EXCLUSIVE: The State of UK Pet Insurance

3.2 million households in the UK acquired a pet during lockdown. That makes a total of 32 million domesticated animals in 17 million homes across Britain, the majority being dogs and cats. This boom in pet ownership has consequently led to increased customer demand for competitive pet insurance. Last year, The Association of British Insurers (ABI) found that pet insurers paid out £799 million in claims in 2020, an 80% increase from claims paid 10 years ago.

According to Market Data Forecast, the UK pet insurance market is expected to be worth $2.09 billion (£1.53 billion) by 2026. The report cites technological innovation, as well as an increase in ownership, as the main facilitators of this growth.

Bought By Many, a leading UK insurtech and pet insurance company continues to diversify this market. The company’s complete policy offers £15,000 in lifetime vet fee and dental cover and is one of the few insurers in the UK to offer cover for pre-existing medical conditions, challenging legacy insurers like Petplan and RSPCA. The company recently acquired the pet wellness startup Vetbox, giving customers discounted access to the service’s various treatments, along with free access to FirstVet video appointments.

This trajectory into pet wellness has seen many insurers follow suit. In 2021, insurance company Pet Protect formed a partnership with PitPat, a UK developer of dog activity monitors and GPS tracking. The monitor, which tracks activity levels and weight maintenance, is offered with Pet Protect’s insurance policy. Like Bought By Many, the interest in wellness and chipping is used to mitigate the risk in pet owners making a claim and accumulating additional expenses.

Lifetime policies from some of the UK’s biggest pet insurers rely on the incentive that customers will renew their annual policies, capping their cover to an agreed amount. This provides a stiff deal for pet owners, who, if they decide to move to a different insurer, run the risk of not having cover for their pet’s pre-existing condition. The lack of flexibility in shopping around for quotes is a key reason why many pet owners are still not insured; 46% of owners claim that premiums are too expensive, according to a Which? survey.

Fortunately, there are UK insurers who are making the search for quotes easier for customers. The insurtech Waggel allows potential customers to get a quote in minutes with their six-step process, which does not require an email address or medical history. Upstart K9 cover has a similar quote process; with the bonus of the company covering pre-existing conditions, customers only have to pay the premium relevant to their dog’s medical history.

An expansion into different types of cover and health maintenance has proven advantageous to the pet insurance market. Yet, further innovations need to be made. Most UK pet insurers and insurtechs exclusively cover cats and dogs. Though they make up a majority of domesticated pets, they do not account for the whole market.

A report from BornFree and RSPCA found that ownership of exotic pets has increased rapidly in the last 20 years. An estimated 1.8 million reptiles, amphibians, and invertebrates, and 1.3 million indoor birds are currently kept in households in the UK. BornFree also found that around 4,000 dangerous wild animals, from wild cats to elephants, are also kept under license in Britain.

Understandably, most UK insurers do not cover exotic pets for the same reasons they do not cover working animals; the amount of potential risk. This does leave a gap in the market.

ExoticDirect, a Bought By Many company, is the only UK insurer with extensive coverage for exotic pets, covering anything from tortoises to birds of prey. Coverage is available for death, theft, vet fees and public liability fees. With an increase in public interest in a range of animals, shown in how 2% of households acquired an indoor bird during lockdown, pet insurers may look to more technological solutions to expand their catalogue of coverage, whilst keeping risks low.