What are the factors affecting pet insurance premiums?
Pet owners receiving renewal notices are often puzzled and annoyed by how much their pet insurance premiums have increased, again.
We get lots of reviews from pet owners despairing at their premium increases, like Wendy, who left a review in Jan 2019:
I have just received my bank statement showing that xxxxxxxxx have not only increased my premiums by 50% (I received no notification) they have also taken two months payments within 4 days of each other! I have been with them for 3 years and made one small claim 18 months ago. They advised that a month’s payment needs to be made in advance although I am an existing customer. I will obviously be cancelling my policy with them.
Wendy, Miniature Schnauzer pet parent
Not every pet insurance customer is unhappy about their increases. Sam E was relieved to find out their insurance had only increased by £200 despite a diagnosis of diabetes in one of their cats:
We've had our 2 cats insured with xxxxxxxxx for 3 years. One of our cats was diagnosed with diabetes and more than have been great. Really quick with claiming vet costs and actually our renewal only went up by £200 for the year and we have lifetime pet cover, so we thought that was good as he's had a few vet hospital stays over the last few months. Also, I think their customer service is good.
Sam E, cat pet parent
As any animal ages it becomes more likely to suffer an illness and so this is a primary driver of price increases year on year. Most, but not all, insurers work on a model where the price increases as time passes giving them scope to react to vet price increases and manage their overall risk.
We all understand that insurance is a business and insurers might increase our premiums if we claim, but there must be other factors that cause increases, or Wendy’s circumstances just don’t add up!
Why do premiums increase each year whether or not you’ve made a pet insurance claim?
There are several factors that affect pet insurance premium increases, and they all create frustration and confusion if insurers don’t explain them properly.
Medical advances drive pet insurance increases
In recent years advances in human medicine have had a significant influence on what is possible in animal medicine. A few years ago, MRI scanning was pretty rare in veterinary medicine but is now fairly common. There are better diagnostic tools and treatments but the costs can be high. Insurers see vet fees rising year on year and so most have to pass some of these increases onto their customers.
The Association of British Insurers research shows the average cost of surgery in 2017 was £1,500, and some of the most expensive claims in 2017 were £30,000 to treat a dog suffering seizures, and a Golden Retriever leg break which cost £10,000 to treat!
Record volumes and value of claims in 2017 increases costs for all. The ABI research also shows that in 2017 pet insurers paid out on average £2million in claims every day, which is a 10% year on year increase. The number of claims topped £1 million for the first time and the average claim hit a peak of £757, whereas the average annual premium for dog insurance was £324 and for a cat,£171. Shopping around and comparing the options for dog, cat and horse health insurance is a good idea as costs can vary enormously.
There is no doubt that Increasing volumes of claims for more expensive treatments is one factor driving pet insurance premium increases year on year.
A pet postcode lottery in UK influences your insurance premiums!
The fees that vets charge for the same tests or treatments varies massively across the British Isles. Animal Friends research found that on average vet fees for the same treatments are highest in London and the South East, and cheapest in Scotland and Northern Ireland. If you move house from Wales to the home counties your pet insurance premiums will increase significantly because of where you live!
Pet insurance treatments are unregulated and wages and rents vary across the country so it’s perhaps not surprising that vet practices in Kent will need to charge more than a vet practice in Lancashire.
Some insurers are trying to limit the effects of these variations by having a list of approved vet practices and charging customers more if you want to use a vet not on their list. If this helps to reduced treatment cost rises and results in lower premiums for customers it could be worth looking out for insurers with this approach.
Switching insurer or policy type can increase your costs, but may be cost efficient long term
Most insurance policies will not cover pre-existing conditions so if possible, your choice of pet insurer should be made early on (before your pet has developed any conditions) and it may be better to stay with the same insurer for your pet’s life.
However, there are options as a few insurers such as VetsMediCover do cover pre-existing conditions if your pet is treatment and symptom free for a period of time.
Bought By Many has introduced a new approach to insurance, and offers a policy that covers pre-existing conditions too, so shopping around the options could help solve the anguish of customers like Lynda:
I Insured my dog with xxxxxxxxx from the age of about 12 months and it cost about 6.99 a month. When my dog got to 10 years old it went up to £83 a month and when he got to 11 it went up to £182 a month! And I wasn’t claiming for a lot. Medication for arthritis was the main thing. I was horrified and now my dog isn’t insured.
Lynda, Labrador Retriever pet parent
If you are insuring pre-existing conditions, premiums are likely to be higher than if your pet didn’t have them but might be lower than those of your existing insurer.
Your choice of breed of furry family member can increase your pet insurance costs
Some pure breed dogs and cats are prone to hereditary conditions that can increase your pet insurance costs. The French Bulldog, which is hugely popular in the UK, is particularly prone to health issues and so their pet insurance costs can be higher than other dogs, so it is a good idea to get quotes from a variety of insurers.
Researching the potential hereditary problems your puppy or kitten might develop by consulting breed guides can help you to understand the pet insurance quotes you get. It’s also a good idea to talk to owners who have bought pets from your chosen breeder in the past. A good breeder will gladly provide you with other owners to talk to and doing your research could help you to keep your pet insurance and vet fee costs down.
Is there anything you can do to reduce your premiums?
Shopping around and making sure you take account of any first year discounts can definitely help you to find the best insurance for you and your pet. Read reviews from real customers to learn more about their experiences as their pets age so you can make an informed choice.
It can help reduce premiums if you:
- Get your pet neutered or spayed
- Buy a mongrel!
- Get your pet micro-chipped
- Insure from a young age before conditions have developed
There are changes in the market and Bought By Many have created a “Fixed for Life” policy where your premiums will not increase year on year. Inevitably your premiums will be higher in the first few years than they might be with another insurer, but this approach does give you the reassurance of knowing what your premiums will be in the future, so maybe more insurers will start to offer this sort of policy if customers are looking for certainty in uncertain times?
The information above is non-specific to any particular pet insurance policy and should be regarded as a basic overview of the type of features that may feature in a policy. The views expressed in this article are the opinion of the author. Always refer to an insurer for specific, accurate information on their policy features.