Provider churn could disrupt pet insurance market

In its new report into the Pet Insurance Market, Defaqto raises the concern that the rate of provider churn could have a detrimental effect on the market unless adequate arrangements are put in place to protect existing policyholders.

Defaqto has identified six companies that have left the market in the last year and nine that have joined, a churn rate of 20%. Unless those pulling out of the market have put in place adequate transition arrangements to ensure that their customers’ pets can remain on cover without having to be re-insured, public confidence in the market could be weakened.

Underlying the churn rate is the fact that the market remains relatively small in absolute terms with premium Income totalling around £400 million per year.

Brian Brown, Head of Insight and joint author of the report said, "It is something of a mystery as to why so many providers feel the need to have pet insurance in their portfolio. It appears difficult to generate significant income from this sector which probably has not grown as quickly as was expected, while the question of the continuing rise in vets’ fees will need to be addressed if the market is to achieve continued, sustainable and profitable growth."