Pet insurers need to compete better with self-insurance

Pet insurers need to compete better with self-insurance by providing better value for money policies which are simplified and by being less greedy in the short-term.

Pet insurance is poor value for money
Pet insurance is poor value for money. Picture in the public domain.
Two useful tags. Click either to see the articles: Toxic to cats | Dangers to cats

Very low level of pet insurance

In the UK, about 67 percent of domestic dogs and about 84 percent of domestic cats are un-insured for health problems according to the Association of British Insurers (ABI), the trade body. In the USA, The New York Times, tells me that an estimated 1 to 2 percent of the country’s 90 million pet dogs and more than 94 million pet cats are insured i.e. 98 percent are not insured at 2017. I find it hard to believe the statistics because the disparity is enormous between the countries. But in both cases it is clear that cat and dog owners, in general, shun the pet insurers.

Complexity and trust

Like me, they prefer to choose self-insurance and the reason is value for money. It doesn’t take a lot of research to realise that when you take out pet insurance you have to read the policy word for word about three times to make sure that you understand it and you’ve got to plough through all the options, restrictions, excess clauses and any other clauses which undermines the policy itself and which prevents the customer getting value for money and being sure that their pet is genuinely insured going forward.

I am confident that a lot of cat and dog owners simply do not trust the insurance companies. If you are a cynical old man like me you see insurance companies as operations to print money. If they are not making a big enough profit they simply put up the premiums and they go on doing that until they see a resistance. But, I suspect, that the majority of people who take out pet insurance are those who are committed to it and therefore will pay higher premiums for peace of mind. They are the sort of people who really demand peace of mind. Perhaps they are risk-adverse therefore the expense of the premiums is worth it for them.

Pet insurance companies need to provide better value for money

The point I’m making in this lengthy introduction is that pet insurance companies could do better for themselves and make more money if they decided to make less money through policies which are overburdened against the customer. They should be thinking long-term and not making short-term profits with terms and conditions which are unintelligible and which look as if they are designed to trick customers.

Pet insurance is like gambling
Pet insurance is like gambling

The costs of insurance – comparing self-insurance with commercial insurance

The average cost of a policy in the UK is £22 a month. But of course it does depend upon the species of animal, its breed if they are purebred and their age and the “excess” – the amount of money that the customer pays initially when making a claim.

Kate Palmer of The Times has worked out that if you put the average annual premium of £264 into a savings account with zero interest you would save £3 if you made one claim of £789 in that period. This is the average pet claim according to her.

Insurance premiums for cats and dogs have increased by 21 percent over the past nine years according to ABI. The insurers would argue that veterinary bills are going up and therefore they have to put up their premiums. As I said they are a vehicle to print money. Nothing will stop them making a profit and and they don’t need to be imaginative or efficient to do it. Am I being too cynical?

The veterinarians would probably say that they are better equipped nowadays to provide higher quality veterinary service because of better equipment and treatments but as is the case for the NHS in the UK, better equipment and treatments cost more money and therefore the price goes up. In the UK, between 2010 and 2019 the average medical claim increased by 62 percent. Very large increase.

I think it would be fair to say that the average cat or dog owner in the UK does not think that pet insurance is worth it by which they mean is not good value for money. Below I list some typical costs charged by veterinarians.

  • The average pet claim as mentioned £789
  • Typical cost of dental work £289
  • The cost of treating a large dog with an ear infection £790
  • Treating a dog’s eye ulcer (miniature dog) £926
  • To treat a dog that has swalloed a toxic substance £551

Choosing the animal

One aspect of this issue is that some savvy new adopters of dogs and I suspect cats do research and find out online which of the breeds or non-breeds are likely to be the most healthy throughout their life. This is worth doing because if you’re buying a purebred animal, some are more healthy than others. Savvy buyers of purebred animals should also avoid pet shops because in some parts of the USA, but no longer in the UK provided a shop applies the law, the animals in those shops have been bred at puppy mills or kitten farms and raised in bad conditions leaving them suffering with health issues which are not disclosed to the buyer. Buyers should always purchase from a reputable breeder and they should visit them read and discuss the issues and obtain a full-blown contract which they must read top to bottom together with health certificates and a pedigree.

Case study

A typical example in the UK would be a hypnotherapist and author, Ailsa Frank, who has no intention of ensuring her cat, Mitzi, which she says is a Ragdoll that she rescued from the side of the road in June. She lives in Camberley, Surrey and puts away £50 a month into a savings account instead of paying into an insurance policy. She was put off ensuring her Ragdoll cat because she and her partner had a dog for 15 years. He died last year and they never made a claim under the policy. And when the dog got older they had to pay half the bills. This proves the point that pet insurance is about risk and reward. You can’t predict the future and therefore you’re taking a risk when you pay for insurance.

Risk in taking out a policy

It is an interesting dichotomy because the sort of person taking out pet insurance doesn’t want to take any risks about high veterinary bills. They want peace of mind but they don’t realise that they are taking a risk in terms of getting value for money or wasting their money.

Some types of policy

The most comprehensive pet insurance policy is called “lifetime cover”. It will pay out for a cat or dog with a chronic long-term illness. However, you won’t get a policy to cover a dog with a pre-existing condition or a dog that is above seven years of age. And if you do get pet insurance cover you pay a high premium for a dog or cat that is predisposed to chronic illnesses and some breeds are because of selective breeding.

You can also buy “time-limited” pet cover. This pays out for each illness or injury over a set period of time such as one year. There are also “money-limited” policies where the company pays up to a certain sum per condition and under which there are no time limits.

There will be exclusion clauses such as treatments for spaying, neutering, flea treatments, vaccinations, grooming unless they are specifically covered as requested. Also, giving birth in pregnancy is not usually covered. Further, most companies won’t pay on a claim within a 14 day window at the beginning of the policy. This even applies to customers who have switched to a different insurance policy within the same company.

In older dogs or cats the customer is likely to have to pay every time their animal needs treatment such as a 20 percent slice of the costs.


I’m going to return to the point of this article which is that looking at it from the pet insurer’s point of view they could do better if they provided a better value for money service. Clearly the customer has decided that self-insurance is the better route to go and therefore they’ve decided that pet insurance is not competitive in comparison their own self-insurance “policy”. Insurance companies need to become more competitive.

Some more on pet insurance

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Useful tag. Click to see the articles: Cat behavior

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