Making a paw-sitive change to pet insurance purchasing
All over the world, the pandemic lockdown and the subsequent shift in working practices has boosted pet ownership. According to a report from Morgan Stanley, the size of the U.S. pet industry could nearly triple from $118 billion in 2019 to $275 billion in 2030. Meanwhile, in the UK the Pet Food Manufacturer’s Association says that 3.2 million households acquired a pet since the start of the pandemic with young people being the main drivers of the trend.
With pet ownership comes responsibility, and cost. To ward off unexpected expenditure, including vets bills, many are turning to insurers who specialise in pet-related policies and this is proving a boon to the industry. A story in the Financial Times in June said that pet insurer Bought By Many, which now has a valuation of more than $2bn, adapted its policy requirements during lockdown, reducing the need for regular check-ups and introducing a ‘pared-back’ version of its policy to better suit struggling customers.
Compared with the more traditional forms of insurance, pet health policies are relatively new. Originally cover was taken out on horses and livestock, and it wasn’t until 1947 that the first pet insurance policy was sold in Britain, and 1980 when U.S. pet owners could buy insurance. Now, however, a third of pet owners in the UK and half of owners in the US buy policies.
Another significant change is in the age of pet owners. According to Statista, millennials make up 32% of pet owners in the U.S, while 27% are baby boomers and 24% are generation X. This is important for insurance companies to understand because millennials view insurance in quite a different way to previous generations.
As digital natives, they are accustomed to purchasing almost everything online, or through their smartphone. They are influenced by brands in social media channels, and they favour personalised, convenient interactions. If they are in the market for insurance for their pet, they will be looking for choice, flexibility, competitive pricing and the ability to manage their policy at the touch of their fingertips.
In research that we carried out recently amongst millennials, on average they were willing to spend approximately $95 a month to insure their pets. While 69% said that they had a positive experience with insurance, what put them off was pushy agents, a lack of attention during purchasing or claims, difficulty in understanding policies and lengthy claims processes.
The answer to capturing this lucrative market, particularly when it comes to pet insurance, is by adapting policies, and changing how they can be bought. Millennials are most comfortable interacting with mobile apps, particularly if this speeds up the insurance purchasing and claims procedure and gives them an instant overview of what they have covered and how much it costs.
The insurance industry has a golden opportunity right now as pet ownership continues to increase to streamline the process of purchasing policies through easy-to-use apps. Millennials are a ready and willing audience.