Roundtable: Exploring the impact of the ‘cost-of-living crisis’ on pet insurance sales and renewals

Between 2020 to 2022, there was significant media coverage highlighting the surge in pet ownership during and after the various Covid-19 lockdowns. Factors such as changes in employment practices, particularly the rise of remote working, contributed to this.

However, in 2023, economic uncertainty has caused people to re-evaluate their spending and overall expenses. Additionally, certain employers are enforcing stricter guidelines on returning to the office. In light of these developments, this roundtable examined the key points discussed during the roundtable session.

Recognising pet insurance as a necessity, not a luxury

According to UK Pet Food (formerly known as the Pet Food Manufacturers’ Association), about 3.2 million households in the UK have acquired a pet since the start of the Covid-19 pandemic.

As a result, it perhaps comes as no surprise that the pet insurance market is thriving as animal owners recognise the importance of adequately covering their pets. The cost-of-living crisis has heightened the necessity for pet insurance, and customers are increasingly aware of this need.

Remarkably, pet insurance claims did not decline despite veterinary closures during the pandemic. This led the panel to believe customers were more inclined to get or inquire about insurance because they felt “it was the right thing to do”, said Karl Pearse, sales consultant at CRIF.

The growth of pet insurance policies can also be attributed to new pet owners being more likely to insure their pets. The demographic of pet owners has changed due to the pandemic, with younger individuals and city dwellers finding themselves with more time to invest in pets than ever before.

These individuals are “more likely to do the research and tick all the boxes” on how to be a “good pet owner”, explained Steven O’Callaghan, head of UK insurance product innovation at Many Pets, leaving them more educated on the risks and responsibilities of pet ownership.

Pet insurance is closer to a health product than a general insurance product

Ian Bubb

However, information about pet owners is just as important as the animals. Despite the turbulent economy, cancellations are not on the rise, and participants explained how customers are more interested in flexing their cover to suit their budget rather than cancelling it altogether.

“We do offer step-down arrangements for customers, but they don’t want it as much,” said Al Hadfield, chief operating officer at Pinnacle Pet Group. He added: “More often than not, people want to stick with their old [higher] level of cover – which leads me to believe customers still value some protection over none.”

Insurers should educate pet owners about the risks of owning an uninsured pet and the potential consequences of not having adequate coverage.

It is crucial to offer comprehensive products and streamline customer journeys to ensure satisfaction and help policyholders recognise the benefits of being insured, especially during challenging times.

Changing approaches to pet education and information

Janet Hughes, commercial director and head of sustainability at Agria Pet Insurance, noted how pet education has changed over the past few years.

“Many people now attend shows such as Crufts to view and choose a dog,” she said. “Consumers approach existing owners to find out more information about a specific breed. Whether it is size or temperament, people are now making educated decisions and trying to pick a pet that is suitable for them.”

This attitude is just one example of the changing approach of the new generation when buying pets. Where they source information and who they trust has changed, and it is incumbent upon insurers to adapt and ensure the right products are provided to meet consumers’ needs.

Social media has also influenced their policy-buying decisions. Hadfield noted how online pet owner communities have increased significantly during the past decade, and policyholders now turn to social media groups to get advice on which insurers to pick and avoid.

However, there is plenty of opportunity for insurers to interact with pet owners online through these communities. Pet insurance is “closer to a health product than a general insurance product”, said Ian Bubb, director of pet insurance at Covea, who believes insurers should model their policies to “promote prevention rather than a cure”.

With the cost-of-living crisis not showing signs of slowing, insurers must find different ways of doing business to help keep the costs down for both the insurer and the customer.

Insurers can include digital integration costs into the end-to-end value chain by focusing on the pet’s health and educating policyholders on ways to help prevent potential problems through literature and customer interaction.

Leveraging data and digital technologies

Ross Hallifax, affinity director at Markerstudy, explained how access to data “at one’s fingertips” has influenced how consumers assess risks. He noted how pet insurance had historically been a broker-led product, with veterinary practices advising pet owners on the most suitable insurance cover for their pets’ needs.

However, technological advancements, and the availability of information on policies and products, have significantly expanded the reach of pet insurance. Consumers can now easily access information and make more informed decisions about their pets’ insurance needs.

Despite these advancements, there is a question of whether pet insurance is driving the treatments offered. Many veterinary practices offer more expensive treatments for much older animals, with insurers broadening coverage to meet modern medicinal treatments and therefore policy premiums.

Participants emphasised using data and finding different ways of integrating it into insurer policies and products is the future of pet insurance.

They also discussed how standardising microchip information and asking detailed questions about where and how owners got their pet at the start of the customer journey is also vital to offering the right level of cover at the point-of-quote stage. This will help the policyholder take out the best policy for them while ensuring the cost is appropriate for their needs.

“You must look at the data regarding what people buy. And right now, people are buying quality,” said David Scott, sales consultancy manager at CRIF. “[Insurers] must take lessons from the new players coming into the market, which means digital and data integration. We can’t stay put. We must move with the times.”

Overall, the participants emphasised the opportunity to leverage data in new ways, such as integrating digital technologies, to stay competitive in the pet insurance market. Adapting to the changing times and continuously analysing trends can help insurers provide comprehensive products, streamline customer journeys, and address the cost-of-living crisis for insurers and policyholders.

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