Vet costs questioned as pet insurance payouts top £1bn

New figures have revealed that UK pet insurance payouts topped £1 billion for the first time last year and providers are facing thousands of new claims every day.

The Association of British Insurers (ABI) said high veterinary care costs are behind the surge, despite estimates a lack of cover could actually be saving the industry billions more.

However, although some leading figures think practices within the veterinary sector are a factor, the BVA believes the rising pet population is a more significant contributor.

The ABI said that, based on data from its members, 1.3 million pet insurance claims were recorded in 2022.

Highest total

That figure is the highest annual total since records began in 2007, and represents a 28% increase on the preceding year.

The amount paid out for claims also rose by 17% compared with 2021 and equated to around £2.8 million being given to claimants every day – a total of slightly more than £1 billion.

An ABI spokesperson said: “This substantial increase largely reflects the high cost of veterinary treatment, including drugs and diagnostic equipment, which can result in more expensive claims.”

The group added that common high-value claims, such as for spinal surgery, could cost between £8,000 and £10,000 per case, while frequent ongoing issues, such as treating diabetes, often trigger four-figure claims.

Canine payouts

The analysis also found around three-quarters of all recorded claims were for dogs, with canine payouts rising by 23% to £800 million.

A further £184 million was paid to settle claims relating to cats, which accounted for around one-fifth of the total number of cases.

The ABI’s findings follow debate within the veterinary sector on whether more needs to be done to ensure appropriate and affordable treatments are available to clients who are struggling with difficult financial circumstances.

Analysis in the latest PDSA Animal Wellbeing (PAW) Report, published earlier this year, indicated more than one in six owners (17%) had not registered their pet with a vet because they felt it was too expensive – up from 11% in 2020.

Cancelling policies

Surveys further found nearly half (46%) of veterinary professional respondents were seeing more clients that were unable to afford preventive health care measures, while one-third (33%) reported pet owners were cancelling their insurance policies, both on financial grounds.

Sector leaders also heard calls for greater consideration of the challenges vets face in supporting owners with limited finances during the BVA Live event in Birmingham in May.

A BVA spokesperson said it could not comment on what the ABI data might mean for vets in practice, but argued the rise in overall claims was “unsurprising” because of the rapid increase in the overall pet population.

She added the data did not indicate a rise in the average value of a claim and the group’s own analysis suggested that had fallen.

Members of the board of SPVS agreed the average cost of an individual claim had fallen, but said the increase in total payouts was connected to both rising care costs and an increase in the number of insured animals.

Increased use of technology in practice, as well as the trend towards referral, particularly, were also identified as potential contributors and the group warned premiums were likely to rise because of the increasing cost.

They added: “Insuring your pet is a sensible strategy to reduce exposure to major treatment costs.”

Data

The overall number of claims reported by the ABI is the equivalent of around 3,600 new claims a day and one claim for around 42% of the estimated 3.1 million active pet insurance policies, based on 2021 data from the Financial Conduct Authority.

But price comparison platform Go.Compare said the latter figure only accounted for 9% of the overall pet-owning population.

The company said it was “shocked” by the finding and warned that owners without cover missed out on £10 billion of potential payouts last year alone.

In a survey of more than 2,000 pet owners without insurance, which was carried out on its behalf by the polling organisation YouGov, more than one in five (22%) said they did not believe policies were worth the money, while around one in six (16%) admitted they could not afford the premiums.

Another 14% said they would use savings or a credit card to pay for emergency expenses, while 11.5% of respondents said they did not think they would need it.

However, the PAW Report found insurance (30%) was still the most common way for pet owners to deal with unexpected veterinary bills, ahead of going into debt (26%), use of savings (22%) or using regular income or a current account (16%).