The number of individuals purchasing pets in the UK has surged since the lockdown measures were implemented by the government. Many people who live alone have struggled to sope with the restrictions on movement, shopping and the complete shutdown of almost everyone’s social life, which has led to people buying or adopting pets for companionship.
Such a sudden increase in the number of pet owners gives pet insurers the opportunity for growth in 2020, according to GlobalData.
In 2019, the pet insurance market contracted slightly by 1.8%, according to the Association of British Insurers. Therefore, the sudden surge in pet ownership as a result of lockdown measures creates an opportunity for the market to bounce back to growth in 2020, particularly given the popularity of dogs, which account for almost three quarters of the market in terms of premiums.
GlobalData’s UK Insurance Consumer Survey indicates that in 2019, two thirds of dog owners had pet insurance cover in place. Such a high penetration rate indicates that the market is poised for growth in 2020 as the number of new owners increases rapidly. In order to capitalize on this opportunity, pet insurance providers should particularly target new owners aged 25–44, as this demographic has the highest penetration rate, with 73.6% of owners holding pet insurance in 2019.
However, GlobalData’s senior insurance analyst Daniel Pearce suggests that insurers need to be wary: “Despite the positive outlook for the pet insurance market, the cost of claims may also increase as a result of COVID-19. The lockdown measures have allowed owners to spend a lot of time with their new pets, but they have also restricted the amount of exercise that pets have been doing.
“With obesity-linked ailments being a key driver behind the cost of claims, the reduction in exercise levels will pose a challenge to the industry. This is particularly the case as owners’ habits may change for the long term and especially if measures restricting their ability to move around remain in place for a prolonged period of time, reducing the confidence and willingness of individuals to go outside”.