Pet adoption, care awareness to lift pet insurance market
There are around 150 million cats and dogs in the U.S., with only 3% of them being insured, showing room for market penetration.
Increasing rates of pet adoptions alongside growing awareness about animal care and treatment are anticipated to drive the pet insurance market, according to Acumen Research and Consulting, which expects the sector to grow around 7%, compounded annually, through 2027.
North America is expected to see the fastest growth during the forecast period, according to the market research company. The revue share potential for the region is also high, particularly for the U.S. where more than half of the population has a pet.
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In the U.S. there are about 150 million cats and dogs, of which just 3% are insured, according to Chris Blatchly, chief digital officer and consulting leader for insurance at Cognizant.
“We think there is a huge potential for that market to increase. We actually see pet insurance as where the medical insurance market was for people 40 years ago,” Blatchly said during an AM Best webinar. “Not only is it a market we think will grow significantly, we think it is a great opportunity for insurance companies to advance their digital agendas and employ technologies that they can use for more conventional insurance in the future.”
Embracing tech will define the sector
He explained through the lifecycle of a pet policy, there are really two key moments: When a claim is filed and the onboarding process.
Most important to the market is the claims experience, Blatchly said, noting having seamless, easy consumer interactions is key. When bringing new clients on, it is important to make sure they understand what is and isn’t covered. However, more paramount is making sure they understand the value of having a policy.
“We can focus a lot on the claims experience, but I think pet insurers need to focus on the whole onboarding and relationship aspect,” Blatchly said. “Hopefully for most pets, premiums are being paid and not much care is being used, so pet insurers have to reinforce the value of the product.”
One thing that will grow the value proposition in the eyes of insureds is product innovation, he explained. Although, backend data is also critical for this market.
“Pet insurance is a weird product. It is essentially a health insurance product regulated as a property and casualty product,” Blatchly said, explaining pet insurers have to look at health care players such as United Health, which has taken a lead in monetizing its data. It is the insurers that best leverage their data that will ultimately become the leaders in this market.
“Why did Walmart become the dominant retailer in the U.S.? Because they were the first to really understand how to take point-of-sales data and understand what was happening in the stores,” Blatchly said. “Similarly with pet insurers, the ones that can mine data and glean insights from it will have a huge advantage as the market grows.”
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