Is the pet insurance industry growing? We look at the current boom in the pet insurance market and consider how long the good times will last.
Pet insurance has surged in both revenue and investment in the last few years. Yet, analysts are predicting the pet insurance market will continue to grow at pace.
By 2030, different market research companies are estimating the pet insurance space could be worth:
While the valuations may differ, analysts agree the market is a great opportunity for insurers. This is particularly the case for those offering insurtech solutions in the pet insurance market.
Can we be certain, however, that the pet insurance market boom will last for another decade? Established insurers are still showing a reticence to invest heavily in the space.
Whether it’s general insurers or other financial services providers moving into pet insurance, or established traditional insurers investing in digital transformation to offer pet insurtech, most organizations are taking a wait-and-see approach.
On the other hand, disruptive insurtech superstars like Revolut and Lemonade are moving into the market without hesitation. To understand why these unicorns have such confidence, we have to consider the reasons for the rise of the pet insurance market.
As COVID-19 left the world isolated under lockdown, the majority of people saw changes in their lifestyles. Many were left working remotely, temporarily furloughed, or out of work altogether.
As such, those who were still financially stable were able to look after a pet where they may not have been able to before. This offered them the opportunity to indulge in daily outdoor activity and provided companionship, particularly for those who lived alone and were deprived of social contact.
Statista’s US survey found that 10% of respondents acquired a pet during 2020, and 14% in 2021. On the other hand, the Pet Food Manufacturers’ Association found that 3.2 million new pets were acquired by UK households from 2020 to 2021.
As a result, the number of new insurance customers has also skyrocketed. Consumer intelligence research found there were 10% more pet insurance products on the market than before lockdown.
Is the pet insurance industry growing? Clearly, yes. Can this growth be maintained, however?
As vaccination has brought the COVID-19 pandemic under relative control, social distancing is no longer mandatory in most countries. As the option to return to the office becomes available, will pet owners be able to retain their pets? Not to mention, will the rise in pet ownership continue?
Since we’ve established that the surge in the pet insurance market was driven by lockdown, doesn’t it follow that now lockdown is over, the market will return to its previous state? Is the pet insurance industry growing a temporary trend? Not necessarily.
The pet insurance market boom was driven by remote working, rather than by the virus itself. Remote working, however, has not ended with the pandemic.
According to Global Workplace Analytics, remote working increased by 173% since 2005, long before COVID-19. Since lockdown, however, surveys show 78% of people want to continue working from home, 16% of companies are already 100% remote, and analysts predict that 25% of all professional jobs in North America will be remote by the end of 2022.
As remote work grows, it seems likely that pet ownership will continue to grow as well. Not to mention, the opportunity for the market is already huge.
According to Forbes, 98% of US pet owners are uninsured, with 86% of UK pet owners in a similar position. This is an enormous untapped market of existing customers, without even considering growth.
So how do you close this insurance gap and reach uninsured pet owners? The key is value.
53% of dog owners without pet insurance in the UK say it’s too expensive. Lowering premiums means cutting into profits, so the goal must be to increase the value of insurance to convince consumers it’s worthwhile.
The way to do this is also the reason why innovative insurers like Revolut and Lemonade are so confident about entering this space. The key to increasing the value of insurance is technology.
Using advanced artificial intelligence (AI) automation, insurers can tailor-make products for customers. By adapting individual aspects of products into modular pieces, personalized products can be served to each customer.
Most pet owners consider their pets to be part of the family, so a more personal cover will naturally fit. That’s just the beginning, however.
Traditional insurance is only of value to customers when they make a claim. In the case of pet cover, this encourages customers to hope their pet will remain healthy and do without insurance.
Technology, on the other hand, allows insurers to provide continuous value to customers between claims. Sweden’s Lassie AB, for example, offers health advice for pets to customers and reduces premiums for those who look after their pets.
This kind of repeatable value offers customers a reason to keep paying premiums to insurers, even if they don’t believe they’ll need to make a claim. This kind of innovative insurtech is at the hands of even established insurers with the right technology.
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