The future of pet insurance: your choice and mine.. - Veterinary Practice
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The future of pet insurance: your choice and mine..

JEREMY JOHNSON has some thoughts on pet insurance following a significant meeting at the BSAVA congress.

IN the wash-up weeks after BSAVA I’ve seen and heard much talk about a meeting of the Association of British Insurers (ABI) Pet Insurance committee at the congress.

The ABI represents 98% of pet insurance underwriters in the UK and without difficulty I could find and list the names of about 30 companies providing veterinary insurance.

The latest figures I have seen circulated indicate an 18% increase in “gross written premiums” – that’s sales to you and me. Growth in sales and plenty of choice then, which you might think would indicate a thriving and healthy market awash with joyful and prosperous companies. However, this is apparently not so.

There is some discrepancy between figures for market penetration for pet insurance, with estimates ranging at between a fifth to a quarter of animals being insured.

The fact that the latest data are compiled from company data of nearly two years ago, that there are nearly 30 of them involved, and that for many of them pet insurance is an add-on rather than “core business”, illustrates some of the difficulties of working out what’s going in a complex market.

Static penetration

Insurers have stated, however, that market penetration has remained static for the last 10 years. We have also received reports from people “in the know” that the proportion of premiums paid out as claims has risen over the last five years, that as a consequence insurers are having to hike the price of the premiums paid to cover the escalating costs and some are losing money on their pet portfolios.

The hidden story in the latest figures that we saw coming out of the ABI meeting was a 44% increase in reported claims, vastly outstripping the 18% growth in sales, which would give any actuary sleepless nights … especially if he or she didn’t know that much about a specialised niche market like veterinary care.

All the claims are not settled and possibly the growing difference between reported claims and settled claims in proportion to total sales may also indicate that pet owners don’t understand what they are getting for their money at the time they are asked to part with it.

Perhaps this is understandable given that the regulations governing such products over the last 10 years have made it harder for the people who understand the products and procedures being paid for – veterinary practices – to be involved in actually selling the insurance.

So now we hear that policy counts are declining or stabilising, the frequency and the average cost of claims is increasing. Insurers know the expression “Sales is vanity, profit is sanity” and some are wondering about the sustainability of what to us is big business but to some of the insurers is just a pimple that some might wish to squeeze.

Handling hot potatoes

So the ABI workshop was called to handle hot potatoes such as what is euphemistically called “vet inflation”, and other items such as new veterinary procedures, geographical variations in vet fees and even fraud were also on the agenda.

“Vet inflation” is a clumsy term likely to offend some – personally speaking I’ve never inflated a vet. In some ways I think it points to some of the problems with lack of understanding of the marketplace by some of the insurers and also how it differs from human healthcare.

Whilst some consumers want a cheap service, and perhaps are disinclined to pay for insurance, others want what they’ve seen on Casualty, or Gray’s Anatomy: specialised professionals surrounded by caring and capable paraprofessionals and an array of machines that go “ping”.

When the cost of the National Health Service seems to go up by ten million pounds in the blink of an eye, when there is talk of a “post code lottery” in terms of who can access human healthcare, it’s hardly surprising that there will be geographical variation in costs of treatment in a market like the veterinary one where there is no public subsidy.

So there needs to be a diversity of choice … not everyone wants Gray’s Anatomy for Deefer Dog. Some just want to know that if the dog’s run over they can get someone to pin its leg – perhaps even by a recent graduate who is able to try it without fear of being sued for not referring the case to a referral centre.

Too much diversification…

At the same time though, one of the issues that came out of the ABI meeting was that there was too much diversification of products, small nuances in the cover and variations in policy wordings that meant that not even vets knew what was and was not covered.

So things need to be simplified not only with standardisation of claims forms and policy wordings, but also with pre-authorisation in a reasonable time so that the practice knows what can be done for Deefer Dog’s leg.

The cynics in the veterinary world would argue that there’s just too much choice in the market place, some consolidation needs to happen and when it does the market will sort the problem out. I’m not sure.

I suspect there’s diversity but not really a lot of choice of products that offer a variety of levels of cover, but also easy for the vet to explain and the client to understand. I suspect though that this will not happen through “concerted action” without the involvement of vets talking to companies that have a genuine desire to design bespoke products for them

New company

By coincidence, one company at BSAVA was talking about just that. Total Vet Insurance (TVIS), a new entrant to the market, was presenting its offering to congress delegates for the first time. Concerned, too, about the future sustainability of pet insurance, this company is offering bespoke, affordable policies which balance the needs of the practice, the insurance and its clients – in the words of its marketing literature, “taking a totally fresh approach”. If you wish to find out more about this firm, I suggest you take a look at

The future is probably not just about consolidation. A choice of bespoke policies from companies that made their policies and procedures simple to understand with processes that mesh well with veterinary practices would probably offer a brighter future. And if this happened you’d probably get market penetration above 25%.

It’s hard to think of a bespoke future that could possibly come to pass without involvement of the veterinary profession so if you see an insurer who wants to chat to you about that, you might wish to get involved

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