There are a number of elements that go into pricing insurance policies including breed, age, postcode, claims and more. However, the one that very few people are aware of is vet fee inflation. We’ll explore more about what this important number is, how it is tracked and what it means for your costs – whether you’re insured or not.
Inflation is a key economic metric that describes the change in prices for goods and services over time, it is measured by a number of indices but the one most people are familiar with is the Consumer Price Index (CPI). The measure of inflation is determined by a basket of 730 different goods and services including meat-free sausages, canned pulses, sports bras, pet collars and antibacterial surface wipes.
The inflation target, set by the Bank of England is 2%, however, as of today the UK inflation rate is at 9.4%.
Vet fee inflation can be seen as a sub-category of inflation and determines the change in prices for veterinary treatment across the country.
Pet insurance companies are concerned about vet fee inflation because it determines the cost of claims that they will need to pay out, therefore prices for policies are adjusted based on the changes to vet fee inflation.
The Office for National Statistics provides the index that tracks vet fee inflation. As of June 2022 the number is at the highest rate since the Office for National Statistics began tracking the number.
The figure for vet fee nflation measures the change in prices for veterinary treatment, therefore this will have an impact on all pet owners regardless of if you have pet insurance or not.
If you are choosing to self insure then vet fee inflation means that you’ll be paying more to the vet as and when your pet requires treatment. The effect is felt from minor and routine treatments such as spaying and neutering right the way through to life saving surgery. Ultimately, this means that you will need to save more money to your pet care than you would have done in previous years.
For those of you who already have pet insurance, vet fee inflation will still impact you through your renewal price. As we mentioned at the beginning of this article, pet insurance pricing is made up of a number of factors, the most influential of which are:
However, vet fee inflation is another key measure that needs to be added to the list. Around 30% of policies make a claim each year, and if the price of the treatment is increasing, then that means the more money the insurer needs to pay out in order to settle claims.
In turn this increase in claims costs means that the insurer needs to adjust the price of their policies, both for new customers and for renewing customers, in order to account for this.
Vet fee inflation (along with pet age) is a large factor in why your renewal price increases even when you have not made a claim.
The actual impact of vet fee inflation can be difficult to see, but below we’ve looked at the average cost of treating conditions in 2015 compared to 2020. An increase is shown in each of the categories we’ve looked at by as much as 99% in the case of trauma conditions.
|Condition||Ave. Cost of Treatment (2015)*||Ave. Cost of Treatment (2020)^|
*According to MoreThan in 2015.
^According to Scratch & Patch research in 2020.
This is backed up by research from the Association of British Insurers (ABI) which shows that the average cost of a pet insurance claim in 2021 was £848 – an increase from £817 in 2020 and an increase from £721 in 2015.
There’s really not much that us as pet owners or pet insurers can do about vet fee inflation. It’s a macro-economic factor that as individuals we have little control over.
Where there may be some effect is the interest in vet chains from large wealthy investors since 2020, resulting in many vet chains being taken over or consolidated and also in some cases a rise in prices for treatments.
The best way to avoid costs as a pet owner is preventative pet care. Doing as much as possible to keep your pet healthy through a balanced diet and adequate exercise – both mental and physical, as well as shopping around particularly for routine medications. Take a look at our guide to saving money on vet bills for more information.
Likewise pet insurers themselves can’t realistically impact vet fee inflation either, however they can make a decision around how influential of a factor they make it in their pricing models. There is one approach currently that insurers are looking into which is around partnerships with the veterinary chains in the UK to achieve preferential vet treatment prices, therefore helping to reduce costs and dampen down the effect of vet fee inflation on their costs and on your insurance pricing. Find out more about how you can save money on pet insurance policies with our handy guide.