resistance to germs and allergens 

This psychological, fitness, and immunological health boost from pet ownership could be a major factor in determining a customer’s risk for health insurance, so why not offer both products together as a package? 

The rising trend in health telematics 

‘Health telematics’ is a major theme in digital insurance. The concept of using technology to remotely gather data on insurance customers’ risk to appropriately adjust their premiums is allowing many insurers to offer lower-cost cover. Why not do the same thing with a pet? 

Wearable fitness trackers are being employed by companies like Vitality to reduce premiums for customers who prove they’re at lower risk by showing they take regular exercise. If a customer can verify they regularly walk their dog at a vet check-up, couldn’t health insurers offer a discount on the assumption that the customer is also benefitting?  

Likewise, a reduction could be offered for those whose mental health is boosted by pet ownership and so avoid needing psychological care. Pets could act as a biological replacement for telematic devices. 

Beyond this, conscientious consumers who properly care for their pets are more likely to also be conscientious with their own personal and financial health. These consumers are ideal candidates to earn rewards as multi-product customers. 

A new, more-inclusive definition of health is emerging; we refer to it as the Personal Green. As a society, we talk about investing in Green – to secure the wellbeing of our environment – the quality of our air, our food and our water – and how connected they are. Similarly, people are viewing their personal wellbeing across their financial, medical, and information health.

Atul Kamra, CEO, SixThirty 

Pet and health insurance, it seems, go hand-in-hand, and health insurers have plenty of reasons to consider diversifying into the pet cover space. 

Pet insurance: a trajectory of growth 

Finding new ways to appeal to potential pet insurance owners is becoming urgent. Worldwide pet ownership has skyrocketed during the pandemic and associated lockdown, as millions of people have taken on a pet for company. 

10% of US respondents told Statista they had acquired a pet during 2020, while 14% have done so in 2021. In the UK, the Pet Food Manufacturers’ Association estimates that 3.2 million new pets were acquired by UK households from 2020 to 2021. As a result, Allied Market Research estimates the value of pet insurance will be USD 16.8 billion by 2030. 

This surge hasn’t gone unnoticed, either. Research from Consumer Intelligence shows that the number of pet insurance products in the market has increased by 10% since lockdown started. Meanwhile, Revolut, the most valuable UK tech startup of all time, has announced its entry into the pet insurance space. 

It’s clear this is a growth market, but it’s also an important one for other reasons. Studies show only 21% of consumers trust the insurance industry. Insurance companies are seen as outdated and out of touch with consumer needs, so it’s clear that new product offerings are needed to win back customer faith.  

What better way to get back in touch with your customers than by showing you understand the link between their needs and those of their treasured animal companion? Indeed, the often-quoted 2015 Harris Poll survey shows 95% of pet owners consider their pets to be part of their family. 

The key to differentiating yourself in the flooded pet insurance space is to move beyond offering a reduction in price and instead begin offering assurance as well as insurance. 

Pet insurance needs to be about more than price 

In our recent article, What’s that Lassie AB? Pet insurance is stuck in the past? we looked at how Swedish startup, Lassie, is offering reduced premiums to customers who read the tailored pet care advice supplied by their app and confirm they’re caring for their pets in the recommended way.  

Traditional insurance only offers value to customers when making a claim. Otherwise, it’s simply an annual admin task and monthly expense.  

Lassie has found a way to provide daily value to consumers subscribing to their app in a way that also rewards customers for reducing their risk of claiming by properly caring for their pet. 

There’s also a value exchange going on here. By taking short surveys on their pet care habits in the Lassie app, customers earn reductions in premium costs. Lassie then acquires data that it can use to improve its service, and also anonymize and sell on to third parties. 

At the heart of the next wave of innovation and change is data. Data is the kingmaker. It is the key to personalization, privacy, and people.

Atul Kamra, CEO, SixThirty 

Moving into assurance opens up a huge range of value-add opportunities for customers, even beyond what Lassie AB are doing. Insurers could offer regular vet check-ups for pets to identify any claimable issues before they arise, for one example. 

DogTV is a service that provides calming visuals for dogs to keep them company while their owners are at work. This not only helps keep dogs calm and avoid any stress-related health issues, but also helps avoid them causing damage to their owner’s home out of boredom or anxiety. Insurers could offer a subscription to the service as part of their pet cover package. 

Meanwhile, companies like PitPat and Felcana are already offering wearable trackers for pets that monitor activity and general health, respectively. Offering these trackers to pet insurance customers can provide them with peace of mind about their pets’ health, but also offer valuable underwriting data. 

Discounts, free services, and digital content can all be utilized to transform insurance offerings into an insurance-as-a-service subscription that provides value throughout its lifespan, rather than just during a claim. 

Combine that with health insurance and you start to create a truly invaluable service that customers simply cannot do without.  

The link between family and pet health 

We… see an immense and growing need for collaboration between incumbents across the ecosystem: life insurance, banking, wealth managers, health care providers, and record keepers. The collision of health and wealth sets the stage, and insurtech and digital health companies will play an active role in intermediating these partnerships.

Atul Kamra, CEO, SixThirty 

If there is one thing that the pandemic has brought to light above anything else, it is the importance of family. Whether people have been separated from theirs or spent a great deal of time locked down together at home, keeping family safe has become forefront in their minds. 

A single solution for protecting every member of the family is an extremely viable proposition for consumers, at the moment, especially when it offers added value beyond just support in the event of a claim. When that proposition includes the four-legged members of the family as well, it becomes even more attractive. 

Forbes research found the average US customer could save 14% by purchasing both home and auto insurance as part of a bundle. Given that nearly 74% of uninsured people cite affordability as the reason they don’t have cover, a valid route to reducing premium cost is beneficial for insurers.  

Indeed, according to the book Marketing Metrics, the probability of selling to a new prospect is 5% to 20%, while the chance of sale to an existing customer is 60% to 70%. 

Scratch and Patch research suggests 53% of pet insurance customers feel trapped with their current provider, and 78% would be open to switching. Taken together, this data suggests cross-selling pet insurance cover to your existing health insurance customers with pets is as close to a guaranteed sale as you can get. 

How FintechOS Northstar can help 

So, what’s stopping health insurers from immediately offering bundled health and pet insurance options complete with add-ons like DogTV subscriptions and vet plans? Mainly, it’s technology. 

Creating innovative health and pet insurance products in a traditional insurance tech stack takes time. Legacy tech doesn’t allow you to combine products, so you will likely need to build these ‘bundles’ as completely new offerings.  

Lastly, partnering with vendors like DogTV and Felcana (who use different systems legacy tech was never meant to work with) is simply impossible without a full digital transformation. 

That’s where the FintechOS Northstar platform comes in. Our low-code/no-code interface allows small teams of digital innovators to build new insurance products in days, rather than months or years. 

Our ready-made Connectors then allow these products to be linked to other vendors and third parties through advanced application programming interfaces (API). You can partner with other suppliers in minutes. 

To find out more about how Northstar can support you in creating bundled health and pet insurance products, book a demo. 

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