Insuring cats and dogs in the UK has been broadly the same since pet insurance became available in the 1970s. Sure, it has evolved a little bit in terms of the cover types on offer and some additional features but on the whole insurers are targeted against the same metrics, pricing is determined by a combination of the same factors and cover varies fairly little between the 62 providers in the UK.
At Gather, we believe that pet insurance needs shaking up.
In the same way that we have seen changes in banking with challengers like Monzo and Starling, investments with the likes of Moneybox, Moneyfarm and Weathify through to health insurance via Vitality. We think it’s only a matter of time until pet insurance catches up.
A revolution is brewing, and below is we think how it’ll happen.
For anyone that works in marketing, personalisation has been a buzzword for the last decade at least, but when we say personalisation we mean in terms of the cover offered.
Currently the approach is very much a cookie cutter type approach where you have the choice of a number of policies and vet fee cover levels.
We see the future involving more information specific to the breed and age of your pet
Personalised pricing based on your pet’s health. Reducing the impact of generic pricing factors like breed, age and postcode.
More tailored cover options so you can choose what is relevant to you and the flexibility to change and amend features during the policy year
The Financial Conduct Authority (FCA) have long wanted pet insurers to offer a pre-existing conditions product.
Stats show that 1 in 3 policyholders make a claim each year, meaning that there are a number of pets out there with existing conditions.
With increasing demand for pre-existing conditions cover from both pet owners and the regulator, we expect there to be a wider range of providers offering cover over the coming years.
Newcomers to the pet insurance market have tried to find a solution to the pre-existing conditions problem but in very different ways.
We also know that price comparison sites are also looking into providing an easily comparable panel for pre-existing providers.
Insurance is a product that people purchase in the hope that they never have to use. This provides a problem for insurers in that it is difficult to prove the value of a policy if someone doesn’t need to claim.
We think that we’ll start to see providers building an ecosystem around the insurance products, whether that be through partnerships with other pet brands – such as pet food, pet activity trackers, pet pharmacies and pet supplement brands etc in order to promote responsible pet ownership.
Claims are the biggest driver of premium increases, so not making a claim is great news for both you and the insurer who are usually targeted on something called a loss ratio. Loss ratios put simply is the ratio of every pound of premium against the value paid out in claims.
By providing policyholders with these additional benefits it should prevent claims and provide value to the policy for all policyholders whether claiming of not.
Transparency in the industry is often something that is difficult to find and is typical for insurance. However, we see this changing particularly in light of recent changes affecting home and motor insurance around price walking
Price walking is the practice of bringing new customers in on reduced prices and then increasing the premiums at renewal year after year. Essentially it’s a penalty for staying loyal.
We may see this expand in the next few years to other types of insurance including pet.
Given that most pet insurers probably only start to make a decent profit out of customers in year 2 and beyond of the policy it makes sense to promote customer loyalty.
Price walking and transparency over the quality of the product as well as the price is a challenge that price comparison sites will be faced with too, so it will be interesting to see what impact and changes are made to the display of price comparison sites to accommodate product value rather than just price.
Gather is looking at a being the catalyst for change. Firstly by doing what we do now, writing articles about how pet insurance works and any specifics that you should be aware of when looking for protection for your pet.
Secondly, by working on bringing a new type of pet insurance to the market. We aim to be up and running in 2023.