UK Pet Insurance 2010

Introduction

The pet insurance market witnessed a lower rate of growth in premium income than it was accustomed to in 2009. This report discusses the current consumer attitudes to pet insurance as well as the trends in market distribution, advertising and the key players in the insurance line. It provides forecasts for GWP up to 2014, making it invaluable reading for those with an interest in pet insurance.
Features and benefits

* The latest data and market research, including information on market size and shifts in pet ownership trends* Insight into advertising expenditure and consumer behaviour in the market* An understanding of the competitive environment, and of the impact that new players and market consolidation is having on the pet insurance market* Forecasts of the market’s GWP growth until 2014, based on primary interview, secondary research and in-house expertise
Highlights

Higher veterinarian expenses, in conjunction with a greater frequency of claims, have led to a significant level of inflation in the total claims bill, according to industry executives. Varying inflation rates of between 5% and 15% have been reported by industry executives, and the market has seen premium rates increase accordingly.According to the Datamonitor General Insurance Consumer Survey conducted in March 2010, 26.0% of respondents own a cat, while 23.7% own a dog. While this response does not indicate how many pets are kept in each household, market sentiment suggests that it is more likely for a household to contain multiple cats as opposed to more than one dog.During the first half of 2010, More Th>n accounted for around 43.4% of the advertising spend of the total pet insurance market. The company dedicated £2.1m to marketing, of which £1.6m was spent on television advertising. This represents a massive increase in budget compared to the £622,000 the company spent during the first half of 2009.
Your key questions answered

* How has the pet insurance market been faring recently and how is it forecast to perform in the next four years?* Gain insight into the future direction of the sector, including market size and the major issues affecting the market.* Benchmark your company against your competitors based on current and past performances in the market.

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TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Executive Summary 2
The pet insurance market grew at a lower rate in 2009 2
High claims inflation continues to cut profit margins 3
The top three pet insurers hold a high share in an increasingly consolidated market 4
More Th>n overtook Direct Line as the largest pet insurance advertiser in 2010 5
Market growth will be driven by claims inflation and resultant premium rate increases 6
Market Context 12
Introduction 12
The pet insurance market grew at a lower rate in 2009 12
High claims inflation continues to cut profit margins 16
Current economic conditions will have an enduring effect on pet insurance 18
Customer Focus 22
Introduction 22
Cat owners are a prudent market on which to focus in the UK 22
More Th>n overtook Direct Line as the largest pet insurance advertiser in 2010 24
The total advertising budget spent on pet insurance shrank between 2008 and 2009 28
Household income impacts pet insurance penetration more than age 32
Direct insurers are the dominant providers of pet insurance 34
Petplan, Tesco Bank, and Direct Line make up half of the total UK pet insurance market 39
Online and telephone distribution are the dominant methods of pet insurance arrangement 40
Confused.com and CompareTheMarket.com joined GoCompare.com in offering a pet insurance comparison service 42
Competitive Dynamics 47
Introduction 47
RSA, QBE and Agria are expected to record increased premiums in 2010 47
The top three pet insurers hold a high share in an increasingly consolidated market 48
Acquisitions in the pet insurance space will see changes in market share 49

Future Decoded 53
Market growth will be driven by claims inflation and resultant premium rate increases 53
Appendix 58
Definitions 58
Methodology 59
Further reading 60
Ask the analyst 60
Datamonitor consulting 60
Disclaimer 60


TABLE OF FIGURES
Figure 1: Pet insurance market growth was muted in 2009 2
Figure 2: Pet insurance has a higher loss ratio than household or travel insurance 4
Figure 3: In H1 2010, the majority of pet insurers' marketing spend was allocated to television advertising 6
Figure 4: Pet insurance market growth was muted in 2009 13
Figure 5: The UK dog population has remained comparatively level since 1999 14
Figure 6: Pet insurance has a higher loss ratio than household or travel insurance 16
Figure 7: UK economic activity levels, 1998–2010 Q1 (000s) 19
Figure 8: A higher proportion of smaller households decreases the convenience of pet ownership 21
Figure 9: Over half of UK pet owners own a cat (multiple responses allowed) 23
Figure 10: In H1 2010, the majority of pet insurers' marketing spend was allocated to television advertising 25
Figure 11: The More Th>n television campaigns focus on their pricing and customer service 27
Figure 12: Pet insurance advertising spend has been increasingly devoted to television advertising 31
Figure 13: Penetration of UK pet insurance, split by household income (% of pet-owner respondents) 33
Figure 14: Penetration of UK pet insurance, split by age 33
Figure 15: The direct and broker channels sold the most pet insurance policies (split by household income) 36
Figure 16: The top 10 pet insurance distributors make up three quarters of the total UK market 39
Figure 17: Online pet cover sales were the dominant distribution channel across household income bands 41
Figure 18: GoCompare.com compares the highest number of pet insurance policies 43
Figure 19: GoCompare.com offers options like boarding fees as add-on components of the policy 44
Figure 20: CompareTheMarket.com asks consumers to specify the breed from a drop down list 45
Figure 21: Confused.com is the latest of the major aggregators to offer pet insurance policy comparison 46
Figure 22: Swedish pet insurer Agria is hoping to bring its Scandinavian success to the UK market 48
Figure 23: The dominance of Allianz and RBSI in the pet insurance market is increasing 50
Figure 24: The growth rate of the pet insurance market is expected to be lower than it was pre-recession 56

TABLE OF TABLES
Table 1: UK pet insurance GWP (£m), 2005–09 13
Table 2: UK dog and cat population (millions), 1999–2010 15
Table 3: Gross loss ratios by line of business, 2005-09 (%) 17
Table 4: UK veterinarian industry numbers and pay inflation, 2003–09 18
Table 5: UK economic activity levels, 1998-2010 (000s) 20
Table 6: UK households by size, 1971–2008/09 21
Table 7: Pet ownership trends in UK households, 2010 23
Table 8: Top 10 pet insurance advertisers by medium, HI 2010 26
Table 9: Top 10 UK pet insurance advertisers ranked by 2010 H1 expenditure, H1 2006 - H1 2010 (£) 28
Table 10: Top 10 pet insurance advertisers by medium, 2009 29
Table 11: Pet insurance advertising spend by medium, 2004–H1 2010 32
Table 12: Penetration of UK pet insurance, split by household income 33
Table 13: Penetration of UK pet insurance, split by age 34
Table 14: Distribution channel, split by household income 36
Table 15: List of UK dog and cat insurance providers (as of November 2010) 38
Table 16: Market share of UK pet insurance distributors by percentage of survey respondents, March 2010 40
Table 17: Pet insurance distribution method split by household income 41
Table 18: Top UK pet insurers by premium income, 2005–09 (£000s) 51
Table 19: Top UK pet insurers by market share, 2005–09 (%) 52
Table 20: Key variables affecting pet insurance GWP, 2010–14f 55
Table 21: UK pet insurance GWP, 2005–14f 57



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