COVID-19 presents an opportunity for growth in the UK’s pet insurance market
Lockdown measures implemented by the UK government have resulted in a surge in the number of individuals purchasing pets. With such a sudden increase in the number of pet owners, the pet insurance market has the potential to grow in 2020.
In 2019, the pet insurance market contracted slightly by 1.8%, according to the Association of British Insurers. Therefore, the sudden surge in pet ownership as a result of lockdown measures creates an opportunity for the market to bounce back to growth in 2020, particularly given the popularity of dogs, which account for almost three quarters of the market in terms of premiums.
GlobalData’s UK Insurance Consumer Survey indicates that in 2019, two thirds of dog owners had pet insurance cover in place. Such a high penetration rate indicates that the market is poised for growth in 2020 as the number of new owners increases rapidly. In order to capitalise on this opportunity, pet insurance providers should particularly target new owners aged 25–44, as this demographic has the highest penetration rate, with 73.6% of owners holding pet insurance in 2019.
Despite the positive outlook for the pet insurance market, the cost of claims may also increase as a result of COVID-19. The lockdown measures have allowed owners to spend a lot of time with their new pets, but they have also restricted the amount of exercise that pets have been doing.
With obesity-linked ailments being a key driver behind the cost of claims, the reduction in exercise levels will pose a challenge to the industry. This is particularly the case as owners’ habits may change for the long term and especially if measures restricting their ability to move around remain in place for a prolonged period of time, reducing the confidence and willingness of individuals to go outside.