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 Charlotte, who left this review in September 2021:

I have insured my cats with xxxx xxxx for years and they changed the policy of one of my cats so I had to pay 20% of claims. But the worst thing is that they have put the insurance up to an undoable about. My two cats (one nine/one ten) now have a joint cost of just under 3k per year! One of them has a condition that may end up costing so I'm trapped with them but I am moving the other and paying for her existing skin condition as none of the treatments cost as much as the £1500 Ia year I'll save.

Charlotte, pet parent of a mixed breed cat aged over 8 years 

Not every pet insurance customer is unhappy about their increases. Katherine feels her premiums are still reasonable despite increases when she considers the care her Miniature Schnauzer has received:

We've been with xxxxxxx for several years after a friend who is a vet recommended them. Our dog had to have an emergency lifesaving operation recently and having xxxxxxx cover really helped make it no more stressful than it had to be. Our vet put in the claim and all I had to do was confirm some details online. Premiums are reasonable too for the cover provided, though have gone up a lot the last couple of years.

Katherine, Miniature Schnauzer 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, too. 

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, so what are they? 

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 (ABI) research into claims in 2020 shows that despite the pandemic vets continued to provide vital care for pets. There were 978,000 claims for a total of £799 million, which is equivalent to £2.2million every day. This is the second highest figure since the ABI started collecting data in 2007.  

The data shows that more cats are insured than every before with 1.06 million cat policies active. Total cat insurance claims rose to their highest ever amount at £148 million, a 10% increase on the previous year. The average claim across all policies was £817, up 2% on 2019. Shopping around and comparing the options for dog, cat and horse health insurance is a good idea as costs can vary enormously, but usually the trend is up in terms of claims and costs to pet parents. 

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. Compare the Market 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. Costs can vary massively within regions, with insurance for a French Bulldog, for instance, costing three times more if you live in Ilford, east London compared to Barnes in south-west London. 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. 

Theft is another factor considered by insurers. In 2020 and early 2021 the prices for puppies skyrocketed as demand grew due to Covid-19 lockdowns, and dog thefts increased by 20% on the year before. Dog thefts were most prevelent in the North West followed by London according ot data obtained by the Daily Mail through Freedon of Information requests.  

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?