This article is by Jonathan Phillips, Sales Director at FintechOS who takes a look at the modern pet insurance market;
Analysts predict the pet insurance boom could see the market valued at nearly USD 17 billion in the next 10 years. Could embedded insurance be an easy way into the pet cover market for health insurers? After all, the psychological health benefits of being a pet owner have long been established. About 74% of people with a pet say that it’s improved their mental health.
This benefit also applies to physical health. Some pets act as a personal trainer by demanding you join them for regular exercise. Certain studies suggest having a pet in the home increases your resistance to germs and allergens.
This psychological, fitness, and immunological health boost from pet ownership could be a major factor in determining a customer’s risk for health insurance, so why not offer both products together as a package?
Pet insurance: a trajectory of growth
Finding new ways to appeal to potential pet insurance owners is becoming urgent. Worldwide pet ownership has skyrocketed during the pandemic and associated lockdown, as millions of people have taken on a pet for company. 10% of US respondents told Statista they had acquired a pet during 2020, while 14% have done so in 2021. In the UK, the Pet Food Manufacturers’ Association estimates that 3.2 million new pets were acquired by UK households from 2020 to 2021. As a result, Allied Market Research estimates the value of pet insurance will be USD 16.8 billion by 2030.
This surge hasn’t gone unnoticed, either. Research from Consumer Intelligence shows that the number of pet insurance products in the market has increased by 10% since lockdown started. Meanwhile, Revolut, the most valuable UK tech startup of all time, has announced its entry into the pet insurance space. It’s clear this is a growth market, but it’s also an important one for other reasons. Studies show only 21% of consumers trust the insurance industry. Insurance companies are seen as outdated and out of touch with consumer needs, so it’s clear that new product offerings are needed to win back customer faith.
What better way to get back in touch with your customers than by showing you understand the link between their needs and those of their treasured animal companion? Indeed, the often-quoted 2015 Harris Poll survey shows 95% of pet owners consider their pets to be part of their family.
The key to differentiating yourself in the flooded pet insurance space is to move beyond offering a reduction in price and instead begin offering assurance as well as insurance.
Pet insurance needs to be about more than price
Swedish startup, Lassie, offers reduced premiums to customers who read the tailored pet care advice supplied by their app and confirm they’re caring for their pets in the recommended way. Traditional insurance only offers value to customers when making a claim. Otherwise, it’s simply an annual admin task and monthly expense. Lassie has found a way to provide daily value to consumers subscribing to their app in a way that also rewards customers for reducing their risk of claiming by properly caring for their pet.
There’s also a value exchange going on here. By taking short surveys on their pet care habits in the Lassie app, customers earn reductions in premium costs. Lassie then acquires data that it can use to improve its service, and also anonymize and sell on to third parties. Moving into assurance opens up a huge range of value-add opportunities for customers, even beyond what Lassie are doing. Insurers could offer regular vet check-ups for pets to identify any claimable issues before they arise, for one example.
DogTV is a service that provides calming visuals for dogs to keep them company while their owners are at work. This not only helps keep dogs calm and avoid any stress-related health issues, but also helps avoid them causing damage to their owner’s home out of boredom or anxiety. Insurers could offer a subscription to the service as part of their pet cover package.
Discounts, free services, and digital content can all be utilized to transform insurance offerings into an insurance-as-a-service subscription that provides value throughout its lifespan, rather than just during a claim. Combine that with health insurance and you start to create a truly invaluable service that customers simply cannot do without.
How the right technology partner can help
So, what’s stopping health insurers from immediately offering bundled health and pet insurance options complete with add-ons? Mainly, it’s technology. Creating innovative health and pet insurance products in a traditional insurance tech stack takes time. Legacy tech doesn’t allow you to combine products, so you will likely need to build these ‘bundles’ as completely new offerings.
Lastly, partnering with vendors like DogTV (who use different systems legacy tech was never meant to work with) is simply impossible without a full digital transformation.
Working with a technology partner that can offer a low-code/no-code interface allows small teams of digital innovators to build new insurance products in days, rather than months or years. Additionally, ready-made Connectors can link these products to other vendors and third parties through advanced application programming interfaces (API), meaning you can partner with other suppliers in minutes.