A new report from IBIS World, “Pet Insurance in the US Industry Market Research Report,” says the pet insurance industry has grown substantially in the past five years.
According to the Department of Clinical Veterinary Science and the Pet Food Institute, 30% of pets in Sweden and 23% of pets in the United Kingdom are covered by pet insurance policies. However, only 1% of pets in the United States are insured, but this segment continues to rise.
Pet insurance industry revenue is anticipated to rise at an annualized rate of 10.9% to reach US$721 million.
“Pet insurers largely face the same regulatory trends as their broader property and casualty counterparts, given that pets are considered property in the view of government regulators,” said IBISWorld Industry Analyst Stephen Hoopes. “However, pet insurance risks and trends tend to be more similar to the health insurance market.”
For example, the cost of obtaining treatment in both markets has consistently increased at a faster pace than inflation. For veterinary costs in particular, expenditures have risen due to advancements in medicine and increased utilization of care. According to industry operator Trupanion, more expensive and sophisticated treatments are gaining acceptance, including radiation therapy, CT scans, transplants and chemotherapy.
“The trend toward more sophisticated veterinary treatments has increased the financial incentive for pet owners to take out industry coverage,” said Hoopes. “At the same time, extensive marketing efforts have expanded consumer awareness of pet insurance policy options.”
Over the five years to 2020, industry revenue is forecast to continue growing. Key fundamental and demographic variables underlying the industry's performance are anticipated to improve in the years ahead. For example, the number of pets is anticipated to rise, while homeownership rates are forecast to rebound from consistent decreases in recent years. Yet the industry's market share concentration is anticipated to continue rising over the five years to 2020, as mounting consumer acceptance of industry offerings is expected to benefit well-branded insurers more than their smaller counterparts.