Pet Insurance Update

The Pet Insurance industry has been receiving bad press just recently, particularly on the rise of premiums. So why are premiums on the rise? The end of 2015 saw an increase in Insurance Premium Tax (IPT) from 6% to 9.5% which will inevitably mean that premiums will have to at least increase by this amount with all suppliers. Most pet insurers are reporting year-on-year double digit increases in veterinary claims costs. This is clearly causing considerable challenges for most underwriters which will again, inevitably result in significant market-wide increases in premiums.

We want to assure you that your clients are in good hands. The Vetsure model is so different in so many ways, not least of which is the ‘limitation’ of working with a trusted network of vets rather than the market as a whole. This offers clear advantages in terms of pricing intelligence and reduction of risk to an insurer. Furthermore, our buying group activities mean that the business benefits from periods of high veterinary treatments – this helps to offset periods of high claims. Overall, these (and other) benefits of our model have lead to sustainability of our pricing strategy over the last 7 years that we have been operating. In 2015, prior to the IPT rise, most Vetsure policy holders actually enjoyed a price freeze.

There are clearly some interesting times ahead. 2015 saw one mid-sized pet insurer come close to administration only to be saved at the eleventh hour by their umpteenth underwriter. Royal Sun Alliance (RSA, underwriters of Tesco, More Than and Marks & Spencer amongst others) seem to be having similar challenges to Axa who left the market completely a couple of years ago. In response, RSA seem to have focused their attention on the Referral Centres. The development of their ‘Preferred Network’ of selected Referral Centres seems to be the starter for many such initiatives aimed at controlling risk – much to the upset of the Profession.

By contrast, Vetsure have operated a ‘Preferred Network’ strategy since inception in 2009 – but by focusing on the first opinion clinic who, in turn, promote us, we have established a more ‘natural’ relationship aligned with the values of the Profession. Vetsure select like-minded practices that are: committed to the Profession, offer clinical excellence as well as consumer value – regardless of the segment of the market they are targeting. In the absence of a failure to understand veterinary work and the unique value offered by certain practices and referral centres, other insurers will make their choices of ‘Preferred Partners’ inevitably on cost. It is this potential strategy that could lead to further challenges to the relationship between the Profession and Insurers.