UK Pet Insurance 2007 : Market Research Report

UK Pet Insurance 2007

Published by: Datamonitor

Published: Aug. 7, 2007 - 58 Pages

Overview
Catalyst
Summary
Executive Summary: The pet insurance market continued to grow rapidly in 2006 due to high premium rates and increased volumes; Pet insurance premium income grew by 13.9 per cent in 2006; Production penetration increased in 2006, fuelling the increase in GWP; The pet population has stalled, while dog numbers continue to experience a marginal decline due to a shift in social-economic conditions; Societal trends are proving to be a boon to the cat population while detrimental to dog numbers; With the economy performing robustly, fewer people now have the time for a pet; The dog population continues to slowly decline though the number of cats has increased and will need to form a larger part of a future pet insurance market; Consumers of pet insurance in the UK are price conscious, affluent and middle aged; Price has been the principle means for policy differentiation for consumers so far; Older consumers are less likely to own a pet and those that do are not likely to insure it; Affluent consumers are more likely to have insured their pets than those with low incomes; Distribution of pet insurance remains in the hands of direct writers but newer platforms are making gains as advertising campaigns have been decreased; Direct writers continue to dominate, though retailers have made significant inroads into the market; Telephone remains the key distribution platform for pet insurance but the Internet is gaining ground as well; Pet insurance advertising declined in 2006 as insurance providers grew more focused in their efforts; New entrants and M&A activity have increased competition in the market though most insurers have continued to grow their books; The acquisition of pet insurance players has altered the pet insurance environment resulting in heightened competition; New broker entrants to the market demonstrate the attractiveness of this fast growing sector despite its difficulties; Swiftcover launched a pet insurance policy in October 2006 hoping to cross sell to its existing customers; The top three insurers wrote almost 79 per cent of the pet insurance market in 2006; The rest of the top 10 accounted for the remainder of the pet market's premium income in 2006; Penetration rates will be the deciding factor in the growth potential of the pet insurance market over the next five years; Pet population and pet ownership trends are not forecast to change significantly in the next 5 years; Premium growth subsides to an annual average of 6.4 per cent, totaling £539.3 million in 2011; Table of Contents; Table of figures; Table of tables
Chapter 1 Introduction: What is this report about?; Who is the target reader?; How to use this report
Chapter 2 Market Context: Introduction; The pet insurance market continued to grow rapidly in 2006 due to high premium rates and increased volumes; Pet insurance premium income grew by 13.9 per cent in 2006; Product penetration increased in 2006, fuelling the increase in GWP; The pet population has stalled, while dog numbers continue to experience a marginal decline due to a shift in social-economic conditions; Societal trends are proving to be a boon to the cat population while detrimental to dog numbers; With the economy performing robustly, fewer people now have the time for a pet; Employment trends have resulted in fewer households with a person at home to care for a pet; The shift towards smaller households has contributed to the decline in pet ownership, hitting dogs disproportionately; The dog population continues to slowly decline though the number of cats has increased and will need to form a larger part of a future pet insurance market; Increases in premium rates were substantial in 2006 due to high claims inflation; The pet insurance market is dominated by cats and dogs, though dogs are on the decline; PFMA statistics show that around 52 per cent of UK homes had a pet in 2004, the majority of which were cats or dogs; The exotic pet market remains a niche section of an already small market; Claims inflation remains a concern for the pet insurance industry as it fears it could restrain growth; Claims inflation in 2006 was estimated to be 11.3 per cent due to high veterinary bills; Non-veterinary claims costs are not a significant factor in pet insurance claims bills; Policy changes have not been effective at limiting claims inflation in the pet insurance market; Consumers must be better educated as to the features of their policies and how this generates claims inflation
Chapter 3 Customer Focus: Consumers appear reluctant to compare policies on anything other than price; Price has been the principle means for policy differentiation for consumers so far; New and more economical products need to reflect consumer needs; Consumer education on claims costs will be crucial in ensuring the market can support higher premiums; Consumers of pet insurance tend to be below 60 and in the higher income brackets; Older consumers are less likely to own a pet and those that do are not likely to insure it; Affluent consumers are more likely to have insured their pets, with a penetration rate of 43 per cent; Distribution of pet insurance remains concentrated in the hands of direct writers but newer platforms are making gains; Direct writers continue to dominate, though retailers have made significant inroads into the market; Telephone remains the key distribution platform for pet insurance but the Internet is gaining ground as well; Aggregators have not made an impact on the market as of yet; Direct mail was eclipsed by television spending for the first time in 2006; Petplan was the top pet insurance advertiser in 2006; Pet insurance advertising declined in 2006 as insurance providers grew more focused in their efforts
Chapter 4 Competitive Dynamics: Introduction; Competitive conditions in the pet insurance market have increased with new entrants and M&A activity; The acquisition of pet insurance players has altered the pet insurance environment resulting in heightened competition; Swedish pet insurance giant Agria purchased PetPartners in March 2007; Domestic and General, the insurer behind PetProtect, has received multiple offers led by Homeserve in May 2007; New entrants to the market demonstrate the attractiveness of this fast growing sector despite its difficulties; Swiftcover launched a pet insurance policy in October 2006 hoping to cross sell to its existing customers; Confused.com has contemplated adding pet insurance to its product line up; Swinton targets £3 million in pet GWP by 2009 with new pet insurance line; Castle Cover, a broker targeting the over 50s market, launched in 2006 with a pet insurance range; The pet insurance market remained highly consolidated in 2006; The top three insurers wrote almost 79 per cent of the pet insurance market in 2006; Petplan remained the market leader in 2006, with 42.9 per cent of the market; RBS's multi-brand approach has resulted in a market share that accounts for just over one quarter of pet insurance premium income; AXA experienced strong growth in 2006 remaining the third largest pet insurance underwriter; The rest of the top 10 accounted for the remainder of the pet market's premium income in 2006
Chapter 5 Future Decoded: Introduction; Pet population and pet ownership trends are not forecast to change significantly in the next 5 years; Social trends are likely to continue their course over the next 5 years; The dog and cat population is not forecast to increase under either scenario; Penetration rates will be the deciding factor in the growth potential of the pet insurance market over the next five years; Scenario 1: Pet insurance market reaches £581.9 million by controlling claims inflation; Insurers can slow the increase in premium rates as claims inflation subsides; Product penetration remains high as more high profile insurance providers offer pet insurance; Premium growth subsides to an annual average of 8.4 per cent, totaling £581.9 million in 2011; Scenario 2: Claims inflation remains elevated, constricting the market; Insurers are unable to control claims inflation and premium rates continue to rise unsustainably; Product penetration falls throughout the forecast period; Pet insurance GWP will only reach £508.8 by 2011
APPENDIX: Supplementary data; Definitions; Methodology; Ipsos MORI data; Sample design; Competitor data; Further reading; Ask the analyst; General insurance research and analysis team; Datamonitor consulting; Disclaimer
List of Tables: Table 1: UK cat and dog insurance premium income, 2002-6; Table 2: Penetration levels of UK pet insurance, 2003-6; Table 3: UK economic activity levels, 1997-2006; Table 4: UK Employment rates by sex, 1997-2007; Table 5: UK housing completions by bedroom number, 1994/5-2005/6; Table 6: UK dog and cat population, 1996-2006e; Table 7: The percentage of animal-owning households in the UK, 2004; Table 8: Penetration of pet insurance products split by age group, 2006; Table 9: Top pets by ownership in the UK by age, 2006; Table 10: Penetration of pet insurance split by income, 2006; Table 11: Distribution of UK pet insurance by channel, 2006; Table 12: UK pet insurance distribution by platform, 2006; Table 13: Top ten pet insurance advertisers by medium, 2006; Table 14: Pet insurance advertising spend by medium, 2003-6; Table 15: Top UK pet insurers' market shares and premium income, 2005-6; Table 16: Scenario 1: UK pet insurance GWP, 2002-11f; Table 17: Scenario 2: UK pet insurance GWP, 2002-11f; Table 18: Top 10 pet insurance advertisers by medium, 2005; Table 19: Pet insurance insurers by premium income, 2005-6
List of Figures: Figure 1: The overall pet population was static, though cats became more popular in 2006; Figure 2: Premium income from pet insurance increased in the dog and cat sectors in 2006; Figure 3: The proportion of households with pet insurance increased again in 2006; Figure 4: The number of economically active persons in the UK has steadily grown, making owning a dog more difficult; Figure 5: The number of women in employment remained high in 2006 despite a softening of economic conditions; Figure 6: One and two person homes have grown as a proportion of society, leaving fewer people to take care of a pet; Figure 7: The size of the average new home has declined dramatically due to an increase in the number of flats; Figure 8: The overall pet population was static, though cats became more popular in 2006; Figure 9: Cats and dogs are the only animals to be kept by over 10 per cent of pet owners; Figure 10: Price is the main concern for pet insurance policy holders; Figure 11: Pet insurance is most attractive to consumers in their mid-life, when financial and family commitments make insurance attractive; Figure 12: Pet ownership declines as people progress past 60; Figure 13: As pet owners have more income they are more likely to take out pet insurance; Figure 14: A few direct writers dominated the distribution of pet insurance in 2006; Figure 15: The use of the telephone in arranging cover has increased to over half of all policies; Figure 16: Direct mail and television spending formed the bulk of the top 10's advertising spend in 2006; Figure 17: Pet insurance advertising has contracted as providers reduce their spend on direct mail; Figure 18: Through its subsidiary Petplan and a number of affinity partnerships, Allianz dominated the pet insurance market in 2006; Figure 19: With penetration rates stable, the pet insurance market reaches £581.9 million in 2011; Figure 20: The market will achieve much lower growth if claims inflation is not brought under control and premium rate increases moderated

Abstract

Introduction Strong growth in pet insurance premium income continued to characterize the market in 2006. This report discusses the current consumer attitudes to pet insurance as well as the trends in market distribution. It also provides forecasts for GWP and profitability up to 2011 under two different scenarios, making it essential reading for those with an interest in pet insurance. Scope The latest data and market research, including information on market size, shifts in pet ownership trends, and product penetration levels An understanding of the competitive environment, and of the impact that new entrants and market consolidation is having on the pet insurance market Insight into changes in product distribution, tracking trends by platform and channel Two scenarios forecasting the market's GWP growth until 2011, based on primary research and in-house expertise Highlights The market now has more tails under cover than ever before, with all insurance providers contacted by Datamonitor for this report indicating that policy numbers experienced significant growth in 2006. This was achieved through an increase in product penetration rather than through growth in the pet population. Almost one in five pet insurance policyholders chose their provider based in part on their veterinarian's recommendation. This indicates that this channel for distribution remains viable and by ceding it largely to Petplan, as many insurers had, competitors have given the industry leader an advantage in the distribution of the product. Operating conditions in the pet insurance market in 2006 remained unchanged with the three largest insurers controlling roughly three quarters of the market. Despite numerous entrants to the market, even in the last year, the market remains consolidated at the underwriting level, as few new insurers have entered the market. Reasons to Purchase Understand UK pet ownership trends and how canine and feline populations are changing Benchmark your company against your competitors based on current and past performances in the market. Develop your future business plans from an informed viewpoint with Datamonitor's GWP forecast

Get Full Details About This Report >>

US: 800.298.5699

Int'l: +1.240.747.3093

About MarketResearch.com
MarketResearch.com is an online aggregator selling over 250,000 market research reports, company profiles and country profiles from over 650 research firms. Our reports will provide you with the critical business and competitive intelligence you need for strategic planning and marketing research. Coverage includes the US, UK, Europe, Asia and global markets.

UK Pet Insurance 2007

Table of Contents

Abstract