Britain’s pet insurance market has sustained growth in 2015 and is expected to reach new record levels this year, a new study by market research firm Wise Guy Reports reveals.
According to the latest report, UK’s pet insurance market is expected to break the £1 billion mark for the first time in 2016 as insurers continue to battle rising costs.
The forecast comes after the sector continued on an upward trend last year, with gross written premiums (GWP) growing in line with the increase in product penetration and number of policy holders.
However, the market was also blighted in 2015 by significant increases in the number of reported claims, which also grew to record levels.
“The ongoing growth in overall market GWP has been driven by a combination of both the response to a tough claims environment through rising premiums and policy volume, as insurers look to improve returns and generate better business,” the report said.
GWP reached £910 million last year, up by 6.3% from £853 million in 2014. Medical inflation was still the underlying driving factor, with the quality of medical treatments and veterinary procedures influencing cost greatly and sparking inflationary pressure.
“Medical costs and pet care continue to influence the cost of claims significantly, and as a result encourage insurers to raise the price of their premiums,” the report said.
Product penetration grew to 3.4 million in 2015, an increase of 8.7% from 2014.
The report showed that the pet insurance market has been trying to boost product take-up and maintain distribution output by increasing the availability of policies on direct propositions and price comparison sites.
It noted that pet insurance is not well served on price comparison websites and is not typically viewed by customers as a “commodity.”
“Aggregators still serve the pet space, but while many of the smaller providers continue to place more of their business onto these platforms, the major players are still refraining from using price comparison sites as a means of product distribution – with good reason,” the report said.
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