Pet Insurance Market

Market Overview

The global pet insurance market size was valued at USD 6.02 billion in 2022. It is estimated to reach USD 23.43 billion by 2031, growing at a CAGR of 16.3% during the forecast period (2023–2031). The projected expansion of the pet insurance market can be attributed mostly to the rise in the population of companion animals.

Pet insurance provides, in whole or in part, the veterinary care of a sick or injured pet owned by the insured. Some policies will pay out if the creature is lost or stolen or if it passes away. It is a policy purchased by a pet owner that reduces the overall expense of expensive veterinary care. This coverage is comparable to human health insurance policies.

Veterinary procedures are frequently costly, but pet insurance will pay for all or a portion. Evaluating and comparing pet insurance plans is necessary to locate the ideal policy. Pet insurance typically includes a deductible and out-of-pocket expenses like human health insurance before coverage begins. Most providers base the premium on the typical cost of veterinarian treatment in the owner's area. Moreover, not all veterinary services may be covered by the policy.

Market Dynamics

Market Drivers

Increasing Companion Animal Population

The pet insurance market is anticipated to grow mainly owing to an increase in the companion animal population. The pet population is growing due to an increase in per capita income across the globe. There has been an increase in the prevalence of mental illnesses in humans, like anxiety-related issues, clinical depression, personality disorder, and psychotic disorder.

One of the currently popular treatments for mental illness is animal-assisted therapy, as animals can provide patients with emotional support. This is anticipated to be a key factor for the increase in the companion animal population. As per the National Institute of Mental Health, in 2017, 46.6 million Americans had a mental illness. Differently, abled people can gain assistance from trained pets, which can help them cope with depression, anxiety, and low self-esteem. Trained dogs can also help them in performing certain daily activities. These factors are leading to an increase in the companion animal population.

Increase in Pet Related Health Issues

There has been an increase in the prevalence of diseases in pets over recent years, including non-communicable and zoonotic diseases. Diabetes is the most common non-communicable disease in dogs and cats. Obesity is the main cause of type 1 and type 2 diabetes in animals. As per the Association for Pet Obesity Prevention, in 2017, 56% of dogs and 60% of cats were obese in the U.S. The number of pets with clinical obesity is expected to increase rapidly over the forecast period. Clinical obesity results in conditions such as high blood pressure, arthritis, and specific forms of cancer.

The increasing incidence of atopic dermatitis in dogs is further fueling market growth. According to an ACVD report, around 10% to 15% of dogs globally suffered atopic dermatitis in 2017. There has been an increase in the participation of pets in sports and shows, such as horse racing, soccer, greyhound racing, rodeos, canine events, and bullfighting. Pet owners are also more conscious about the health of their pets. These factors are anticipated to increase the incidence of pet injuries and accidents, further boosting the pet insurance market.

Market Restraint

Lack of Knowledge of Pet Owners

Lack of awareness about pet insurance is a key aspect that may limit the pet insurance market growth. The level of awareness and penetration of pet insurance varies across different countries. The adoption of pet insurance is higher in European countries. As per the Department of Clinical Veterinary Science and the Pet Food Institute, 23.0% of pets in the U.K. and 30.0% in Sweden are covered by pet insurance. In contrast, only 1% of pets in the U.S. are covered. Owners in developed regions are generally more informed about the benefits of pet insurance than those in developing economies.

Market Opportunities

High Veterinary Cost

The demand for veterinary healthcare services is expected to rise as the number of companion animals increases. The need for veterinary doctors, qualified technicians, and specialized diagnostic tools drives up the cost of veterinary care. According to the American Pet Products Association Report 2018, veterinary care spending increased by 7% from USD 15.95 billion in 2016 to USD 17.07 billion in 2017. These expenses create a need for pet owners to seek options for reducing their out-of-pocket expenditure on veterinary care.

Key pet insurance providers cover major dog and cat illnesses, excluding preexisting conditions. Insurance in the market provides minimum coverage of 60% of veterinary bills, which can reduce financial pressure on pet owners. The number of surgeries performed on animals has surged in the recent past. Surgery, hospitalization, post-surgery follow-up, and medication costs can create major financial pressure on pet owners. Among these, the high cost associated with surgery is anticipated to compel a higher number of pet owners to avail of pet insurance. Thus, high veterinary costs have created opportunities for market growth.

Regional Analysis

Based on region, the global pet insurance market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Europe Dominates the Global Market

Europe is the most significant global pet insurance market shareholder and is anticipated to exhibit a CAGR of 16.1% during the forecast period. In Europe, the U.K. and Sweden exhibit the highest pet insurance penetration. Key drivers in the region are the high cost of veterinary services and the willingness of pet owners to buy pet insurance. Moreover, high per capita income and an increase in companion animals are some factors boosting the market growth. According to the European Pet Food Industry, 80 million European households have at least one companion animal with a roughly equal number of cats and dogs.

On the other hand, Europe lacks a proper regulatory body that regulates the European pet insurance market. Lifetime, non-lifetime, and accident-only policies are available through insurance providers. Players can enter the European market easily owing to high demand. In addition, Germany is one of the key pet insurance markets. The rise in pet ownership is one of the key factors driving the market. For instance, according to European Pet Food Industry 2018, Germany has 9.4 million dogs and 14.5 million cats. The rise in pet animals is anticipated to create opportunities for pet insurance companies.

North America is estimated to exhibit a CAGR of 15.4% over the forecast period. North America held the second-largest revenue share in the pet insurance market. The key drivers of the market are the growth in the companion animal population and a surge in awareness about pet insurance. Moreover, high veterinary healthcare costs and per capita income boost the market growth. North American Pet Health Insurance Association (NAPHIA) regulates the market in this region. As per the National Pet Owners Survey completed by the American Pet Products Association in 2017, 68% of U.S. households owned a pet, and North American and Canadian pet insurance companies insured 2.43 million pets.

In addition, according to NAPHIA, in 2018, healthcare expenditure in the U.S. was USD 69.4 billion. North American pet insurance market comprises pet insurance leaders such as Nationwide Pet Insurance, Trupanion, Royal & Sun Alliance Insurance Group (RSA), and Petplan Pet Insurance.

Asia-Pacific is anticipated to expand at a lucrative pace over the forecast period because of increasing per capita income and rising animal health expenditure. Moreover, increased awareness about veterinary health and a rise in companion animal population are other factors boosting the market growth. According to IMF 2019, the per capita income of Asia Pacific is USD 7.35 thousand and is expected to reach USD 10.18 thousand by 2024. Japan held a dominant share in the pet insurance market as healthcare expenditure in the country is high, which improves market value. According to the Japan Pet Food Association, in 2017, the population of pet dogs was 8.92 million and 9.52 million cats.

In addition, Japan Animal-Club, Holdings, Inc. and iPet Insurance Co. Ltd. are some local market players. Foreign insurance companies are investing in Japan to gain a larger market share. For instance, in October 2018, Taiyo Pacific Partners—a Washington-based fund management company—invested a 5% stake in Anicom Holdings, Inc. to expand insurance-related business.

The Latin American pet insurance market is anticipated to witness growth over the forecast period because of increasing penetration of better veterinary healthcare, rising per capita income, and soaring awareness about the benefits of pet insurance. According to the IMF, the per capita income in 2019 was USD 16,270, which is expected to increase to USD 19,000 in the coming years. In addition, the local and foreign market players are constantly implementing new strategies, such as regional expansion, to gain higher market share. Generic Pet Insurance and Hollard Pet Insurance are some of the key market players.

The Middle East and Africa (MEA) market is predicted to grow over the projection period owing to increased awareness regarding animal health in developing nations such as Saudi Arabia and the UAE. The region's disposable income is high, indicating higher spending capacity on animal healthcare. The region has huge growth opportunities for cat insurance providers due to a large cat population.

Segmental Analysis

The global pet insurance market is segmented by type, application, and sales channel.

Based on type, the global market is bifurcated into lifetime coverage and accident only. 

The lifetime coverage segment dominates the global market and is projected to exhibit a CAGR of 16.4% over the forecast period. Key drivers of the lifetime coverage segment are the high cost of diagnosis and treatment, the rise in the companion animal population, and increased awareness about pet insurance. Contractual policies cover accidents and illnesses and the cost of surgery and hospitalization, whereas lifetime pet insurance covers companion animals for a lifetime and is comparatively more expensive. However, this is the most favorable pet insurance policy for young animals. Key players in the market are Figo Pet Insurance, Nationwide, Pet Assure, Healthy Paws Pet Insurance, Embrace Pet Insurance, and Petplan.

Key drivers of the accident-only segment include a rise in the incidence of accidents in animals and high veterinary health care costs. Older animals with preexisting conditions can be covered with an accident-only policy. These policies are inexpensive and less comprehensive compared with other types of pet insurance. In addition, insurance providers are focused on increasing market penetration by targeting the customer base through various sales channels, such as banks, agencies, and brokers. For instance, Healthy Paws collaborated with Roover.com to increase its market penetration in February 2018. An increase in veterinary health issues and a rise in the companion animal population are key drivers of this segment.

Based on application, the global market is divided into dogs, cats, and others. 

The dogs segment is the largest revenue contributor to the market and is expected to exhibit a CAGR of 14.02% over the forecast period. An increase in dog ownership worldwide is the key driver of the segment. The increasing importance of pet health and high veterinary healthcare costs are expected to aid further market growth. As per the North American Pet Health Insurance Association (NAPHIA), in 2017, 89.7 million dogs in the U.S. Rabies, parvovirus, kennel cough, heartworm, diabetes, and cancer are major diseases and disorders reported in dogs.

Additionally, the companies in this segment focus on reducing premium costs through innovative methods to track pet health. For instance, in April 2019, MoreThan, a Royal and Sun Alliance-backed insurance technology company, launched a dog fitness tracker in collaboration with Pitpat.

The anticipated rise in cat ownership is projected to stimulate market growth. Cat insurance is available in lifetime and non-lifetime policies. Cats' most prevalent disease-causing organisms and diseases are feline immunodeficiency virus, feline leukemia, heartworm, high-rise syndrome, ringworm, upper respiratory infections, worms, rabies, and ringworm.

Based on sales channels, the global market is segmented into agency, broker, bancassurance, and direct sales channels. 

The agency segment owns the highest pet insurance market share and is estimated to exhibit a CAGR of 15.6% during the forecast period. The key driver of the agency segment is the high customer base. The need for pet insurance and the rise in the companion animal population fuels the segment's growth. Capstone Insurance Agency, REAL Insurance Agency, Capital Blue Cross, Bullpen Insurance, and AA International Insurance Agency are involved in this segment.

Bancassurance is anticipated to grow at a steady rate over the forecast period. The key driver of the segment is a large, established bank network across the globe, which increases pet insurance companies' customer base and market presence. These banking institutions offer lifetime, non-lifetime, and accident-only policies. Tesco Bank, M&S Bank, First Citizen Bank, Midwest Heritage Bank, and German American Bank offer pet insurance. This segment is exhibiting growth due to geographical expansion. For instance, CIMB Bank in Singapore became the first bank to launch pet insurance for various pets in April 2018.

Recent Developments

• August 2023- Go Digit General Insurance, a digital full-stack insurer, collaborated with Vetina Healthcare LLP, an animal healthcare solutions company, to extend pet insurance coverage for canines.

• June 2023- CUVRO, formerly known as Pop Insured, officially launched its pet insurance to provide the best digital experience for consumers and introduce new products based on customer needs.