The low penetration represents significant opportunities within the pet insurance sector which is estimated to reach £1.14 billion in 2017, and forecast to reach £1.76 billion in 2022 (according to Mintel) driven by increases in the cost of veterinary treatment and improved public awareness of the benefits of cover the value of pet premiums.
The Association of British Insurers (ABI) reported that in 2017 insurers paid out a record £775 million in pet insurance claims:
- The number of claims surpassed 1 million for the first time since records began, increasing 10% year-on-year. Insurers paid out an average £2 million per day – a record.
- The average claim hit a new peak of £757, compared with the average annual premium of £324 for dogs and just £171 for cats.
- Average claim pay-outs are up 56% since 2010, highlighting ever increasing costs.
- 3.7 million households now have pet insurance (up by 11% year-on-year), which means 8.2 million households still choose to leave their pets uninsured.
- An estimated 67% of dogs and 84% of cats are still uninsured – leaving approximately 12.4 million cat and dog owners at risk of having to foot the bill themselves.
No detected fraud figures have been published since but in line with overall market growth, fraud exposure will have increased at a minimum proportionally and it is likely that the exposure is much higher.
So, what are the five most common pet insurance fraud patterns?
- Insuring imaginary pets: when the pet never existed, or owners discard the animal - by selling it or even killing it – and then claim a payout for early death.
- Faked accidents: when owners intentionally injure their pets in "faked accidents" to cover up pre-existing injuries or conditions that were not covered by their policy.
- Staging disappearance: scams involve staging the disappearance of an animal, because some policies pay out if a pet is lost or stolen.
- Submitting inflated charges: for expensive vet treatments that have either not actually been given, or are unnecessary or are more expensive than they need to be. In these cases vets are directly involved.
- Pet swopping: treating an uninsured pet under the name of an insured pet.