Corona may well cause a recession, but it’s not all bad news. Aquarium Software takes a look at the growth opportunities in the pet insurance sector.
According to the North American Pet Health Insurance Association, the pet insurance sector is estimated to be close to $1 billion market. There are some key factors that have heavily influenced the market such as the increasing number of pets in the world and an overall demographic shift in pet owners with more millennials opting for pets before the idea of children.
Pet insurance – a global opportunity
Despite this, however, in the US there are more than 100 million cats and dogs with only around two percent covered with pet insurance. In comparison, here in the UK, approximately 30 percent of pet owners have insurance for their animals. This suggests that despite the current size of the market, there is still significant room for growth and development opportunities, especially in areas like North America. We can also expect to see the pet insurance sector grow further afield in European territories such as France, Spain and Germany; all of which are at the early stages of development with potential for high growth in the near term.
The data on insurance claims in the UK shows that the average amount of a claim has increased by 75 percent in the last decade, but the average premium has only risen by 50 percent. This demonstrates that pet insurance has become better value for money in relative terms. Additionally, data from the Association of British Insurers (ABI) in 2018 showed that the average pet insurance claim was almost £800, driven by increasingly sophisticated medical procedures that are now available for animals.
Other responsible factors include an increase in technological innovations and a growing interest in pets from younger generations with 57 percent of millennial households currently owning companion animals. This demographic is a particular target for pet insurers as they often pick more expensive designer breeds such as French Bulldogs that can require significant veterinary care.
The drive to digital
Digital platforms play an incredibly important role in managing pet insurance policies. Technological advancements have generally had a huge impact on the way insurance providers implement procedures such as claims management and customer service. Digital platforms provide the necessary tools to quickly manage vast quantities of data that can be collected for pet insurance policies such as identifying pet breeds that are particularly susceptible to a certain illness or injury. This data can also identify trends that have the potential to help insurance providers offer more accurate and competitive premiums in real-time.
The potential for digital growth in the pet sector is colossal, particularly in the US where there is less technological innovation. Digitising insurance processes delivers a huge short-term benefit in efficiency and can help companies become more competitive. In the long run the benefits are even more significant: enabling insurers to interrogate millions of lines of data to deliver a more accurate, efficient and increasingly completely automated insurance processes. Additionally, the market can be impacted by more efficient payment collections; faster and more accurate claims management and settlement; data security; reliable policy creation; effective product marketing; risk reduction – all digitally delivered.
If people are able to update claims or policies themselves online or in an app it not only saves them time waiting for a call to be answered but also automates the process meaning operational costs for the
insurer are reduced. This can be a hugely significant saving – more than a million dollars per year for the larger operators. Claims settlement times and costs are also reduced being less reliant on veterinary expertise thanks to developments in artificial and machine learning. We now have the potential to settle 80 percent of common claims in seconds.
A platform to deliver
The Aquarium platform deals with all relevant aspects of creating a pet insurance proposition. For example, integration with third parties such as vets’ practices ensures real-time claims settlement. The Aquarium platform is used by leading North American pet insurance provider Pets Plus Us. This company saw the benefits of the platform as follows: “we needed something intelligent, intuitive, and with a proven track record. Aquarium stood out from the crowd. It used the latest cloud-based technologies, offered out-of-the-box deployment and access from anywhere in the world as well as integration with client facing web sites and existing back office systems.’’
By analysing data, it is possible to identify pets that are susceptible to illness – either because of their breed, geography or other factors. Prevention is better than cure so it may be possible to use this data to protect pets before they even get ill. For example, active dogs can suffer from arthritis in later life. Digital insight from data may enable owners protect a proportion of these from this risk earlier in life with medication or lifestyle management.