By FintechOS · May 10, 2022
7 minute read

Lifetime pet insurance: why vets recommend it

Woman with laptop and dog

The UK Royal Veterinary College recommends pet owners take out lifetime pet insurance cover for their pets. As more and more services in the modern age are increasing their flexibility, Jonathan Phillips looks at why vets are recommending pet owners commit to long-term cover.

Jonathan Philips, Sales Director Insurance UK, FintechOS
Jonathan Phillips, Sales Director Insurance UK, FintechOS

Pet ownership has understandably sky-rocketed during lockdown. PFMA estimates that 3.2 million new pets were acquired by UK households from 2020 to 2021, while 10% of US respondents told Statista they had acquired a pet during 2020, and 14% in 2021.

Yet, 86% of UK consumers have no pet insurance, according to the YouGov Better Safe Than Sorry report. Meanwhile, in the USA, only a staggering 2% of consumers insure their pet, according to Forbes. The Read Group explains the reason for this, reporting 53% of UK dog owners without pet insurance have not arranged cover because they believe it’s too expensive.

It’s not surprising that these new pet owners chose to forego spending out on pet insurance for their lockdown pet, since a Pew Research Center survey found that one-in-four Americans had trouble paying their bills during the coronavirus outbreak, a third relied on savings, and one-in-six borrowed money.

While your new pet is healthy, it can seem like pet insurance is just a nice-to-have back-up that you can do without in tough times. In a consumer’s mind, they can always pay directly for veterinary assistance if their pet’s health fails unexpectedly. If they do choose to take out insurance, they’ll likely be looking for a lower-cost rate of cover until their pet’s health wanes.

In that environment, why are vets still recommending consumers choose the most-expensive lifetime pet insurance cover for their pets?

The true cost of veterinary care

It’s very easy for a healthy and hearty pet to seem invulnerable in its youth, then rapidly decline into expensive long-term illness as it ages. Not to mention, an accident can leave a pet not just requiring one-off veterinary support, but ongoing medical care for the rest of its life, the cost of which could continue to spiral out of control.

The Association of British Insurers (ABI) gives the following examples of the average costs of veterinary treatment:

  • GBP 7,000 to treat a French bulldog with a fractured leg.
  • GBP 5,000 to re-attach two toes to a cat after they had been crushed
  • GBP 3,800 to treat a dog’s dislocated kneecap
  • GBP 3,600 to repair right-leg cruciate ligament damage in a Jack Russell terrier
  • GBP 3,770 for the treatment of a fractured femur leg bone of a cat following an accident

Once an animal’s health does inevitably fail, cover for pre-existing conditions is significantly more expensive -if available at all – and consumers could be faced with the decision of whether to leave their pet without medical care or go into debt. Since the well-known 2015 Harris Poll has long shown 95% of pet owners consider their pets to be family, this is a deeply unpleasant dilemma to be in.

Even with insurance, this is still a possibility. Most pet insurance policies are capped at a certain level of payout. A maximum of GBP 10,000 may sound generous, but when you can spend up to GBP 7,000 to resolve a single, non-life-threatening incident, it may not always cover everything you need in the case of a serious accident.

Not to mention, when an ongoing condition is involved, standard insurance will only pay out for so long. Many policies consider their annual limit to be the maximum paid out for a single incident. As such, your annual limit of GBP 10,000 may need to cover your pet’s ongoing treatment for the rest of their life.

Diabetes treatment for a small dog will cost around GBP 1,200 per year. So, your GBP 10,000 maximum spend for diabetes treatment may only last eight years of a dog’s 10 to 13-year life expectancy. Clearly, this can leave pet owners out-of-pocket.

So, what’s the alternative?

Lifetime pet insurance

Lifetime pet insurance cover is an insurance policy that looks after a pet’s needs throughout their life. The maximum pay-out of a lifetime policy is the maximum payment per condition, per year. This means your cat’s diabetes treatment could be covered for GBP 10,000 a year for their entire life, for example, rather than just GBP 10,000 in total, so long as the policy is renewed.

The benefit of this to insurers is obvious: it’s the most expensive type of pet insurance available and it requires consumers to lock-in to one provider for the entire life of their pet, or else lose the benefits of lifetime cover. In fact, many pet owners taking lifetime cover for a pet’s medical condition would be unable to find cover elsewhere, since their pet’s illness would count as a pre-existing condition.

This, however, doesn’t easily fit into modern patterns of consumer behavior. Jumping from insurer to insurer to find a cheaper offer is becoming standard, with customers not even necessarily caring which brand they take out cover from. It’s now become normal to go check your policy documentation to find out who you’re insured with when you want to claim.

Selling lifetime cover in this market takes more than just advising on the dangers of not being insured. To sell a premium, lifetime policy, you need to show that your cover is tailored to pets. Thankfully, the two things go hand in hand.

Personalized pet insurance for life

If the expectation is that an insurance policy is being taken out for life, not just for a year, then it can be completely tailored to the lifetime needs of the pet. Insurers can identify the customer’s exact breed and set a reserve based on the most common illnesses the pet is likely to develop in later years.

Tailored pet care advice can then be offered, and well-looked-after pets can be rewarded with reduced premiums for lowered risk. Earned trust can then be built into a more-intimate customer experience, with insurers sending congratulations on pet birthdays or offering them gift vouchers at Christmas.

To read more about what other insurers are already doing in this space, read: What’s that Lassie AB? Pet insurance is stuck in the past?

Once the annual struggle to win customers back on renewal is overcome, insurers can focus on providing experiences that continue to delight customers throughout the entire lifetime of their pet. Brand loyalty will once again become feasible, but first insurers must show their customers that their pets are as important to their insurer as they are to them.

To do that, insurers need to go beyond just ‘dog’ or ‘cat’ cover. Advanced data analytics and artificial intelligence (AI) tools can be used to design tailored cover for each customer’s individual pet, accounting for their needs. Framed this way, pet insurance becomes a money-saving necessity, rather than a nice-to-have expense.

Lifetime pet insurance as standard?

So what’s holding insurers back from offering lifetime cover as standard? The issue, as always, is technology.

Without AI tools to identify breed and determine smart reserves for insurers, personalized policies are out of reach. Without omni-channel systems to offer tailored advice and rewards, customer engagement simply isn’t feasible. Without exceptional customer experiences, pet insurers are left in a race to the bottom to offer the lowest-cost, lowest-quality service to win customers who are counting the pennies.

It’s essential that the pet insurance industry embraces the latest insurtech to win over customers to a premium service that offers the level of protection their pet needs. Otherwise, they’ll be left with a choice between their pet and their finances.

To find out what the FintechOS platform can do to empower you organisation with the latest insurtech, book a demo.

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